CORN futures on the Chicago Board of Trade (CBOT) finished up on Monday. The MAY’11 contract closed at $7.624 up 25.25¢/bu and 10.75¢/bu over last week at this time. The DEC’11 contract closed at $6.814; up 16.0¢/bu and 13.25¢/bu higher than last report. Excessive wet weather delaying planting in the U.S. Midwest and bullish speculators were supportive while exports were neutral to bearish due to high U.S. corn prices. Heavy rains and storms in the eastern and southern U.S. Midwest crop areas look to cause flooding and hold corn planting progress. Corn yields are reduced the later planting is held off. Planting after May 15 is considered late planting. USDA put the U.S. corn crop at 9% planted as of Monday, April 24, 2011. This number will most likely make the bulls run as it compares to a 23% five-year planting average, 46% planted this time last year, and a 13% average of trader estimates. Funds were net buyers of an estimated 13,000 lots. USDA placed corn-inspected-for-export at 33.235 mi bu; 5.36 mi bu lower than last week and lower than estimates ranging from 34-38 mi bu. Fundamentals remain bullish for corn.
SOYBEAN futures on the Chicago Board of Trade (CBOT) finished mixed on Monday with nearby futures gainers and deferreds losing some price value. The MAY’11 contract closed at $13.894/bu; up 9.0¢/bu and 45.25¢/bu higher than last Monday. NOV’11 soybean futures closed even with last Friday’s close at $13.824/bu but 33.25¢/bu over last report. Higher corn and wheat prices had a spillover effect on soybean futures. The soybean harvest is nearly complete in South America, so soy traders are turning their attention to the U.S. Midwest and Delta weather patterns. Wet weather in the Corn Belt is delaying field work and slowing early plantings. USDA won’t publish the soybean planting progress report until next week. Brazil announced it was harvesting a record 70.56 mi tonne (2.59 bi bu) soybean crop vs. last year’s 68.5 mi tonnes (2.52 bi bu) aided by good harvest weather. Argentina’s soybean harvest is proceeding rapidly in spite of rains plaguing some harvest areas. Argentina’s Agriculture Ministry increased its 2010/11 soybean harvest forecast to 50.4 mi tonnes (1.85 bi bu) from 50.0 mi tonnes (1.84 bi bu). Argentina is also the world’s largest exporter of soyoil and soybean meal. As of last Thursday the Argentinean government reported its soybean crop 52% harvested vs. 50% harvested this time last year. Funds were net buyers of 4,000 soybean futures contracts. Below is a graph of Argentinean soybean/corn production courtesy Reuters.
Fundamentally soybeans remain bullish and prices will continue to be volatile on weather concerns and fund trading.
WHEAT futures in Chicago (CBOT) closed up on Monday. The MAY’11 wheat contract closed at $8.260/bu; up 26.5¢/bu and 48.5¢/bu higher than last report. JULY’11 futures finished up 26.5¢/bu at $8.612/bu and 50.75¢/bu over last week. Floor sources said traders are worried about expanding wheat damage due to dry conditions in the wheat belt causing crop losses. Conditions look too wet in the north U.S. Plains and Canada increasing worries that producers won’t plant as much wheat as previously stated intentions. Additionally, severe weather conditions in the Northern Hemisphere are adding to price volatility. Exports were not supportive due to the high price of U.S. wheat. USDA put wheat-inspected-for-export at 28.017 mi bu vs. expectations for 30-32 mi bu. Iraq bought 300,000 tonnes (11.0 mi bu) of U.S. and Australian origin wheat in a tender issued two weeks ago. Government stocks in India fell by 35% from a year earlier since beginning purchases March 15. Supplies are shrinking due to a delay in crop harvesting in the northern grain growing regions. Funds were net buyers of 4,000 wheat contracts. Weather markets are contributing to price fluctuations.
DAIRY CLASS III futures on the Chicago Mercantile Exchange (CME) closed up on Monday with the exception of the May 2011 contract. The APR’11DA contract finished at $16.80/cwt; even with Friday’s close but $0.06/cwt higher than last week at this time. JULY’11DA futures finished at $17.40/cwt; even with Friday’s close but $0.10/cwt over last report. Cool wet weather in the Northeast region slowed field work activities and limited milk production increases. Demand was off increasing milk supplies due to the Easter holiday and many school closings for spring break. Warm weather in the Mid-Atlantic is seeing an increase in milk production due to greening pastures. Milk production in the Southeast is rapidly approaching peak level. Producers are showing more culling activity due to higher feed costs as supplemental hay feeding continues in most areas except the Southeast where pastures are coming flush. Cream demand has declined on slowing ice cream and cream cheese production while demand is steady-to-firm for bottle cream in metropolitan areas. Go Starbucks. USDA put milk production for the 23 surveyed states as of March 2011 at 15.8 bi lbs; up 2.4% from a year ago ahead of spring flush. Dairy producers are turning over herds more than ever. The first three months show 780,000 head went to slaughter, up 9.7% from 2010 and the most since 1997 according to USDA. However, cow numbers still increased 34,000 head during the January-March 2011 period. Western milk production is higher on new crop alfalfa and green chop feeding supplies. Processors report running at capacity. Increased butter and powder production is taking care of the spike in supply. Enthusiasm for higher milk prices continues to be dulled by growing feed and energy costs. Higher energy costs are also seen as the culprit for higher input costs across the board. Milk prices are generally reacting lower in advance of increased supply. CWT accepted 9 bids for export assistance for 2.152 mi lbs of cheese for delivery from now through October 2011.
LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) closed lower on Monday. The APR’11LC contract closed at $116.025/cwt, up $2.375/cwt and $2.15/cwt lower than a week ago. AUG’11LC futures closed at $114.450/cwt; down $2.225/cwt and $2.85/cwt down from last report. The DEC’11LC contract closed at $121.300/cwt; off $1.575/cwt and $2.025/cwt lower than this time last week. Technical selling by funds surprised floor traders even as lower futures were expected on higher grain prices. Fundamentally bearish in the short run, USDA’s Cattle on Feed report last week showed placements for heavy feeders up nearly 22%. March marketings and a drop in the average weight of cattle processed last week were supportive to nearby contracts. Marketings were up 4.5% over last year while weights were down 9 lbs from a week ago to 1,268 lbs/head 1,249 lbs/hd a year ago. Cattle futures are trending lower on seasonal pressure as sales slow on supermarket supplies already bought for the holidays. Boxed beef sales are generally pre-booked by the middle of May. Cash cattle were lower on slack sales as many processing plants did not operate on Monday. On Monday USDA put the 5-area average price at $119.15/cwt; $0.05/cwt over this time last week. USDA placed Monday’s process totals at 92,000 head vs. 120,000 head a week ago and 126,000 head this time last year. USDA on Monday put choice boxed beef at $186.49/cwt; up $0.66/cwt and $0.90/cwt higher than last report. Beef plant margins remain negative due to high cattle prices. According to HedgersEdge.com, the average packer margin was raised $7.10/head to a negative $19.85/head based on the average buy of $119.15/cwt vs. the average breakeven of $117.57/cwt.
FEEDER CATTLE at the CME closed down on Monday with the five nearby contract limit down. The MAY’FC11 contract closed at $129.975/cwt; down $3.000/cwt and $3.250/cwt lower than a week ago. The AUG’11FC contract settled at $133.950/cwt, down $3.000/cwt but $2.925/cwt under last report. Feeders were hit by higher prices for feed to put into cattle that will be lower prices in the fall due to seasonality pressures. Additionally, seasonal weakness is creeping into feeder cattle as well. Funds were noted sellers. The Oklahoma City National Stockyards were closed Monday with last week’s receipts placed at 12,762 head vs. 12,146 head this time last year. Demand was slack in thin volume. The latest CME feeder cattle index was placed at $132.40; down $0.72 and $1.32 lower than last report.
LEAN HOGS on the CME closed down on Monday. The JUNE’11LH contract closed at $98.525/cwt; off $1.525/cwt and $2.750/cwt lower than a week ago. AUG’11LH futures closed at $99.475/cwt; down $0.775/cwt and $2.075/cwt lower than last report. Differing from cattle, short-term market-ready hog supplies are still tight. However, pressure on fresh pork sales is expected to slow at meat counters because retailers are seen as generally having what they need for the grilling season. Supporting features in the livestock pits in Chicago include traders seasonally buying June hogs and selling June cattle. That appeared to be the play on Monday as losses in hogs trailed fat cattle. This is the third consecutive decline in futures and may be a technical sign that prices will trend lower. Cash hogs traded flat to $1 higher with top hogs going from $64-$64.50/cwt; live basis. Buying will most likely back off quickly as processors have most of the hogs they need for the short week. USDA put the pork cutout at $94.98/cwt; up $0.27/cwt but $1.30/cwt lower than last report. According to HedgersEdge.com, the average packer margin was lowered $5.20/head to a negative $2.70/head based on the average buy of $69.53/cwt vs. the average breakeven of $68.53/cwt. The latest CME lean hog index was placed at $94.98; up $0.27 and $1.17 over last report.