25 October 2012

7 minute read

North America

MAR’13 corn futures closed at $7.592/bu; down 0.25 › /bu but 22.0 › /bu higher than last report. The DEC’13 contract closed at $6.332/bu; down 1.5 › /bu but 7.0 › /bu higher than a week ago. A lack of fresh news kept traders mostly on the sidelines as corn futures traded a range of +/- 5 › /bu from the opening to the close. Export numbers were bearish. USDA put corn-inspected-for-export at 9.605 mb vs. estimates of 12-15 mb. This is well below the 22.5 mb needed to stay on pace with USDA’s most recent demand projection of 1.15 bb. Please see chart:

The national average basis is -14 › /bu under CBOT December futures. Basis in North Carolina ranged from +23 to -34 › /bu of December futures with cash prices ranging from $7.85/bu - $7.91/bu.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed mixed on Monday with nearbys up and deferreds down. NOV’12 futures closed at $15.464/bu; up 12.25 › /bu and $1.17/bu higher than last report. The MAR’13 contract closed at $15.176/bu; up 8.0 › /bu and 51.75 › /bu higher than a week ago. NOV’13 futures closed at $13.370/bu; off 0.75 › /bu but 12.75 › /bu higher than last Monday. Soybeans were supported by production doubts from South America closing on double-digit gains, tight stocks, and strong technical signals amid long liquidation. The November 2012 contract expires Friday and volatility is expected. Exports were very supportive with USDA putting soybeans-inspected-for-export at a blistering 61.422 mb vs. estimates for 41-51 mb. This was well above the 23.6 mb needed to stay on pace with USDA’s 1.265 bb demand projection. Please see chart:

Soybean basis levels remain firm on slowing physical grain movement. U.S. cash markets are unusually strong for this time of year due to tight US and global stocks. The national average basis for soybeans is - 47.0 › /bu under the nearby CBOT November futures. Basis in North Carolina was -$1.00/bu to -1.0 › /bu with cash prices ranging from $14.26-$15.47/bu.

WHEAT futures in Chicago (CBOT) closed up on Monday. DEC’12 wheat futures finished at $8.782/bu; up 5.75 › /bu and 30.0 › /bu higher than a week ago. The JULY’13 contract closed at $8.564/bu; up 8.25 › /bu and 23.5 › /bu higher than last report. Tightening global stocks, bullish funds, and optimism for U.S. exports picking were supportive. Ukraine on Friday said it could run out of exportable wheat in November. Both Australia and US wheat producing areas still are moisture-negative. USDA put wheat-3 inspected-for-export at 16.402 mb vs. estimates for 12-15 mb. Soft Red Winter Wheat’s national average basis was placed at -37 › /bu under CBOT December futures. Hard Red Winter Wheat was placed at - 56 › /bu under Kansas City December futures. Hard Red Spring Wheat national average basis was placed at -56 › /bu under the Minneapolis December futures contract. New crop wheat in North Carolina ranged from $7.22-7.97/bu.

DAIRY CLASS III futures on the Chicago Mercantile Exchange (CME) closed down on Monday with the exception of the front month October. The OCT’12DA contract closed up $0.01/cwt at $21.05/cwt but $0.11/cwt lower than last report. DEC’12DA futures closed at $20.49/cwt; down $0.06/cwt and $0.24/cwt lower than a week ago. The MAR’13DA contract closed at $19.20/cwt; down $0.10/cwt but $0.15/cwt over last report. US production is improving but still below year-ago levels. High grain prices continue to plague milk production profitability. Heavy culling is most likely to continue as income-over-feed costs remain tight and get tighter. Effects of the severe drought across much of the U.S. linger. Both milk cow numbers are 6,000 head below a year ago and milk production is 0.4% lower than a year ago. Dairy producers continue to exit dairying for good while others reduce herd size. Dairy cow slaughter is 7% over a year ago. With a decline in cow numbers and no increase in milk-per-cow increase USDA is projecting no increase in 2013 milk production. Cheese stocks are reported somewhat tighter, the lowest for the month of September since 2009. Butter stocks continue to decline to the lowest since January 2012. Butter demand is good but there is concern that higher retail prices could slow buying interest. Exports are feared to be slowing due to a deepening European economic crisis. Class III futures were: 3 months out = $20.71/cwt ($0.21/cwt lower than last report); 6 months out = $20.10/cwt ($0.04/cwt lower than a week ago); 9 months out = $19.67/cwt ($0.05/cwt higher than last Monday); and 12 months out = $19.38/cwt ($0.03/cwt over last report). This week variable cost of production for the average North Carolina conventional 200 cow dairy with a 23,000 lb average is $22.55/cwt; $0.22/cwt higher than last Monday.

LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) closed up on Monday. The OCT’12LC contract closed at $126.400/cwt; up $0.100/cwt and $2.25/cwt over last report. DEC’12LC futures closed at $127.275/cwt; up $0.475/cwt even with Friday’s close but $1.300/cwt higher than a week ago. APR’13LC futures closed at $134.950/cwt; up $0.175/cwt and $1.55/cwt over this time last week. Higher wholesale beef prices and tightening supplies were supportive while gains in grains held prices back. Last Friday’s USDA report showed even larger year-to-year declines in cattle placed on feed or marketed than anticipated. Supplies of slaughter-ready cattle are tightening and should continue through the rest of the year into 2013. Processing year-to-date is off 4.1% from this time last year while beef output is down only 2.0%. This is a result of heavier cattle being processed. USDA’s latest boxedbeef prices were placed at $198.35/cwt; up $1.67/cwt and $4.39/cwt over last report. According to HedgersEdge.com, the average packer margin was raised $18.10/hd to a negative $14.30/head based on the average buy of $124.63/cwt vs. the breakeven of $123.26/cwt. Late Monday, October 15, 2012 USDA put the 5-area weekly steer average at $126.16/cwt $2.96/cwt over last week at this time. Please see graph:

FEEDER CATTLE at the CME closed down on Monday. The OCT’12FC contract closed down $0.475/cwt at $145.675/cwt but $1.325/cwt higher than a week ago. NOV’12FC futures closed at $147.750/cwt; down $0.625/cwt but $2.20/cwt over last report. APR’13FC futures closed at $153.400/cwt; down $0.803250/cwt but $1.900/cwt higher than this time last Monday. Short-covering and long liquidation weighed on prices. For Monday 10.22.12; estimated receipts at the closely watched Oklahoma City market were put at 9,700 head vs. last week’s 8,923 head and 9,478 head this time last year. Feeder steer and heifers were $1.00-$3.00 higher amid very good demand. Steer calves were $2.00- $6.00 higher with heifers steady. Stocker buyers were seeking calves for winter wheat pastures. Quality was reported mostly average for calves. Recent rains in the Southwest and North Texas have put pastures in fair shape. Pasture reports from Northwest Oklahoma show they still need rain.

The CME feeder cattle livestock index was placed at 145.03 up 0.23 and 1.02 higher than last report. Please see chart:

LEAN HOGS on the CME finished mixed on Monday with nearbys off and deferreds gainers. The DEC’12LH contract closed at $78.675/cwt; off $0.950/cwt but $0.125/cwt over last report. APR’13LH futures closed at $90.450/cwt; down $0.350/cwt but $0.50/cwt higher than this time last week. The JUN’13LH contract closed at $100.900/cwt; up $0.075/cwt. Rising pork stocks and higher grain prices weighed on prices. Nearby contracts declined on expectations for softer demand in the coming weeks as pit sources said they think the pork market has reached a peak. This time of year pork demand tends to soften. The USDA cold-storage report published after trading showed a rise in pork supplies. The report showed a 7.7% increase in storage at 630.7 mi lbs. USDA put the lean pork cutout at 88.64 late Monday, down $0.44/cwt but $0.78/cwt over last report. Cash hog prices were steady-to-weaker on Monday as processors expect more hogs to be offered for sale this week. According to HedgersEdge.com, the average packer margin was raised $3.30/hd at a positive $7.80/head based on the average buy of $61.16/cwt vs. the breakeven of $64.02/cwt. The latest CME Lean Hog index was estimated at 84.66; up 0.53 and 4.33 over a week ago.