12 May 2011

6 minute read

North America

DAIRY CLASS III futures on the Chicago Mercantile Exchange (CME) closed up on Monday with the exception of the nearby May contract. The MAY’11DA contract finished at $16.52/cwt; $0.06/cwt down $0.06/cwt but $0.05/cwt higher than last report. JULY’11DA futures finished at $17.75/cwt; up $0.10/cwt but $0.05/cwt lower than this time last week. Cheese trended higher over last month but blocks were lower after making gains over the last five days. Butter was lower selling only one load. The trend in butter is lower. Class III prices were noted at $16.40/cwt while Class IV came in at $20.20/cwt. Milk prices in New Zealand for the 2010/11 season continue strong with output trending over year-ago levels. New Zealand exports registered record levels supported mostly by gains in whole milk powder.

LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) mixed on Monday with nearbys off and deferreds up. The JUNE’11LC contract closed at $109.000/cwt, down $0.850/cwt and $2.95/cwt lower than a week ago. AUG’11LC futures closed at $110.875/cwt; down $0.700/cwt and $3.650/cwt lower than last report. The DEC’11LC contract closed at $119.100/cwt; up $0.075/cwt but $2.575/cwt lower than this time last week. Future’s discount to cash, forecasts for improved weather for seasonal grilling, and higher outside markets were supportive. Retail sales remain a negative market factor on weaker demand while futures were pressured by chart-based selling and spreading. USDA on Friday reported choice beef cutout at $177.15/cwt; down $2.19/cwt and $4.88/cwt lower a week ago. Live cattle didn’t get the boost from outside markets that grains did. Fat cattle futures continued their sell off from record highs. Processing-ready cattle are coming to market of higher placements of feeders last year. Cash markets started weak on Monday. USDA put the 5-area-average at $114.97/cwt; $1.79/cwt lower than a week ago. According to HedgersEdge.com, the average packer margin was lowered $9.35/head from a week ago to a negative $43.20/head based on the average buy of $115.48/cwt vs. the average breakeven of $112.01/cwt.

FEEDER CATTLE at the CME closed down on Monday. The MAY’FC11 contract closed at $128.000/cwt; down $1.125/cwt and $3.050/cwt lower than a week ago. The AUG’11FC contract settled at $132.300/cwt, down $0.475/cwt and $2.525/cwt under last report. Feeders were pressured by lower cattle futures and increases in corn futures. In Oklahoma City at the National Stockyards an estimated 7,000 head were sold vs. 7,805 head last week and 11,879 a year ago. Compared to last week steer and heifer demand are considered moderate for all classes. Fleshy cattle brought better prices as buyers were buying gain they didn’t have to put on with more feed. The latest CME feeder cattle index was placed at $130.00; off $1.02 and $3.39 lower than last report.

CORN futures on the Chicago Board of Trade (CBOT) closed up on Monday. The MAY’11 contract closed at $7.044/bu; down 21.75¢/bu but 26.25¢/bu lower than last Monday. The DEC’11 contract closed at $6.574/bu; up 17.25¢/bu but 3.75¢/bu lower than last report. Corn was supported by the slow planting rate and gains in outside crude oil and metal’s markets. Traders expected a better seeding rate. USDA late Monday put US corn-planting progress at 40 per cent vs. the 59 per cent five-year average and 80 per cent this time last year. Some drier weather is forecast for the corn growing states. Funds made profits in crude and metals so they ended up putting money into commodities, especially corn since the fundamentals show bullish opportunities. Even though funds took profits last week on corn futures there are still net-long 272,860 contracts. Cash corn was down due to high water levels on the Mississippi halting all barge traffic and slow farmer selling. Exports were disappointing with USDA putting corn-inspected-for-export at 27.777 mi bu vs. expectations for 29-32 mi bu. Fundamentally corn is still bullish. It would be a good idea to advance any sales you can afford to at this time.

SOYBEAN futures on the Chicago Board of Trade (CBOT) finished up on Monday. The MAY’11 contract closed at $13.350/bu; up 10.0¢/bu but 055.25¢/bu lower than last Monday. NOV’11 soybean futures closed11.0¢/bu higher than last Friday’s close at $13.194/bu but 54.25¢/bu lower than last report. Outside markets were supportive encouraging funds to infuse cash into soybean commodities. Funds were net buyers of 3,000 lots. They were back in the game after taking profits last week and needing to put gains in crude and metals somewhere. Volume was light and the lowest since November 26. Soybeans struggled to keep pace with gains in corn and wheat amid the light volume. Cash soybeans were steady-to-firm amid slow farmer selling and slow-to-no barge movement. USDA put soybeans planted at 7 per cent vs. the 17 per cent five-year average and 28 per cent planted this time last year. Soybean prices in Rosario, Buenos Aires, SA were firm and rising on slow farmer sales. Exports were bearish with USDA putting soybeans-inspected-for-export at 6.018 mi bu vs. expectations for 9-12 mi bu. Fundamentally soybeans remain bullish but volatile. Some crop sales should be considered at this time.

WHEAT futures in Chicago (CBOT) closed higher on Monday. The MAY’11 wheat contract closed at $7.592/bu; up 34.75¢/bu but 0.5¢/bu lower than last report. JULY’11 futures finished up 31.0¢/bu at $7.904/bu but 1.25¢/bu lower than last week. Fund buying, adverse weather, and lower wheat production numbers were supportive. Funds bought 4,000 lots. Weather has been very dry on the crop in some places and really wet in others. Heavy rains are slowing spring plantings while in Kansas, the top US bread-wheat producer registered temperatures over 100 this past weekend. US wheat production was put at 2.037 bi bu this year, down 19 mi bu from last year. Trading volume was light noting less than 100,000 trades taking place vs. the 30-day average of 110,605. Fund money was supportive, just like corn and soybean futures. Weather continues to drive volatility while fundamentally global stocks are not that bullish. USDA put wheat-inspected-for-export at 34.625 mi bu vs. expectations for 30-35 mi bu. It would be a good idea to advance crop sales at this time.

LEAN HOGS on the CME finished mixed on Monday. The JUNE’11LH contract closed at $97.725/cwt; off $0.625/cwt but $2.250/cwt higher than a week ago. AUG’11LH futures closed at $94.275/cwt; up $0.325/cwt but $3.300/cwt lower than last report. Front months lacked support as funds rolled positions to deferreds. Cash hogs were steady-to-firm supported by seasonal demand and cheaper-than-beef protein. Packers are ramping up production ahead of Memorial Day. USDA put the pork cutout at $90.44/cwt. According to HedgersEdge.com, the average packer margin was raised $2.00/head to a negative $0.90/head based on the average buy of $65.38/cwt vs. the average breakeven of $65.05/cwt. The latest CME lean hog index was placed at $92.18; down $0.24 and $2.02 lower than last report.