Weekly Roberts Report

US - Agricultural US Commodity Market Report by Mike Roberts, Commodity Marketing Agent, Virginia Tech.
calendar icon 21 September 2010
clock icon 5 minute read

Michael T. Roberts
Extension Agriculture Economist,
Dairy and Commodity Marketing,
NC State University

LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) closed sharply lower on Monday. The OCT’10LC contract closed at $98.150/cwt; off $1.250/cwt but up $0.70/cwt from last Monday. The DEC’10LC contract closed down $1.350/cwt at $100.600/cwt but $0.225/cwt over last report. The APR’11LC contract closed at $103.525/cwt, down $0.725/cwt but $1.30/cwt higher than last week at this time. Futures lost ground on follow-through selling from last Friday’s bearish Cattle-on-Feed report from USDA. USDA’s report put August placements at 107.1 per cent, a four-year high, and well above average estimates of 99.5 per cent. Marketings were close to estimates of 106.8 per cent and the September 1 On-feed supply was placed at 102.8 per cent of last year, a three-year high. The report initiated fund rolling long October positions into December and unwinding of bear spreads. Analysts, on average, expected a 1.1 per cent increase in feedlot cattle numbers. Cash cattle were weaker with USDA putting the 5-area average at $95.68/cwt; down $1.30/cwt from last report. USDA put boxed beef on Monday at $156.94/cwt; up $0.32/cwt but $12.48/cwt lower than last report. Live cattle faltered from the start. Floor sources stated that “We probably wouldn’t have fallen so much had the market not settled higher Friday before the report.” Packers were unwilling to bid up cash cattle amid negative margins. According to HedgersEdge.com, the average packer margin was lowered $29.40/hd from last week to a negative $12.25/hd based on the average buy of $97.45/cwt vs. the average breakeven of $96.51/cwt.

FEEDER CATTLE at the CME followed live cattle lower on Monday. SEP’10FC futures closed at $110.650/cwt; down $1.175/cwt and $1.70/cwt lower than last report. The OCT’10FC contract finished up $1.100/cwt at $110.750/cwt; $1.625/cwt lower than last week at this time. The NOV’10FC contract finished at $110.950/cwt, off $1.400/cwt and $2.075/cwt off from last report. Sell orders in September and October feeders were tripped after both months bridged three-month lows. Cash feeders in Oklahoma City were $1.00-2.00/cwt lower with estimated receipts placed at 8,500 head vs. 10,070 head last Monday and 11,019 a year ago. The CME feeder cattle index was placed at 112.22/lb; off 0.51/lb and 1.49/lb lower than last Monday.

CORN futures on the Chicago Board of Trade (CBOT) closed down on Monday. DEC’10 corn futures closed off 5.0¢/bu at $5.082/bu but 24.75¢/bu over last report. The MAR’11 contract closed at $5.212/bu; down 4.5 cents from Friday. The DEC’11 contract closed at $4.732/bu; down 4.5¢/bu but 17.25¢/bu higher than last Monday. Corn futures rallied to their highest level in two years then retreated to end down for the day on profit-taking and farmer hedge-selling. According to several floor sources traders backed off fears that a late US harvest and frost in China might limit supplies. Others on the floor see corn prices falling after such a strong opening as a predictor of topping action in corn futures. Even the most pessimistic traders don’t think the supply hiccup is worth $5.22/bu. Most sources believe, me included that corn prices will be pulling back over the next few days. USDA’s World Agriculture Supply Demand Estimate (WASDE) report due out October 8 should give another snapshot of supply. The most recent report by USDA projected an average yield of 162.5 mi bu per acre. Exports were disappointing with USDA putting corn-inspected-for-export at 28.460 mi bu vs. expectations of 35-40 mi bu. China is expected to continue importing corn as imports soared to 432,191 tonnes (17 mi bu). Funds sold 7,000 lots on profit taking amid a volume of 356,000 contracts, up 10 per cent from the 30-day average of 323,218 lots. It is significant to note that net fund length in corn was at 444,100 lots, the highest since April 1996 and 32 per cent open interest, an all-time high. Cash corn was flat to weaker amid brisk farmer selling.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed up on Monday. NOV’10 futures closed at $10.844/bu, up 15.5¢/bu and 50.0¢/bu higher than last report. The MAR’11 contract closed at $11.020/bu; up 17.25¢/bu from last close. NOV’11 soybean futures closed up 14.5¢/bu at $10.704/bu and 43.5¢/bu higher than last week at this time. Soybeans finished up a one-year high on concerns of dryness in portions of South America’s crop region prior to planting, a freeze in Canada that may harm immature canola, and a freeze in China. USDA put soybeans-inspected-for-export at 12.078 mi bu vs. expectations for 8-12 mi bu. China bought 225,000 tonnes (8.3 mi bu). Oil prices rose after a new report on Monday said the US has endured the longest recession since World War II. Crude oil futures influence demand for corn and soybean prices because of their relationship with energy. While corn yields are looking off reports of soybean yields so far are promising. Prices are being influenced by corn and wheat strength even though American farmers are expected to harvest a bumper crop in 2010. Funds bought 5,000 lots with volume near 160,000 contracts, up nearly 65 per cent from the 30-day average of 96,929.

WHEAT futures in Chicago (CBOT) finished mixed on Monday with nearby contracts up to JULY’11 down while the JULY’11 contract and those past it showing gains. The DEC’10 wheat contract closed at $7.316/bu; down 7.5¢/bu from Friday’s close. JULY’11 futures finished up 2.75¢/bu at $7.500/bu and 6.0¢/bu higher than a week ago. Nearbys suffered from profit taking with deferreds supported by dry weather in Australia, Russia, parts of Argentina, and season-ending frost in Canada. Exports were somewhat supportive with USDA reporting wheat-inspected-for-export at 29.934 mi bu vs. expectations for 25-30 mi bu. Wheat prices retreated on profit-taking since the Russian announcement of the market-shocking ban on grain exports early last month. Market participants remain nervous about global grain production because Russia needs more rain to plant its next wheat crop. Funds sold 3,000 lots amid 59,000 contract volume which was down nearly 50 per cent from the 30-day average of 113,148 lots.

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