3 December 2008

4 minute read

North America

Financial markets take another plunge generating fresh bearish momentum while commodities do likewise amid a strengthening U.S. dollar and plummeting oil prices plummet. In other news, Pilgrims Pride asked the courts for protection while it seeks to restructure. It is well known that they blame their woes on too much chicken on the market and high corn prices.

LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) were down on Monday pressured by the same sorry economic news that squeezed commodities in general. The DEC’08LC contract closed at $85.450/cwt; off $1.925/cwt and $1.200/cwt lower than a week ago. FEB’09LC futures closed up $1.925/cwt at $85.725/cwt; 1.875/cwt lower than last Monday. Volume was light amid low numbers of buyers while sellers were able to push prices lower while shorting the market. Packers have backed off demand amid worries that shoppers will not buy as much product this holiday season. USDA on Monday put Choice Boxed Beef at $152.16/cwt, up $0.56/cwt. Cash cattle in the Plains traded $2-$3/cwt lower than last week while USDA put the 5-area price at $89.82/cwt, off $1.44/cwt from a week ago. According to HedgersEdge.com, the average packer margin was lowered $19.95/head from last week to a negative $9.75/head based on the average buy of $88.69/cwt vs. the average breakeven of $87.92/cwt. Consider buying short-term needs at this time. Corn markets will most likely uptick on good financial news.

FEEDER CATTLE at the CME followed live cattle and the other commodity markets lower on Monday. JAN’09FC futures finished at $89.625/cwt, down $2.075/cwt from Friday and $1.775/cwt lower than last Monday. The MAR’09FC contract settled at 89.850/cwt; off $2.375/cwt and $2.30/cwt lower than a week ago. The CME Feeder Cattle Index for November 27 was placed at $93.05/cwt; up $0.35/cwt. It might be a good idea to price short-term feed needs now.

CORN futures on the Chicago Board of Trade (CBOT) closed down to a 14-month low on Monday. The DEC’08 contract closed at $3.332/bu; down 16.25 ¢ /bu from Friday and 21.25 ¢ /bu lower than last week. MAR’09 corn futures closed at $3.492/bu; off 16.5 ¢ /bu and 21.75 ¢ /bu lower than this time last Monday. The absence of fresh fundamental news, speculative selling and good crop weather in South America boosting crop prospects proved bearish while U.S. export news was supportive. USDA placed corninspected- for-export at 32.6 mi bu vs. estimates for between 20-25 mi bu. China reported optimism for a record 525 mi tonne (20.7 bi bu) crop which is 5% higher than last years. Cash corn in the U.S. Midwest was steady as farmers continue to be slow sellers. Cash corn in the U.S. Mid-Atlantic States was steady to weaker with prices ranging from 2.0 ¢ /bu – 5.0 ¢ /bu lower in most places. Funds were net sellers of around 5,000 contracts. It should pay to store as the ’08 crop harvest comes to a close. A put option is not out of the question.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed down on Monday. The JAN’09 soybean contract closed at $8.460/bu; down 37.0 ¢ /bu and 38.0 ¢ /bu lower than this time last week. MAR’09 soybean futures closed at $8.542/bu; off 36.75 ¢ /bu and 37.5 ¢ /bu lower than last Monday. Speculative selling and good crop weather in South American growing regions pressured prices. Exports were somewhat supportive as USDA placed soybeans-inspected-for-export at 37.5 mi bu vs. estimates for 33-38 mi bu. Argentine soybean processors slowed their crush due to farmer hoarding amid hopes for better prices. China soybean processors halted operations as part of a government plan to support local farmers while stockpiling crops. U.S. Midwest cash soybeans were steady as farmers did not want to sell their crops at these prices. Cash soybeans in the U.S. Mid-Atlantic States were steady to weaker with prices ranging from 2.0 ¢ /bu – 8.0 ¢ /bu lower in most places. Basis was mostly higher around 5.0 ¢ /bu around the country. Storing beans will most likely pay now. A put option is not out of the question.

WHEAT futures in Chicago (CBOT) were off 6% on Monday amid financial market worries and expectations for large deliveries. The DEC’08 contract closed at $5.096/bu; down 32.75 ¢ /bu and 27.75 ¢ /bu lower than this time last week. JULY’09 wheat futures were off 33.0 ¢ /bu at $5.546/bu and 29.0 ¢ /bu lower than two weeks ago. Too much rain in Australia was supportive of global markets. USDA reported wheat-inspected-for-export at 19.8 mi bu vs. estimates for 15-27 mi bu. Iraq was still buying wheat on Monday, but not U.S. wheat. Reports showed it wanted Russian, German, or Canadian wheat, according to Chicago sources. China announced it would plant 5% more wheat next year while reports from the Ukraine show a reduction in wheat seedings. Hopefully 30%-40% of the new crop has been priced on previous advice. If global stocks continue to tighten prices may rebound.