11 February 2009

4 minute read

North America

LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) were up on Monday. FEB’09LC futures closed up $1.050/cwt at $84.700/cwt; $0.80/cwt over a week ago. The APR’09LC contract closed at $87.750/cwt; up $1.050/cwt and $0.925/cwt higher than this time last week. Short covering and fund buy-stops added support. A lower US dollar is seen as helping exports. Buying got started on higher cash cattle and better packer profits. Cash cattle in the southern Plains traded higher $1-$3 higher with USDA’s 5-area price coming in at $82.36/cwt. Cattle should bring better prices due to tighter supplies. USDA early on Monday put choice boxed beef up $0.03 at $136.90. According to HedgersEdge.com, the average packer margin was lowered $61.95/head from last week to a negative $12.35/head based on the average buy of $81.24/cwt vs. the average breakeven of $80.25/cwt. If a couple months’ near-term corn needs on last week’s advice it would be a good idea to put a little extra weight on fat cattle before selling.

FEEDER CATTLE at the CME closed up on Monday. MAR’09FC futures were up $1.200/cwt to $95.550/cwt and $2.550/cwt over a week ago. The APR’09FC contract closed at $97.350/cwt; up $4.025/cwt. The Goldman Sachs roll and short covering on late buy-stops supported futures. Funds spread long April/short March futures. Better cash prices and higher fat cattle were also supportive. USDA’s report also was very bullish showing the 2008 calf crop at a 57-year low. The CME Feeder Cattle Index for 5 February was up $0.44/lb at $93.93/lb. If grass comes quick and short-term feed needs were bought last week things seem to be looking up for a bit. Now all we need is an improving economy.

CORN futures on the Chicago Board of Trade (CBOT) closed up on Monday. MAR’09 corn futures closed at $3.774/bu; up 0.25 ¢ /bu and 7.0 ¢ /bu higher than a week ago. The JULY’09 contract closed at $3.984/bu; up 0. 5 ¢ /bu and 6.0 ¢ /bu above last Monday’s finish. Drought in Argentina encouraging early short covering, a weaker US dollar, and higher crude oil prices were supportive. Exports were neutral. USDA put corn-inspected-for-export at 28.817 mi bu vs. expectations for between 28-31 mi bu. It was announced today that exports from Indonesia will be tripling for 2009. December corn futures and November soybean futures closing prices put the soy/corn ratio at 2.23:1. A ratio near 2.2:1favors corn planting while a higher ratio encourages soybean plantings. Funds bought 2,000 contracts as large speculators increased net bear positions by 16,000 lots to 43.906 contracts. Several floor sources said traders expect USDA to raise it 08/09 ending stocks estimates because of slumping demand. Midwest cash corn bids were weaker on Monday due to increased farmer selling on better futures prices. Cash corn in the US Mid-Atlantic states was steady with bids ranging 1.0 ¢ /bu -3.0 ¢ /bu higher. Fundamental strength in corn continues and is now coupled with bullish leaning non-commercial speculators. It might be a good idea to price up to 35 per cent of the 2009 crop.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed mixed on Monday with the three nearby contracts finishing up and the rest of deferreds down. MAR’09 soybean futures closed at $10.020/bu; up 1.0 ¢ /bu and 42.75 ¢ /bu higher than a week ago. The NOV’09 contract closed at $9.430/bu; down 3.0 ¢ /bu but 18.0 ¢ /bu higher than this time last week. Nearby contracts reflected short-term worries over drought in Argentina. Profit taking late in the session pressured prices while exports were supportive. USDA placed soybeans inspected for export at 46.567 mi bu vs. expectations for between 30- 35 mi bu. China imported 33.184 mi bu of the total. Cash soybeans were steady to lower in the US Midwest while they were generally stronger in the US Mid-Atlantic states. Traders evening positions ahead of Tuesday’s USDA WASDE report combined with spillover weakness in soybean meal added additional pressure keeping futures below $10.00/bu in most contracts. The WASDE report is expected to show tightening soybean stocks. It might be a good idea to hold off pricing more of the ’09 crop at this time.

WHEAT futures in Chicago (CBOT) closed up on Monday. The MAR’09 contract closed at $5.650/bu; up 8.0 ¢ /bu and 1.5 ¢ /bu higher than this time last week. JULY’09 wheat futures finished up 8.25 ¢ /bu at $5.904/bu and 2.0- ¢ /bu higher than a week ago. Short covering, dry global weather, and good exports were supportive. USDA put wheat-inspected-for-exports at 19.048 mi bu vs. expectations for between 13-15 mi bu. Large speculators decreased net bear positions in CBOT wheat. It would be a good consideration to price up to 20 per cent of the 2009 crop at this time.