4 July 2012

3 minute read

North America

DAIRY CLASS III futures on the Chicago Mercantile Exchange (CME) closed down on Monday. JULY’12DA futures closed at $16.560/cwt; down $0.31/cwt and $0.39/cwt lower than last Monday’s close. The SEPT’12DA contract closed down $0.18/cwt at $17.55/cwt but $0.08/cwt higher than last report. Fluid demand has increased somewhat as slowing production is keeping supplies in balance. Hot weather has been affecting production. Commercial disappearance of milk for April 2012 declined 3.5% year over year. Class III futures were: 3 months out = $16.71/cwt ($0.02/cwt over last Monday); 6 months out = $17.14/cwt ($0.10/cwt over last report); 9 months out = $17.09/cwt ($0.15/cwt over last Monday’s close); and 12 months out = $16.96/cwt ($0.16/cwt higher than last report).

LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) finished down on Monday. The AUG’12LC contract closed at $119.275/cwt; down $1.175/cwt but $3.40/cwt higher than last report. DEC’12LC futures closed at $126.850/cwt; down $0.55/cwt but $3.05/cwt higher than last report. Hot weather continuing to grip much of the US is contributing to negative demand. Lackluster demand and beef prices were mixed after declining last Friday. Futures are also being pressured by the market’s premium to cash prices. USDA put boxed beef at $195.29/lb; up $0.63/lb from Friday but $1.140/cwt lower than a week ago. According to HedgersEdge.com, the average packer margin was increased $14.20/head from last week to a positive $70.95/head based on the average buy of $116.39/cwt vs. the breakeven of $121.42/cwt. USDA put the 5-area average price at $116.49/cwt; $0.01/cwt lower than last report. See chart:

FEEDER CATTLE at the CME closed lower on Monday. The AUG’12FC contract closed $1.800/cwt lower at $149.650/cwt but $1.800/cwt higher than last report. NOV’12FC futures closed at $155.550/cwt; down $1.500/cwt. Feeders were weighed down by higher feed costs and hot weather seen as limiting weight gains. For Monday July 2 actual receipts at the closely watched Oklahoma City market were put at 1,687 head vs. last week’s 7,448 head and no sale this time last year. Numbers were limited due to the upcoming 4th of July Holiday. The CME feeder cattle livestock index was placed at 147.66; down 0.09 and 3.75 lower than last report. See chart:

CORN futures on the Chicago Board of Trade (CBOT) closed up on Monday. The JULY’12 contract closed at $6.924/bu; up 20.0¢/bu and 61.5¢/bu over last report. The DEC’12 contract closed at $6.556/bu; up 21.0¢/bu and 61.75¢/bu over last Monday’s close. Worries of lower yield potential continue to support prices. Funds were bullish but weakness in outside markets limited gains. Exports were neutral with USDA putting corn-exported-for-export at 22.214 mb vs. estimates for 20-24 mb and compared to the 35.4 mb needed to stay on pace with USDA projection demand estimates. See chart:

The market is reacting fiercely to the weather. It would be a good time to consider pricing another portion of the 2012 crop.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed higher on Monday. The JULY’12 contract closed at $15.322/bu; up 19.5¢/bu and 49.75¢/bu over last Monday. NOV’12 futures closed at $14.380/bu; up 10.25¢/bu and 12.75¢/bu over last report. Weather and chart signals were supportive. Exports were neutral to bullish with USDA putting soybeans-inspected-for-export at 13.898 mb vs. estimates for 10-15 mb and the 13.3 mb needed to stay on par with USDA’s demand projections. Please see chart:

Weather will remain a factor but since soybeans are a later maturing crop than corn and there are some prospects for lower prices and profit taking.

WHEAT futures in Chicago (CBOT) closed up on Monday. JULY’12 wheat futures finished at $7.544/bu; up 15.5¢/bu and 30.25¢/bu over last report. The JULY’13 contract closed at $8.060/bu; up 8.25¢/bu and 26.75¢/bu over this time last week. Spillover from corn and soybeans and hot weather were supportive. Rumors that Russia is again lowering its grain production estimates were also supportive. Exports were neutral with USDA putting wheat-inspected-for-export at 21.466 mb vs. estimates for 18-24 mb. Technical signals for wheat futures are bullish.