CORN futures on the Chicago Board of Trade (CBOT) finished up on Monday. The MAY’11 contract closed at $7.776 up 8.0¢/bu and 17.5¢/bu over last week at this time. The DEC’11 contract closed at $6.572; up 4.25¢/bu and 11.75¢/bu over last report. Dwindling U.S. corn stocks continued to support corn futures. Unless corn exports slow the U.S. is treading thin ice and may run the risk of depleting its corn supplies before harvest amid stocks at their lowest levels since the 1930s. Good corn planting weather has helped producers get off to their best start yet as intentions show farmers plan to plant the second largest area to corn since World War II. Everybody and his brother are planting corn or cotton. Tight local corn supplies have encouraged the Chinese government to sell more off-quality wheat from government reserves for livestock feed. Funds bought more corn positions raising net long positions to their highest levels in four weeks after last week’s USDA stocks report. Funds continue to build long positions and if this keeps up any glitch in the corn supply will have a huge impact on prices. Fundamentally corn continues to show bullish strength.
SOYBEAN futures on the Chicago Board of Trade (CBOT) finished fell on Monday. The MAY’11 contract closed at $13.684/bu; down 23.75¢/bu and 15.75¢/bu lower than last Monday. NOV’11 soybean futures closed off 15.75¢/bu at $13.802/bu and 8.75¢/bu lower than last report. Soybeans saw their largest decline in a month, sliding almost 2% as South America reports a bumper crop harvest there and growing concerns that China may slow soybean imports. Early Monday Chinese officials said it is highly likely that some cargoes of soybeans will be deferred or even cancelled due to poor crush margins. Barge basis for soybeans was steady to weak early Monday amid slow grain movements and slack demand. Lower crude oil futures put pressure on soybeans, particularly on the soybean oil contract. Fundamentally soybeans are looking more bearish.
WHEAT futures in Chicago (CBOT) closed down on Monday with the exception of the nearby May contract. The MAY’11 wheat contract closed at $7.982/bu; up 0.75¢/bu and 8.25¢/bu over last report. JULY’11 futures finished down 0.5¢/bu at $8.316/bu but 5.0¢/bu higher than this time last week. Wheat prices were fairly firm on corn strength. However, prices were limited due to forecasts for rain in the U.S. Plains. Profit taking also weighed on prices. China said last Tuesday it will sell another significant portion of state wheat reserves because quality problems. This is the second such sale for animal feed production amid tight local corn supplies. India is yet to decide whether it will allow exports of wheat this year. Fundamentally wheat has some strength. Weather markets will begin to weigh in.
DAIRY CLASS III futures on the Chicago Mercantile Exchange (CME) closed up on Monday. The APR’11DA contract finished at $16.78/cwt; up $0.7/cwt and $0.26/cwt higher than a week ago. JULY’11DA futures finished at $17.99/cwt; up $0.29/cwt and $0.99/cwt over last report. May, June, and July futures were up a dollar in the last few days. Traders are anticipating rising cheese prices. Bulls have taken over in the pits. Blocks and barrel bids went unfilled today further strengthening prices. Butter prices were steady-to-firm. While milk prices are higher profits are being offset by higher feed costs. This will lead to small or no herd growth in 2011. USDA put 2011 milk production at 195.6 bi lbs; up 1.6% year-over-year from 2010. California milk Class I prices are declining in April as grass and milk production pick up. Beginning July 19 Fonterra will begin to auction industrial cheddar cheese.
LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) finished mixed on Monday with everything but April and August losing ground. The APR’11LC contract closed at $119.025/cwt, up $0.200/cwt but $3.35/cwt lower than a week ago. AUG’11LC futures closed at $118.725/cwt; up $0.050/cwt but $3.40/cwt off from last report. Cattle rebounded or held steady with small losses after five straight days of profit taking and sell stops. There is talk in the pits that cattle have hit a seasonal peak. USDA early Monday put choice boxed beef at $189.97; down $0.62/cwt and $1.61/cwt lower than last report. Cash cattle were steady-to-firm amid light volume. USDA put the 5-area average price at $123.20/cwt; $1.64/cwt higher than this time last week. Futures were discounted to cash due to declines in packer margins giving pit traders concerns. Beef demand will most likely slow due to slower clearance of fresh beef on retail shelves due to higher prices. In addition, believe it or not weaker crude oil prices and metal futures dampened interest in beef futures from large funds. According to HedgersEdge.com, the average packer margin was lowered $26.85/head to a negative $30.55/head based on the average buy of $122.90/cwt vs. the average breakeven of $120.45/cwt.
FEEDER CATTLE at the CME closed lower on Monday. APR’11FC futures finished at $133.875/cwt; down $0.725/cwt and $3.875/cwt lower than a week ago. The AUG’11FC contract settled at $137.625/cwt, off $0.925cwt and $7.650/cwt off from last report. All contracts were lower as feeder lots were full and fat cattle movements were sluggish on lackluster packer demand. Higher corn and feed wheat prices are hitting stocker growers where it hurts. However, today in Oklahoma City the Oklahoma City National Stockyards reported higher cattle movement with receipts estimated at 12,200 vs. 8,262 last week and 12,108 a year ago. Compared to last week feeder steer prices were $3-$5/cwt lower while feeder heifers were $1-$3/cwt lower. Calves were $3-$4/cwt lower amid light calf volume. The latest CME feeder cattle index was placed at $136.07; up $0.06 and $1.64 over last report.
LEAN HOGS on the CME finished up on Monday with the exception of the August 2011 contract. The APR’11LH contract closed at $93.250/cwt; up $0.100/cwt but $0.95/cwt lower than a week ago. AUG’11LH futures closed at $100.85/cwt; down $0.025/cwt and $3.25/cwt off from last report. Higher pork prices on faltering beef and talk of higher cash trade this week were supportive. Seasonal trend-strength in hog prices ahead of Memorial Day was seen as positive in the pits. Export markets were very supportive as Japan increased imports due to the disaster there and South Korea buys more amid herd reductions on reports of foot-and-mouth disease there limiting internal supply. Higher corn prices kept the lid on however hog prices. Cash processor demand was flat on Monday while they take a “wait-and-see” attitude toward price movement. These same processors may have to bid up prices later in the week to fill processing lines. USDA put the pork cutout at $94.28/cwt; up $0.32/cwt and $0.16/cwt higher than last week at this time. According to HedgersEdge.com, the average packer margin was at a positive $0.85/head based on the average buy of $67.82/cwt vs. the average breakeven of $68.13/cwt. The latest CME lean hog index was placed at $91.23; up $0.20 and $2.62 over last report.
Roberts Commodity Report © Copyright 2011. Michael T. Roberts