DAIRY CLASS III futures on the Chicago Mercantile Exchange (CME) closed up on Monday. MAR’12DA futures closed at $15.45/cwt; up $0.03/cwt and $0.26/cwt higher than a week ago. The MAY’12DA contract closed at $15.46/cwt; up $0.25/cwt and $1.26/cwt over last report. JULY’12DA futures closed at $16.28/cwt; up $0.11/cwt and $0.86/cwt higher than this time last Monday. US cheddar’s 5-fold export increases over this time last year were very supportive. Butter bids were up a modest $0.0175/lb. Higher corn futures weighed on milk futures. The rally doesn’t look fundamentally sustainable. Increased demand from domestic use and export markets could change that. Prices for Class III futures were: 3 months out = $15.46/cwt ($0.36/cwt higher than last report); 6 months out = $15.83/cwt ($0.34/cwt over a week ago level); 9 months out = $16.04/cwt ($0.28/cwt more than this time last week); and 12 months out = $16.07/cwt ($0.14/cwt over a week ago).

LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) closed up on Monday with the exception of some deferreds. The APR’12 contract finished at $126.750/cwt; up $0.725/cwt but $1.650/cwt under last Monday at this time. JUNE’12LC futures closed at $123.900/cwt; up $0.300/cwt but $2.00/cwt lower than last report. DEC’12LC futures closed at $132.650/cwt; up $0.050/cwt but $1.800/cwt lower than a week ago. Fat cattle rebounded from recent losses amid expectations for new cash-market bids. Traders expect that packers will be buying cattle in the cash markets earlier than usual this week after sitting out last week. Packer margins have lost money on margins for several weeks and worry that consumer demand will weaken given beef prices have set historical highs. Cash cattle markets were quite Monday. USDA on Monday put box beef prices at $193.11/cwt; down $2.69/cwt and $4.88/cwt lower than a week ago. According to HedgersEdge.com, the average packer margin was lowered $33.50/cwt to a negative $58.40/head based on the average buy of $128.54/cwt vs. the breakeven of $123.24/cwt. Late Monday, March 5, USDA put the 5-area average price at $126.81/cwt; down $2.63/cwt from last report.

FEEDER CATTLE at the CME finished higher on Monday. APR’12FC futures finished at $156.350/cwt; up $0.500/cwt but $2.600/cwt lower than last report. The AUG’12FC contract closed $0.325/cwt higher at $159.250/cwt but $2.900/cwt lower than a week ago. Feeders followed live cattle but were pressured by higher corn prices and steady-to-lower cash prices. Oklahoma City prices were $1-$2 lower while heifers were steady. The Oklahoma National Stockyard feeder cattle auction estimated receipts for Monday, 3/5/12 at 5,500 head compared to 9,738 last week and 9,660 a year ago. Numbers were reduced somewhat by rains over the weekend. Quality was plain-to-average. The CME feeder cattle livestock index was placed at 155.63; down 0.27 and 0.29 lower than this time last week.

CORN futures on the Chicago Board of Trade (CBOT) closed up on Monday. The JULY’12 contract closed at $6.540/bu; up 10.0¢/bu but 8.25¢/bu lower than a week ago. The DEC’12 contract closed at $5.684/bu; up 6.0¢/bu but 13.0¢/bu under this time last week. Exports, tight stocks, good cash markets, bull spreading, and continued talk that China may now come back to the US market for corn were all supportive market factors. USDA put corn-inspected-for-export at 36.256 mi bu vs. estimates for 31-33 mi bu. The recent USDA World Agriculture Supply Demand Estimate (WASDE) put ending stocks at 801 mi bu. This is 3.28 weeks’ worth of corn grain. Cash markets were firm as farmers hold onto old crop corn. Local East Coast prices averaged about 6.75/bu for old crop corn and 5.66/bu for new crop. End-users have been forced to pay up for grain or go without. China’s moves to buy US corn now on already tight stocks provide solid support for old crop supplies. New crop corn prices are lower on the potential for a record large US corn crop for 2012/13. Bull spreading also supported nearby crop prices. A “Bull Spread” is an option strategy in which maximum profit is attained if the underlying security rises in price. Either calls or puts can be used. The lower strike price is purchased and the higher strike price is sold. The options will have the same expiration date. The user of this strategy will make a lot of money if the stock price rises but will lose it all if it doesn’t. It is a high risk maneuver that can cause a lot of anxiety. This strategy is being employed because traders think that new crop corn will be pressured by larger supplies. Argentina’s government may modify its export system that would allow more exports to world markets by late summer. Large speculators bolstered net long positions buying more than 13,000 lots.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed down on Monday. The MAR’12 contract closed at $13.304¢/bu; off 1.25¢/bu but 11.25¢/bu over a week ago. NOV’12 futures closed at $12.994/bu; down 5.75¢/bu but 10.5¢/bu higher than this time last week. Soybean futures were pressured as spreaders took profits and unwound long soy/short corn positions. Pit sources say there is some speculation in the pits that high US soybean prices will hurt export demand. USDA last Thursday put soybeans inspected-for-export at 26.247 mi bu vs. estimates for of 29-35 mi bu. In other news, Brazil’s soy harvest is picking up adding to global supplies. Funds sold 3,000 lots. Cash soybeans on the East Coast averaged $13.00/bu for old crop and $12.50 for new crop.

WHEAT futures in Chicago (CBOT) closed higher on Monday. The MAR’12 contract closed at $6.526/bu; up 14.0¢/bu but 15.0¢/bu lower than last report. JULY’12 wheat futures finished at $6.592/bu; up 5.75¢/bu but 23.5¢/bu lower than a week ago. Spillover from corn, a weaker US dollar, and short-covering were supportive. Good crop growing weather in the US Midwest and Plains accompanied by mild temperatures seen as boosting wheat prospects held higher prices back. Exports were very supportive with USDA putting wheat-inspected-for-export at 31.597 mi bu vs. estimates for 15-17 mi bu.

 

TheCattleSite News Desk