26 October 2010

4 minute read

North America

LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) finished down on Monday. The OCT’10LC contract closed at $101.400/cwt; off $0.800/cwt but $2.325/cwt higher than last Monday. The DEC’10LC contract closed down $1.050/cwt at $100.650/cwt and $0.075/cwt under last report. The APR’11LC contract closed at $106.000/cwt, down $0.625/cwt but $1.000/cwt over last week at this time. Prices were pressured by profit taking, high prices not seen in 7 years, and USDA’s cattle-on-feed report showing a 3 per cent increase in feedlot supplies over last year. Cash prices were mixed on Monday with choice higher and select lower. USDA put the 5-area cash price at $100.98/cwt; $4.33/cwt over last report amid trade volume of 32,620 head in the Texas Panhandle region, 50,294 head in Kansas, and 65,329 head in Nebraska. USDA on Monday put choice boxed beef at $162.20/cwt; up $0.78/cwt and $6.30/cwt higher than this time last week. According to HedgersEdge.com, the average packer margin was raised $0.75/hd to a negative $9.50/hd based on the average buy of $99.56/cwt vs. the average breakeven of $100.26/cwt. Cattle should be near a topping action as corn prices rise, technical signs show strong tendency for profit taking, and seasonal pressure on prices are upon the market.

FEEDER CATTLE at the CME finished lower on Monday. The OCT’10FC contract finished down $0.100/cwt at $111.100/cwt but $2.300 /cwt higher than last week at this time. The NOV’10FC contract finished at $111.875/cwt, off $0.675/cwt but $2.325/cwt higher than last report. APR’11FC futures finished at $113.925/cwt; down $0.475/cwt but $2.125/cwt higher than week before last. Feeders were pressured by lower fat cattle and higher corn prices. Compared to last week cash feeders and heifers were steady to $1/cwt higher. Demand was considered moderate-to-good. In Oklahoma City at the National stockyards receipts were estimated at 7,700 vs. 8,016 last Monday and 9,756 head a year ago. The latest CME feeder cattle index was placed at 110.38/lb; up 0.31/lb and 2.13/lb over last report.

CORN futures on the Chicago Board of Trade (CBOT) closed up on Monday. DEC’10 corn futures closed up 8.75¢/bu at $5.686/bu and 1.14¢/bu higher than last report. The MAR’11 contract closed at $5.814/bu; up 9.25¢/bu and 1.2¢/bu higher than last Monday. The DEC’11 contract closed at $5.326/bu up 14.25¢/bu and 1.6¢/bu over last Monday. Weak yields, risky weather, a weaker US dollar, hedge fund buying, news that China will be buying more US corn, and strong crude oil prices were supportive. When the US dollar is weaker exports are encouraged because US exports are cheaper. Hedge funds are buying to hedge inflation, and higher crude oil affects corn prices because of ethanol demand. Funds bought over 7,000 lots. Exports were not supportive with USDA putting corn-inspected-for-export at 19.813 mi bu vs. expectations for 25-26 mi bu. Weakening demand is seen as limiting market gains. In other news storms set to blow through the Midwest this week could cause crop losses that could be supportive. The U.S corn crop is seen as especially vulnerable due to very dry weather and the crop being very tall and susceptible to being blown over. The US corn harvest is 83 per cent complete; up from 20 per cent this time last year and above the5-year average of 49 per cent for this time of year. Yields have been disappointing and this could lead to tight supplies next spring. Looks like corn prices are fundamentally supported past the near term.

SOYBEAN futures on the Chicago Board of Trade (CBOT) finished up on Monday. NOV’10 futures closed at $12.176/bu, up 18.25¢/bu and 33.75¢/bu higher than last report. The MAR’11 contract closed at $12.372/bu; up 18.5¢/bu and 34.0¢/bu over a week ago. NOV’11 soybean futures closed up 11.5¢/bu at $11.650/bu and 12.75+¢/bu higher than last week at this time. A falling dollar, brisk fund buying, and good exports were supportive. Funds bought 6,000 lots amid a good volume of 217,000 contracts vs. the 30-day average of 174,000 trades. USDA put soybeans-exported-for-export at 68.344 mi bu vs. expectations for 31-40 mi bu. Exporters reported heavy sales to China for 2010/2011 delivery. Dry weather in Brazil continues to push China to US soybeans. USDA also put US harvest progress at 91 per cent vs. 42 per cent a year ago and the 5-year average of 72 per cent. Strong fundamentals indicate continued price strength.

WHEAT futures in Chicago (CBOT) finished up on Monday. The DEC’10 wheat contract closed at $6.740/bu; up 3.25¢/bu but 16.0¢/bu lower than last Monday. JULY’11 futures finished up 5.25¢/bu at $7.412/bu but 24.75¢/bu lower than a week ago. A weak US dollar pricing US wheat better to importers and news last Friday that Russia would retain its ban on grain exports to July 2011 were supportive. Dry weather in the Ukraine is slowing wheat seedings there. Spillover from corn and soybeans were also supportive. Wheat has depended on strength from other commodities since near-term supply threatens weakness. However, the Russian threat of export release hangs over the market. Fundamentally wheat prices have improved from mildly bearish to neutral.