11 March 2009

5 minute read

North America

LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) finished up Monday. The APR’09LC contract closed at $83.20/cwt; down $0. 750/cwt but $0.75/cwt lower than a week ago. The AUG’09LC contract was up $0.425/cwt at $82.625/cwt but $0.325/cwt lower than last Monday. Smaller show lists, short covering, and improved fundamentals seem to be kicking in. A slump in the Dow/Jones at the end of its trading day took some wind out of live cattle sales. Technical action was supportive as fund rolling from April into June futures remained light and local traders unwound bear spreads in April futures. The roll is done by funds moving some spot April long positions into the nearby-June contract. USDA put choice boxed beef at $135.23/cwt, up $0.23/cwt early Monday. Early week expectations for cash cattle are steady to $1 higher as USDA placed its 5-area average at $81.605/cwt, $0.16/cwt higher than last Monday. Processors are expected to take a harder look at show lists this week as margins continue to slide. According to HedgersEdge.com the average packer margin was lowered $9.45/head from this time last week to a negative $31.55/head based on the average buy of $81.53/cwt vs. the average breakeven of $79.09/cwt. This should affect demand and price later in the week. However, processing lines have been expanded to Saturday shifts in many places so the hold out is not expected to last long. It would be a good idea to hold off pricing any corn for about a week. Hold fats until they are ready to sell.

FEEDER CATTLE at the CME closed up on Monday behind live cattle and outside market strength. MAR’09FC futures were up $0.225/cwt to $90.725/cwt; however this closing was $0.275/cwt lower than a week ago. The APR’09FC contract closed at $90.925/cwt; up $0.300/cwt but $1.425/cwt lower than last Monday. Spreaders bought back months and sold nearbys. Feeders were supported by higher fat cattle, short covering, and front-month’s discounts to the CME Feeder Cattle index. The CME Feeder Cattle Index for March 5 was placed at $91.77/cwt, up $0.06/cwt. Cash cattle were $1-$4/cwt higher last week in Oklahoma City. Wait to price corn until next week and only price what you need to get you to good grass.

CORN futures on the Chicago Board of Trade (CBOT) closed up somewhat on Monday. MAR’09 corn futures closed at $3.572/bu; up 4.5 ¢ /bu and 13.+ ¢ /bu over last Monday. The JULY’09 contract closed at $3.752/bu; up 4.5 ¢ /bu and 15.+ ¢ /bu higher than a week ago. DEC’09 corn futures finished at $3.960/bu; up 9.25 ¢ /bu and 15.+ ¢ /bu above last Monday’s close. Higher crude oil prices, the new USDA Secretary’s pronouncement that increasing the ethanol blend rate in US gasoline to 12-13 per cent from 10 per cent could be done, better-than-expected exports, a Dow-Jones that mostly held its own during the day, and wet weather slowing field prep in the corn belt were supportive. The market is holding its collective breath. Some positioning ahead of Wednesday’s World Agriculture Supply Demand Estimate (WASDE) report was noted. The industry expects USDA to show 08/09 ending stocks up 10 mi bu at 1.8 bi bu on decreased demand and increased production potential. USDA placed corn-inspected-for-export at 40.6 mi bu vs. expectations for between 25.0-30.0 mi bu. Funds bought over 2,000 contracts reducing net bear positions by 6,800 lots for the week ended 3 March. Cash corn bids were steady amid quiet producer interest as they take a “wait-and-see” attitude for a little higher price. It might be a good idea to get the ’08 crop out of the bin, clean it out ready for the ’09 crop, and price up to 45 per cent of the 2009 crop if you haven’t done so already.

SOYBEAN futures on the Chicago Board of Trade (CBOT) were mixed on Monday. MAR’09 soybean futures closed at $8.810/bu; up 2.0 ¢ /bu and 32.75 ¢ /bu over last week. The JULY’09 contract was off 3.0 ¢ /bu at $8.630/bu. The NOV’09 contract closed at $8.174/bu; up 2.5 ¢ /bu and 24.5 ¢ /bu over last Monday. Profit taking on nearby’s and mixed feelings over uncertain economic and fundamental outlooks pressured some prices, according to several floor sources. Prices were supported by shortcovering and stronger crude-oil prices. Slow farmer selling held cash prices steady. Trade expectations for the USDA WASDE for ending stocks were lowered to 200 mi bu. We’ll see early Wednesday. USDA placed soybeans-inspected-for-export at 27.2 mi bu vs. expectations for between 23.0-26.0 mi bu. Funds sold around 1,000 contracts. Large speculators increased net short soybeans by about 8,200 lots. If you didn’t get your old crop beans sold last week you’ve got a second chance. It is still a good idea to get up to 25 per cent of the ’09 crop priced now.

WHEAT futures in Chicago (CBOT) closed down on Monday. The MAR’09 contract closed at $5.130/bu; off 3.25 ¢ /bu but 63.5 ¢ /bu higher than a week ago. JULY’09 wheat futures finished down 3.5 ¢ /bu at $5.352/bu but 17.5 ¢ /bu higher than last Monday. Profit taking, a stronger US dollar, and export worries pressured prices. USDA placed wheat-inspected-for-export at 14.7 mi bu vs. expectations for between 12.0-16.0 mi bu. This was 3.5 mi bu higher than last week but 236.1 mi bu behind last year’s pace. Funds sold right at 1,000 contracts increasing net bear positions by 7,100 lots. If you held sales on last week’s advice it would be a good idea to get up to 25 per cent of the ’09 crop sold at this time.