5 October 2011

3 minute read

North America

DAIRY CLASS III futures on the Chicago Mercantile Exchange (CME) closed down on Monday. OCT’11DA futures finis he d at $17.40/cwt; off $0.04/cwt. The JAN’12DA contract closed at $16.12/cwt; off $0.23/cwt and $0.62/cwt lower than a week ago.

Liquidatio n continues. Cheese, butter, and NDM futures were lower as well. Whey futures were mixed. During August much of US milk production went into butter or powder.

Butter production for the month was up 31 per cent from this time last year at 133.0 mi lbs. Year-to-date production was up 16.1 per cent.

Furthering the bearish tone, USDA last Friday released the September class prices showing declines across the board: Class II was $20.55/cwt; down $1/cwt from August. Class III was $19.07/cwt; down $2.60/cwt with Class IV price at $19.53/cwt; down $0.61/cwt.

Cheese prices fell for the week with blocks closing at $1.72 on 10 loads. Barrels fell to $1.64 on 18 loads. There is good demand for product while manufacturers are moving product to market in order to limit inventory at the plant.

Butter stocks fell 3.5 mi lbs (two per cent) for September. Manufacture rs are moving demand in anticipation of holiday retail sales. Lower prices are supportive of this supply/demand situation.

Average futures prices for Class III milk are: three months out = $16.73/cwt ($1.28/cwt lower than last report); six months out = $16.51/cwt ($0.92/cwt under last Monday); nine months out = $16.46/cwt ($0.66/cwt lower a week ago); and 12 months out = $16.60/cwt ($0.47/cwt under last report).

LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) finis hed mixed on Monday with nearbys up and deferreds taking some heat. The OCT’11LC contract closed at $123.100/cwt up2 $0.950/cwt and $3.275/cwt higher than last report.

JUNE’12LC futures closed at $123.900/cwt; up $0.400/cwt and $0.15/cwt over last report.

Global instability, and follow through buying were supportive.

Two pit sources said there was talk that there is some sentiment that if the corn market continues to lose value it may drag down deferred CME live cattle contracts because cheaper feed might prove to be incentive to grow the herd.

Profit taking after the last few days of increases could also weigh on prices.

USDA put the five area average price at $120.26/cwt; $4.37/cwt over last report.

On Monday, 3 October, USDA put the beef cutout value at $183.10/cwt; up $1.07/cwt lower than a week ago. Packers continue to pay higher prices for new supplies in spite of declining margins.

According to HedgersEdge.com, the average packer margin was raised $1.20/head from last report to a negative $15.30/head based on the average buy of $115.94cwt vs. the average breakeven of $114.77/cwt.

The packer margin last Friday was placed at a negative $9.10/hd. Grain pricing should be considered at this time.

FEEDER CATTLE at the CME closed down on Monday with the exception of the October. The OCT’11FC contract finis hed at $141.000/cwt, up $0.475/cwt and $3.175/cwt.

The NOV’11FC contract settled at $142.850/cwt, off $0.075/cwt; but $3.275/cwt higher than last report. APR’12FC futures finis hed at $146.200/cwt; down $0.950/cwt but $1.750/cwt higher than this time last week.

Feeder cattle were supported by lower corn prices helping offset input costs for cattle feeders. At the Oklahoma National Stockyards in Oklahoma City, OK estimated receipts were placed at 10,500 head vs. 8,441 a week ago and 7,407 head this time last year.

Compared to last week: feeder cattle and calves were $3- $6/cwt higher with steers less than 500 lbs steady. Demand was considered good except for un-weaned calves, in light-to-moderate demand.

Quality was considered average. Cattle over 700 lbs were not tested. Most cattle weighed in between 500-700 lbs. The latest CME feeder cattle index was placed at $134.60; up $1.23 and $2.97 over this time last week.

CORN futures on the Chicago Board of Trade (CBOT) finis hed mixed on Monday. The DEC’11 contract closed at $5.924/bu; even with last Friday’s close but 56.75 ¢ /bu lower than a week ago. MAR’12 futures closed at $6.060/bu; up 0.25 ¢ /bu but 55.25 ¢ /bu lower than this time last week.

The DEC’12 contract closed down 3.25 ¢ /bu at $5.624/bu and 27.0 ¢ /bu lower than a week ago. The contract limit expanded to 60.0 ¢ /bu on Monday after the limit down trading last Friday.

News that China is expected to triple corn purchases offset bearish exports numbers. USDA put corn-inspected-for-export at 28.443 mi bu vs. estimates for 30-35 mi bu.

Even though large funds reduced long holdings in CBOT corn on Monday it should be noted that they have held long positions for the last four consecutive weeks.

This should prove price supportive later on. Put options would make a good price floor mechanism. However, upside potential may be in the offing.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed mostly down on Monday with the exception of the May 2012 and the July 2012 contracts. NOV’11 soybean futures closed 1.5 ¢ /bu lower at $11.774/bu; and 82.25 ¢ /bu under last report.

The MAR’12 contract closed at $11.980/bu; down 0.25 ¢ /bu and 80.0 ¢ /bu lower than a week ago. Friday’s extended sell-off was encouraged by a firm US dollar. More large funds sold contracts but are still net bullish.

Selling was triggered by forecasts for good harvest weather. In addition, Brazil’s 2011/12 soybean crop is forecast to be a record 75.2 mi tonnes (2.763 bi bu).

USDA late Monday put soybeans-inspected- for-export at 10.599 mi bu vs. estimates of nine to 14 mi bu. Price floors implemented by Put options might be a very good consideration at this time.

WHEAT futures in Chicago (CBOT) finished up on Monday. The DEC’11 contract closed at $6.194/bu; up 10.25 ¢ /bu but 28.75 ¢ /bu lower than last report.

JULY’12 wheat futures finis hed at $7.6.926/bu; up 16.0 ¢ /bu but 11.75 ¢ /bu lower this time last week. Fund buying was supportive.

Late Monday USDA put wheat-inspected- for-export at 22.079 mi bu vs. estimates for 22-27 mi bu. Global wheat supplies are ample and look to be that way for a while.