22 April 2009

5 minute read

North America

LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) finished off on Monday. The APR’09LC contract closed at $87.375/cwt; off $0.950/cwt and $0.10.cwt lower than a week ago. The AUG’09LC contract was down $1.925/cwt at $83.200/cwt; $0.100/cwt over last week and $1.975/cwt under last Monday’s close. DEC’09LC futures closed at $89.150/cwt; off $1.600/cwt and $1.725/cwt lower than my last report. Plunging stock prices, lower crude, and a stronger U.S. dollar pressured prices. Sell stops and other technical signals triggered chart-based selling. The USDA Cattle on Feed report issued last Friday is seen as neutral however heavier-weighted cattle placed in March depressed prices. The USDA 5-area price came in at $88.89/cwt last Friday. USDA early on Monday placed Choice Boxed Beef at $150.86/cwt, up $1.66/cwt and $10.68/cwt higher than this time last week. According to HedgersEdge.com average packer margins were $61.10/head over last week. The average processor margin was placed at a positive $11.95/head based on the average buy of $87.50/cwt vs. the average breakeven of $88.40/cwt. Feed buyers should consider buying more feed needs again this week.

FEEDER CATTLE at the CME closed down on Monday. The APR’09FC contract closed at $98.550 /cwt; off $0.625cwt and $0.400/cwt under last week. The April futures contract will expire on April 30. AUG’09FC futures finished at $100.700/cwt; down $1.250/cwt and $0.775/cwt lower than last report. Feeders followed all the other commodity pits; and for much the same reasons. Cash feeders were the only bright spot on the day. In Oklahoma City where the market is closely watched feeders were $1- $3/cwt over last week. The CME Feeder Cattle Index for April 16 was placed at $97.92/cwt; up $0.03/cwt. It should still pay to hold feeders to heavier weights if you have the grass and good growing conditions.

LEAN HOGS on the CME closed down on Monday. The MAY’09LH contract closed at $70.925/cwt; down $1.325/cwt. The JUNE’09LH contract was off $1.325/cwt at $72.300/cwt and $1.800/cwt lower than last Monday. Besides the pressures affecting other commodity markets a round fund selling added additional pressures. The large premium of futures to the CME Lean Hog Index and a lower pork cutout value on Friday also hurt prices. The expected seasonal uptrend in prices may already be factored into the market. USDA on Friday put Pork Cutout at $60.88/cwt; down $1.03/cwt. The latest CME Lean Hog Index was placed at $57.89/; up $0.49. According to HedgersEdge.com, the average pork plant margin was lowered $3.80/head to a negative $1.20/head. This was based on the average buy of $43.61/cwt vs. the average breakeven price of $43.18/cwt. It is a good idea to price more feed needs now and sell hogs when ready.

CORN futures on the Chicago Board of Trade (CBOT) closed down on Monday. MAY’09 corn futures closed at $3.694/bu; off 6.75¢/bu and 18.0¢/bu lower than last week. The JULY’09 contract closed at $3.786/bu; down 7.0¢/bu and 18.75¢/bu lower than last Monday. DEC’09 corn futures finished at $3.986/bu; off 8.25¢/bu and 20.75¢/bu under last report. The soft DOW Jones Industrial average and a drop in crude oil prices weighed on corn as slow planting progress buoyed negative price action. Exports were also supportive with USDA placing corn-inspected-for-export at 38.0 mi bu vs. expectations for between 34.0-38.0 mi bu. Large speculators are still growing net bull positions in futures and options for the week ended Tuesday. However, large funds were seen as offsetting many of those long positions with shorts. Cash corn in the U.S. cornbelt was steady-to-firm on Monday as producers were reluctant to price any more of the crop or sell what they had left in the bin. Monday’s opening bids for corn in the U.S. Mid-Atlantic States were off 10.0 – 14.0¢/bu. Hold off on pricing any more corn sales. Opportunities should present themselves. Feed buyers should consider buying more feed needs at this time.

SOYBEAN futures on the Chicago Board of Trade (CBOT) were off on Monday. MAY’09 soybean futures closed at $10.184/bu; off 32.5¢/bu and 3.0¢/bu lower than this time last week. The JULY’09 contract finished off 30.0¢/bu at $10.114/bu and 4.25¢/bu under last Monday. The NOV’09 contract closed at $9.030/bu; down 32.0¢/bu and 24.25¢/bu lower than last report. Technical profit taking, a falling stock market, a firmer dollar that hurt exports, and lower crude oil prices pressured soybeans. China moving on a large buy of soybeans from the U.S. and South America were price supportive. USDA placed soybeans-inspected-for-export at 15.7 mi bu vs. expectations for between 21.0-24.0 mi bu. The South American harvest proceeds normally under good weather. Cash soybeans were steady to weak in the U.S. Heartland as farmers were reluctant to turn loose of stocks. Monday’s cash opening prices in the U.S. Mid-Atlantic States were lower 8.0-13.0¢/bu. Large speculators are still bullish on soybeans increasing net bull positions by 10,577 lots to 109,037 contracts for the week ended Tuesday. It may be a good idea to hold off selling any more of the ’09 crop for now. Soybean users might want to consider locking in some needs in the next two days.

WHEAT futures in Chicago (CBOT) closed off on Monday. The MAY’09 contract closed at $5.044/bu; down 18.2¢/bu and 18.75+¢/bu lower than this time last week. JULY’09 wheat futures finished off 18.0¢/bu at $5.666/bu but 32.0¢/bu higher than a week ago. The same maladies of a lower DOW Jones and falling crude profits affected wheat. Lower-than-expected exports and huge world ending stocks didn’t help any either. USDA placed wheat-inspected-for-export at 14.2 mi bu vs. expectations for between 15.0-18.0 mi bu. Good crop-heading weather in the U.S. Plains was seen as productive for harvest but counterproductive for prices. Dryness in Argentina and continued drought in Australia were price supportive. Large speculators cut net bull positions in CBOT wheat futures and options for the week ended Tuesday. It might be a good idea to hold off pricing any more for now.