28 January 2009

4 minute read

North America

LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) were down below moving averages on Monday. FEB’09LC futures closed down $0.325/cwt at $82.350/cwt. The APR’09LC contract closed at $83.825/cwt; off $0.350/cwt. The sour economy weighed on prices despite fund buying last Friday. Even though USDA reported bullish numbers on Friday the break in the US Stock market late Monday was too much to ask to hold gains. USDA put 11.234 mi head on feed (93 per cent compared to a year ago) while marketings were up 2 per cent from a year ago at 1.683 mi head. Placements were 1.647 mi head; 97 per cent of this time last year. A big setback in lean hogs also weighed on prices. USDA put choice boxed beef at $14.85/cwt, off $0.46/cwt. Cash cattle were off with USDA 5-area price being placed at $81.93/cwt, off $1-$2/cwt. Packer demand was steady amid packer profits. According to HedgersEdge.com, the average packer margin was raised $71.40/head from two weeks ago to a positive $54.30/head based on the average buy of $83.14/cwt vs. the average breakeven of $87.33/cwt. It might be a good idea to hold cattle a little longer if you can.

FEEDER CATTLE at the CME closed down on Monday with the exception of the nearby January contract. The JAN’09FC contract settled at $93.750/cwt; up $0.100/cwt. MAR’09 futures were down $1.025/cwt to $91.725/cwt. Feeders followed live cattle with corn futures and the break in the stock market weighing prices. January gained due to a narrowing discount to the CME Feeder Cattle Index. That Index for 22 January was reported at $95.34/lb, down $0.18/lb. The January contract will expire on Thursday. Technical spreading of March/June and sell stops in the March contract did not help. Cash feeder prices in Oklahoma City were weaker to $2/cwt. Hopefully a couple months of feed was bought on advice two weeks ago.

CORN futures on the Chicago Board of Trade (CBOT) closed up somewhat on Monday. MAR’09 corn futures closed at $3.936/bu; up 3.25 ¢ /bu. The JULY’09 contract closed at $4.152/bu; up 3.2 ¢ /bu. Continued dry weather in Argentina and some fund buying were supportive factors while concerns for questionable demand expectations and a down-turn in the US stock market weighed on the prices. Weather forecasts did call for some moisture in Argentina limiting gains. Lack of technical strength is a contributing factor keeping corn under the $4.00/bu mark. Funds bought between 3,000-4,000 contracts while cutting net bear positions by about 7,000 lots. It might be a good idea to wait and see where these prices are headed before pricing any more of the 2009 crop.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed near even on Monday. MAR’09 soybean futures closed at $10.090/bu; near even with last close. The NOV’09 contract closed at $9.454/bu; up 2.25 ¢ /bu. Forecasts for better weather in Argentina rocked the markets today. Dry weather and fund buying catalyzed prices at the start of trading but that quickly faded. Fund positions were near unchanged with the CFTC reporting some funds cutting net bull positions in CBOT soybeans. Producers did not seem to be turning loose of many beans. USDA placed soybeans-inspected-for-export at 37.390 mi bu vs. expectations for between 23-35 mi bu. China bought 31 mi bu. It might be a good idea to price binned soybeans on upticks.

WHEAT futures in Chicago (CBOT) were up on Monday. The MAR’09 contract closed at $5.924/bu; up 9.75 ¢ /bu. JULY’09 wheat futures were up 10.0 ¢ /bu at $6.162/bu. Gains were influenced by expectations for improved demand on events in Argentina. The Argentinean government was reportedly blocking exports to protect food supplies amidst an ongoing drought. In other news Nigeria cancelled a large order while South Africa made a move to lower its wheat import tax by 2 per cent and Iraq announced plans for a tender to purchase enough wheat to make it through June 2009. Russian cash wheat made gains while Israel tendered an offer to buy 25,000 tonnes (918,600 bu) of feed wheat. Cold weather was not seen as a problem for US Plains wheat. The CFTC Commodity Traders Report showed funds buying 3,000 contracts while large speculators increased net short positions in CBOT wheat by about 9,200 lots. It would be a good consideration to hold off pricing any more wheat.