7 October 2009

4 minute read

North America

LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) were down on Monday. Short covering, weak chart signals, bear spreading, and lower cash markets pressured prices. The OCT’09LC contract closed down $0.275/cwt at $82.675/cwt; $3.425/cwt lower than this time last week. DEC’09LC futures closed at $83.900/cwt; off $0.100/cwt and $1.870/cwt lower than last report. October futures set a 10-month low while the December ’09 through October 2010 contracts set lifetime low marks before gaining a few cents back on the close. Cash cattle in the southern Plains were off $1.50/cwt last week with no bids expected on Monday. USDA placed the 5-area average at $82.23/cwt; $1.31/cwt lower than last report. Higher unemployment figures are indicating that consumers are eating out less and buying cheaper cuts of meat. This is keeping the lid on packer bids for beef. USDA early on Monday put the choice beef cutout at $134.72/cwt, up $0.06/cwt but $4.08/cwt lower than this time last week. One bright spot for US cattle producers are news reports from Buenos Aires, Argentina showing a surge in cattle processing. This is raising concerns that the current pace will deplete country stocks leading to domestic beef shortages in that country and a halt to all exports next year. This may provide export possibilities for US cattle. According to HedgersEdge.com, average packer margins were lowered $21.20 to a negative $25.50/head based on the average buy of $82.85/cwt vs. the average breakeven of $80.91/cwt. Continue to sell cattle when ready as packers are discounting for heavy weights.

FEEDER CATTLE at the CME were off on Monday. The OCT’09FC contract closed at $93.350/cwt; down $0.200/cwt and $3.100/cwt lower than a week ago. NOV’09FC futures closed at $93.300/cwt; off $0.275/cwt and $3.25/cwt lower than last Monday. According to associated press reports the recession has now been labeled a near-depression by some economists. Feeders ended weak after sinking to 10-month lows on technical selling and spreading out of November and January into October. The rally in corn also pressured prices. Oversold conditions did lend some support. Cash cattle were steady in Oklahoma but weaker in other cash markets amid reduced demand for replacements. The CME feeder cattle index for 1 October was placed at $95.36/cwt; off $0.13/cwt and $1.51/cwt lower than last report.

CORN futures on the Chicago Board of Trade (CBOT) closed higher Monday. DEC’09 corn futures finished at $3.414/bu; up 8.0¢/bu but 44.75¢/bu under last report. The MAY’10 contract closed at $3.632; up 7.75¢/bu and 3.0¢/bu higher than last Monday. Weather worries over frost potential, a weaker US dollar, higher-than-expected exports, and chart signals for profits after last Friday’s sell off were supportive. A frost is forecast next weekend for the US Corn Belt and is expected to hurt immature corn there. USDA put the US corn crop at 57 per cent mature, harvest progress at 10 per cent, and corn in good-to-excellent condition at 70 per cent; up 2 points from last week. Traders expected USDA to report the US corn crop at 50 per cent mature and 10-12 per cent harvested. USDA put corn-inspected-for-export at 38.504 mi bu vs. expectations for 32-35 mi bu. US cash corn bids were mixed; weaker where harvest pressure was on and steady to firm where harvest is yet to begin. Cash corn in the US Mid-Atlantic states was steady to firm ranging from 3.0-7.0¢/bu higher. Funds bought 9,000 contracts while large speculators turned net bullish covering nearly 23,000 net short positions. Speculate with 30 per cent of the unsold ’09 crop.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed mixed on Monday. NOV’09 soybean futures closed at $8.85/bu; even with last Friday’s close but 8.75¢/bu lower than a week ago. The MAR’10 soybean contract closed at $8.906/bu; off 4.5¢/bu. Expectations for colder weather and the rally in corn were supportive. USDA estimated the US crop 15 per cent harvested vs. the 5-year average of 36 per cent. USDA placed the US soybean crop at 67 per cent good-to-excellent condition. Exports were neutral with USDA reporting soybeans-inspected-for-export at 12.482 mi bu vs. expectations for 11-16 mi bu. Cash soybeans in the US Midwest ranged from weak to firm on mixed harvest reports. Cash bids for soybeans in the US Mid-Atlantic States were steady amid slow farmers selling. Large speculators changed from net bear to net bull covering 2,446 short positions. If the frost comes early enough it could pay to speculate with the remaining 30 per cent of the ’09 crop.

WHEAT futures in Chicago (CBOT) were steady on Monday. DEC’09 futures closed at $4.622/bu; up 1.5¢/bu and 10.75¢/bu higher than last report. The JULY’10 wheat contract closed at $4.864/bu; up 1.0¢/bu but 18.75+¢/bu cents lower than last Monday. Mild gains were made on this technical bounce after recent sharp declines. Exports were slightly bearish with USDA reporting 18.033 mi bu of wheat-inspected-for-export vs. expectations for 19-21 mi bu. Rains in the US Northern Plains were slowing harvest with USDA placing harvest at 97 per cent complete vs. 100 per cent for this time of year. Funds bought 1,000 contracts while large speculators covered 4,185 short positions. It is still a good idea to get up to 60 per cent of the ’10 crop priced at this time.