19 October 2011

2 minute read

North America

DAIRY CLASS III futures on the Chicago Mercantile Exchange (CME) closed up on Monday. OCT’11DA futures finished at $17.90/cwt; off $0.02/cwt and $0.02/cwt lower than a week ago.

The JAN’12DA contract closed at $16.53/cwt; up $0.13/cwt and $0.33/cwt higher than last report. Spot cheese bids were aggressive in early trading. Blocks gained $0.225 while barrels were up $0.01. Milk production is seasonably low this time of year.

The September Milk Production report is due out Wednesday afternoon at 3:00 pm. Analysts expect USDA will increase the Class III price $0.15/cwt to $16.30- 17.20/cwt; lower Class IV price $0.25/cwt to range from $16.50-17.60/cwt; and lower the all-milk price by $0.10/cwt to a range of $17.75-18.65/cwt.

Current average futures prices for Class III milk are: three months out = $17.23/cwt ($0.10/cwt over last report); six months out = $16.76/cwt ($0.15/cwt higher than last Monday); nine months out = $16.60/cwt ($0.12/cwt higher than a week ago); and 12 months out = $16.67/cwt ($0.07 over last report).

LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) finished up on Monday with the exception of the nearby October contract. The OCT’11LC contract closed at $121.350/cwt; down $0.300/cwt but $1.325/cwt over last report.

JUNE’12LC futures closed at $126.700/cwt; up $0.475/cwt and $2.20/cwt over last report. Expectations for higher beef prices, firm cash prices, lower beef cattle numbers, and strong US and Asian market orders were supportive.

USDA will release its Cattle-on-Feed report Friday, 10/21/11. Processors continue to compete for tightening cattle supplies. Demand will get another boost as packers seek supplies for processing for the upcoming holidays. From conversations with feeder-buyers, packers, and pit sources cash cattle should be called $2/cwt higher this week.

USDA on Monday placed the five-area average price at $119.13/cwt. The long-term trend is still up and approximately $30.00/cwt over this time last year. See chart.

USDA on Friday put the wholesale choice-beef price at $185.00/cwt; off $1.00/cwt. According to HedgersEdge.com, the average packer margin was raised $7.40/head from last report to a negative $59.60/head based on the average buy of $119.99cwt vs. the average breakeven of $115.5447/cwt.

FEEDER CATTLE at the CME closed up on Monday with the exception of the May 2012 contract. The OCT’11FC contract finished at $140.150/cwt, up $0.250/cwt and $1.150/cwt higher than a week ago.

The NOV’11FC contract settled at $144.425/cwt, even with Friday’s close but $1.300/cwt higher than last report. APR’12FC futures finished at $148.400/cwt; up $0.350/cwt and $2.300/cwt higher than this time last week.

Feeders were supported by short-covering and commercial buying. At the Oklahoma National Stockyards in Oklahoma City, OK estimated receipts were placed at 10,000 head vs. 7,021 a week ago and 8,016 head this time last year.

Feeder steers were steady to $2/cwt higher; heifers $3.00/cwt higher; and steer and heifer calves $2--$6/cwt higher. Demand was considered good for all classes. The CME feeder cattle index for 10/17 was placed at $137.89; up $0.76 and $2.68 over last report. Long-term trend is up. See chart.

CORN futures on the Chicago Board of Trade (CBOT) finished mixed on Monday. The DEC’11 contract closed at $6.404/bu; up 0.5 ¢ /bu and 35.5 ¢ /bu over a week ago.

MAR’12 futures closed at $6.512/bu; down 0.25 ¢ /bu but 33.75 ¢ /bu higher than this time last week. The DEC’12 contract closed up 1.5 ¢ /bu at $6.032/bu and 31.0 ¢ /bu higher than a week ago.

A firm US dollar kept prices stable, and chart resistance kept prices in check. Late Monday USDA put the US corn harvest at 47 per cent complete vs. the five-year average of 41 per cent for this time of year.

Export news lagged. USDA on Monday said it wouldn’t release corn-inspected-for-export numbers until Tuesday 10/18. Industry estimates range from 30 to 38 mi bu. USDA last week reduced supply / demand estimates by 64 mi bu due to reduced planted and harvested acres; 91.9 mi ac and 83.9 mi ac respectively.

Yield estimates remained unchanged at 148.1 bu/ac. U.S. corn use was reduced by 50 mi bu. Total US corn production was put at 12.433 bi bu. Ending stocks were placed at 8.6 mi bu, an increase of 194 mi bu from the September 2011 estimate.

Corn prices show downward price trend in the short run as funds and large speculators take profits on short covering and long-liquidation.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed down on Monday. NOV’11 soybean futures closed 17.0 ¢ /bu lower at $12.530/bu but 75.75 ¢ /bu over a week ago.

The MAR’12 contract closed at $12.676/bu; off 18.0 ¢ /bu but 70.0 ¢ /bu higher than this time last week. News that the troublesome kudzu bug that eats kudzu, as well as soybeans, is invading southern soybean fields was supportive.

University of Georgia researchers say the voracious pest is adaptable and is spreading both north and west. A firm dollar, higher crude oil, short covering, and long liquidation in profit taking weighed on prices. Lack of confirmation that China purchased large quantities of US soybeans also contributed to Monday’s price weakness.

USDA placed the US soybean harvest at 69 per cent vs. the five-year average of 61 per cent and 81 per cent this time last year.

Showers this week should slow the US soybean harvest. Analysts expect soybean exports to come in at 35-40 mi bu. USDA will publish those figures on Tuesday, 11/18. Last week USDA reduced harvested US soybean acres 0.1 mi ac to 73.7 mi ac and also reduced the US yield estimate for soybeans to 41.5 mi bu/ac.

This resulted in an estimate of 3.060 bi bu; 25 mi bu less than the September forecast. Ending stocks were reduced five mi bu to 160 mi bu. Technical signals show upside potential and those should materialise if export news is positive from China.

WHEAT futures in Chicago (CBOT) closed mixed on Monday. The DEC’11 contract closed at $6.242/bu; up 1.5 ¢ /bu and 12.75 ¢ /bu higher than last report.

JULY’12 wheat futures finished at $6.966/bu; down 0.5 ¢ /bu but 13.75 ¢ /bu higher than this time last week. Forecasts for dry weather were supportive.

A firm US dollar limited prices. Export estimates ranged from 16-21 mi bu. USDA’s export report normally released on Monday’s at 11:00 am EST was delayed until Tuesday. There is upside potential in the short run.