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Weekly Roberts Market Report

by 5m Editor
12 October 2011, at 9:20am

US - Corn, soybean and wheat futures all finished up on Monday, whilst dairy futures finished down, writes Michael T. Roberts.

DAIRY CLASS III futures on the Chicago Mercantile Exchange (CME) closed down on Monday amid buyer liquidation and short covering. OCT’11DA futures finished at $17.92/cwt; off $0.11/cwt but $0.52/cwt higher than a week ago.

The JAN’12DA contract closed at $16.20/cwt; off $0.24/cwt but $0.10/cwt higher than last report. Friday’s increase on barrels didn’t hold up Monday dropping a nickel amid steady offers.

Milk futures reacted sharply plunging limit down but recovering a few cents by the close.

Cheese futures declined, losing in the November – January contracts. November and December Class III futures declined the most, falling $0.68/cwt and $0.64/cwt respectively. NDM futures were slow while whey futures were mixed. Futures are still discounted to cash prices. CWT accepted bids to help export 2.7 mi lbs of cheese for delivery through 2011. Pit sources are watching the slowly improving milk production along with increased component output.

A higher DOW close was supportive but could not offset downside pressure. Average futures prices for Class III milk are: three months out = $17.13/cwt ($0.50/cwt over last report); six months out = $16.61/cwt ($0.10/cwt higher than last Monday); nine months out = $16.48/cwt ($0.02/cwt higher than a week ago); and 12 months out = $16.60/cwt (even with last report).

LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) finished mixed on Monday with nearbys up and deferreds down. The OCT’11LC contract closed at $120.025/cwt down $1.950/cwt and $3.075/cwt lower than last report.

JUNE’12LC futures closed at $124.500/cwt; up $0.250/cwt and $0.60/cwt over last report. Market-ready supplies remain ample on drought-sent cattle in feedlots. Deferred contracts reflect tight supply fundamentals seven to eight months out from now.

Nearbys slumped despite supportive higher outside markets. Sluggish wholesale beef prices indicate slowing retail beef demand. Packer margins are the worst they’ve been in a while.

According to HedgersEdge.com, the average packer margin was lowered $51.70/head from last report to a negative $67.00/head based on the average buy of $120.67cwt vs. the average breakeven of $115.54/cwt.

FEEDER CATTLE at the CME closed up on Monday with the exception of the October 2011 contract. The OCT’11FC contract finished at $139.000/cwt, down $0.625/cwt and $2.000/cwt lower than a week ago.

The NOV’11FC contract settled at $143.125/cwt, up $0.775/cwt; and $0.275/cwt higher than last report. APR’12FC futures finished at $146.100/cwt; up $0.350/cwt but $0.100/cwt lower than this time last week.

At the Oklahoma National Stockyards in Oklahoma City, OK estimated receipts were placed at 8,000 head vs. 9,659 a week ago and 7,719 head this time last year.

Feeder steers and heifers were steady amid very light volume. Steer and heifer calves were steady. Demand was moderate-to-good for calves amid plain-to-average quality on slightly thin body conditions.

CORN futures on the Chicago Board of Trade (CBOT) closed up on Monday in light volume. The DEC’11 contract closed at $6.050/bu; up 5.0 ¢ /bu and 12.75 ¢ /bu over a week ago.

MAR’12 futures closed at $6.174/bu; up 4.75 ¢ /bu and 11.5 ¢ /bu higher than this time last week. The DEC’12 contract closed up 4.25 ¢ /bu at $5.722/bu and 9.75 ¢ /bu higher than a week ago.

Futures were supported by a weak dollar, firm outside markets, and oversold conditions. The US dollar index decreased 1.6 per cent making US corn a better buy for importers. Some upside potential exists on technical chart signals.

The market is waiting on USDA’s release of its World Agriculture Supply Demand Estimate (WASDE) due out at 8:30 am on Wednesday, 10/12/11. Corn prices have firm upside potential.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed up on Monday. Trading volume was up nearly 19 per cent from the most recent 30-day average. USDA’s WASDE report will fuel trading on Wednesday. NOV’11 soybean futures closed 19.25 ¢ /bu higher at $11.774/bu; even with this time last week.

The MAR’12 contract closed at $11.976/bu; up 18.25 ¢ /bu but 0.5 ¢ /bu lower than a week ago. Futures closed in a broad rally on news that France and Germany will be coming up with a plan to contain the monetary crisis developing in Europe.

A lower US dollar was supportive. As of last Friday large funds decreased net bull positions by nearly 17,000 contracts.

WHEAT futures in Chicago (CBOT) finished up on Monday in light volume. The DEC’11 contract closed at $6.114/bu; up 4.0 ¢ /bu but 0.75 ¢ /bu lower than last report.

JULY’12 wheat futures finished at $6.830/bu; up 2.0 ¢ /bu but 9.75 ¢ /bu lower than this time last week. Volume was light, placed at 50,500 contracts. This was well below the 30-day average of 74,720 lots and the three-quarter average of 102,572 contracts.

Wheat futures were supported by a weaker US dollar. Markets closed well below session highs as traders locked in profits. Traders will wait to see what is in the USDA WASDE report due out Wednesday morning.

5m Editor