18 January 2011

4 minute read

North America

LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) finished up on Monday. The FEB' llLC contract closed up $0.575/cwt at $106.950/cwt. The APR' llLC contract closed at $111.450/cwt, up $0.900/cwt. AUG' l1LC futures closed at $109.750; up $l.OOO/cwt. Fears over harsh weather slowing supplies were supportive. Cold weather slows growth rates and hampers delivery. Pit sources report optimistic thinking that new highs are still on the horizon. Short covering was a major play. There was some concern over last week's lower processing rate as traders suspect packers want to "push" meat prices higher by cutting beef production. Last week's slaughter was down 1.24 per cent from this time last year. Cash beef prices traded between $105 0 $106/cwt. USDA reported the 5 - area price at $105.52/cwt. USDA put the choice beef price at $165.83/cwt, down $0.47/Cwt. According to HegersEdge.com the average packer margin was a negative $27.30/head based on the average buy of $105.88/cwt vs. the average breakeven of $103.80/cwt.

FEEDER CATTLE at the CME finished up on Monday. The JAN' llFC contract finished at $122.300/cwt; up $0.700/cwt. APR' llFC futures finished at $124.175/cwt; up $0.975/cwt. The AUG' 11FC contract settled at $125.450/cwt, up $0.950/cwt. Feeders finished higher despite higher corn prices on higher live cattle prices. May/March spreading was noted as funds moved longs to deferred months. Estimated receipts at the Oklahoma National Stockyards in Oklahoma City were placed at 9000 head vs. 9656 last week and 7220 this time last year. Feeder prices were considered firm while calf prices were moderate to weaker. The CME feeder index was placed at 123.38 lib; off 0.21 lib from last Friday.

CORN futures on the Chicago Board of Trade (CBOT) finished up on Monday. The MAR' 11 contrac1 closed at $6.070; up 12.0 /bu. The DEC' 11 contract closed at $5.480; up 6.0 /bu. Both corn and soybean futures closed higher on worries about hot, dry weather in Argentina and Brazil while technical buying sentiment that last week's sell-off was overdone was supportive. Funds bought nearly 14,000 lots. Dry weather in South America is seen as stressing the corn and soybean crops and depleting soil moisture. Outside gains in crude oil were also supportive. Several floor sources said that traders were positions ahead of the Wednesday release of the USDA January crop production, supply/demand, quarterly stocks and U. S. winter wheat acreage reports. Ending stocks for both soybeans and corn should be supportive Cash bids for corn were steady to weaker on good farmer selling. Prices look good for speculating with the remaining 30 per cent of the 2011 crop.

SOYBEAN futures on the Chicago Board of Trade (CBOT) finished up on Monday. JAN' 11 futures closed at $13.732lbu, up 15.5 Ibu. The MAR' 11 contract closed at $13.804/bu; up 15.5 /bu. NOV' 11 soybean futures closed up 6.0 Ibu at $12.8lb76lbu. South American hot weather was very supportive 0f soybeans. Higher crude oil prices due to a leak in the Alaskan pipeline also helped. Fund buying was moderately active with funds buying near 5,000 lots. Cash soybeans were steady-to-firm amid slow farmer selling. Position rebalancing ahead of USDA's crop report was noted. It is a good opportunity to speculate with the remaining 40 per cent of the 2011 crop.

WHEAT futures in Chicago (CBOT) closed down on Monday. The MAR' 11 wheat contract closed at $7.672lbu; down 6.75 /bu. JULY' 11 futures finished down 4.25 Ibu at $8. 166lbu. Fund selling was pressured by fund rebalancing, long liquidation, and short covering. Funds started the day buying over 1,000 lots but ended it by selling 3,700. Egypt buying and more rainfall in Australia leading to more flooding and further crop damage were supportive. Cash bids for hard red winter wheat were steady-to firm in the U.S. Plains. Hopefully 75 per cent of the 2011 crop has been priced on previous advice.

DAIRY CLASS III futures on the Chicago Mercantile Exchange (CME) were mixed on Monday with nearbys up and deferreds down. JAN' IIDA futures were up $0.02/cwt at $13.35/cwt. The MAR' liD) contract finished at $14.60/cwt; up $O.17/cwt. JULY' IIDA futures finished at $ 15.90/cwt; down $0.06/cwt. Contrary to last week the butter market was quiet. Blocks increased somewhat. NDM report whey prices higher last week with tight current supplies amid mostly contracted production.

LEAN HOGS on the CME finished up on Monday. The FEB' llLH contract closed up $0.275/cwt at $79.700/cwt. The APR' 11LH contract closed at $84.650/cwt; up $0.600/cwt. AUG' 11LH futures closed at $92.425/cwt; up $0. 125/cwt. Bullish fundamentals indicate smaller supply outlook and hopes of more export sales growth. Bear spreading was noted as funds moved long positions out of February to deferred contracts. Over 12,000 such spreads were noted. USDA placed the average pork price at $78.55/cwt. Exports from Germany, France, and Denmark are seen to be harassed by dioxin-tainted feed. South Korea has banned meat from Germany and Russia is considering banning them as well. Dioxins are formed by burning waste and have been shown to contribute to increased cancer rates. USDA put the average cash pork price at $78.55/cwt; up $O.4l1cwt. The CME lean hog index was placed at 73.06 lib; up 0.43 lib. According to HedgersEdge.com, the average packer margin was placed at a positive $9.25/hd based on the average buy of$52.89/cwt vs. the average breakeven of$56.25/cwt.