2 July 2013

6 minute read

North America

CORN futures on the Chicago Board of Trade (CBOT) closed down on Monday. The JULY’13 contract closed at $6.532/bu; up 8.5¢/bu and 30.25¢/bu lower than last report. SEP’13 corn futures closed at $5.790/bu; down 13.0¢/bu but 0.5¢/bu over last Monday. The DEC’13 contract closed at $5.464/bu; down 9.75¢/bu but 6.0¢/bu higher than a week ago. Even though more rain fell on saturated fields in the North some drying conditions were noted in many other corn growing areas. Futures were supported by by short-covering and forecasts for more rainy weather. USDA put corn-inspected-for-export at 5.843 mb vs. estimates for 6-11 mb. Strong basis levels, recent commercial demand, and technical signals of an upward trending channel the last 30 days were also supportive. The national average basis for corn was steady at +34.0¢/bu over CBOT July futures.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed up on Monday. The JULY’13 contract closed at $15.120/bu; up 18.75¢/bu but 0.5¢/bu lower than a week ago. NOV’13 futures closed at $12.734/bu; even with Friday’s close and 12.0¢/bu lower than last report. China’s current credit crunch translating into increased US soybean imports was supportive. USDA put soybeans-inspected-for-export at 7.827 mb vs. estimates for 1-3 mb. Informa Economics preliminary reports indicate a bearish outlook for soybean futures. Technical trading indicators continue to show bullish signals on speculative profit taking and buying. Grain bids were lower with soybeans trading higher on firm cash basis levels. USDAs crop progress report showed US soybeans 85 per cent planted vs. the 5-year average of 91 per cent. Fundamentally soybeans are now bearish. Cash soybeans firmed +10.0¢/bu to +75.0¢/bu over CBOT July futures.

WHEAT futures in Chicago (CBOT) closed down on Monday. The JULY’13 contract closed at $6.790/bu; down 19.0¢/bu and 1.5¢/bu lower than last report. DEC’13 wheat futures closed at $7.020 /bu; down 15.0¢/bu and 1.0¢/bu lower than a week ago. Winter wheat is 95 per cent headed and 20 per cent harvested, compared to 89 per cent an d11 per cent last week and 95 per cent and 37 per cent on average, respectively. The crop condition index was up 2 points from a week ago. Spring wheat is 96 per cent planted and 90 per cent emerged, compared to 92 per cent and 84 per cent last week and 99 per cent and 97 per cent on average, respectively. USDA put wheat-inspected-for-export at 28.562 mb vs. estimates for 19-24 mb. Harvest is picking up and the crop looks good. Ample global stocks and good winter wheat coming off the US Plains weighed on prices. Wheat basis was steady with the Soft Red Winter wheat basis index placed at -25.0¢/bu under CBOT July futures. Hard Red Winter Wheat basis firmed to -16.0¢/bu under Kansas City July futures. Hard Red Spring Wheat firmed 2.0¢/bu to -24.0¢/bu under Minneapolis September futures.

DAIRY CLASS III futures on the Chicago Mercantile Exchange (CME) closed down on Monday. JUNE’13DA futures closed at $18.03/cwt; even with Friday’s close but $0.01/cwt higher than a week ago. The JULY’13DA contract closed at $17.34/cwt; down $0.45/cwt and $0.73/cwt lower than last report. NOV’13 futures closed at $18.39/cwt; off $0.11/cwt and $0.23/cwt lower than this time last week. Steady milk production and growing inventory pressured prices. Lower prices may be nearby. Peak milk production has passed with hot weather affecting cow comfort now and components to varying degrees. Cheese buyers are non-aggressive with plenty of supply on hand. Domestic demand is steady, but lower-than-desired. Continued weakness in butter is noted and a concern. However, export demand is increasing. Class III futures are: 3 months out = $17.79/cwt ($0.50/cwt lower than last report); 6 months out = $18.11/cwt ($0.45/cwt lower than a week ago); 9 months out = $18.27 … 17.95/cwt ($0.32/cwt under this time last week); and 12 months out = $17.75/cwt ($0.25/cwt under last report).

LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) closed down on Monday. JUN’13LC futures closed at $120.950/cwt; down $0.30/cwt and $1.100.cwt under last report. The AUG’13LC contract closed at $121.175/cwt; off $0.425/cwt and $2.925. The FEB’14LC contract closed at $127.600/cwt; down $0.400/cwt and $1.325/cwt lower than this time last week. Fat cattle were pressured by lower equities and macroeconomic concerns. Funds pulled money from commodities balancing the books. Friday’s USDA report showed a smaller decline in cattle placements with also weighed on prices. However, USDA’s cold-storage report was supportive. The lack of processor bids indicate they have enough booked through Tuesday or Wednesday. USDA put boxed beef prices at $199.25/cwt; down $0.14/cwt from Friday and $1.94/cwt lower than a week ago. USDA put the 5-area average price on Monday at $120.72/cwt; $2.08/cwt under last report. Please see chart:

The latest HedgersEdge packer margin was raised $40.60/head from last report to a positive $77.80/head based on a $120.63/cwt buy vs. a breakeven of $126.16/cwt.

FEEDER CATTLE at the CME finished up on Monday. The AUG’13FC contract closed at $147.675/cwt; up $.750/cwt and $3.150/cwt over last report. NOV’13FC futures closed at $152.850/cwt; up $0.850/cwt and $2.300/cwt over this time last week. Feeders ended higher on sagging corn futures. Cash cattle markets were quiet as expected following the late-week trades on Friday. Fat cattle spillover and demand optimism were supportive. For Monday 06/24/13 estimated receipts at the Oklahoma City market were put at 9,700 head vs. 9,247 head last week and 7,4481head this time last year. Feeder steers and heifers were $1-$4/cwt higher. Demand was very good for all classes. Steer and heifer calves were $2-$4 higher. Quality was plain-to-attractive. Plenty of heavy weight feeders continue to come to the market. The latest CME index was estimated at 136.75 lb; up 0.134/lb and 0.61/lb over last report. Please see chart:

This table shows the maximum price a producer could pay for feeder cattle and still break even, assuming the costs and conversion/performance factors listed above. Producers should remain aware that calculations are based on averages. Courtesy DTN.

LEAN HOGS on the CME finished up on Monday. The JUL’13LH contract closed at $100.950/cwt; up $1.200/cwt and $3.050/cwt over last report. OCT’13LH futures closed at $85.850/cwt; up $0.750/cwt and $1.000/cwt over this time last week. Tight supplies, short-covering, and sliding corn futures were supportive. News that the Congress left D.C. after NOT passing a a farm-policy bill was disappointing and created more volatility in the market. The $940 billion bill unexpectedly collapsed on the House Floor Thursday. The Smithfield / China buyout deal is being rethought. It seems that Smithfield could now be broken into three separate companies to ease fears that Shuanghui International Holdings will control too much of the US meat market share. At one time the board had said it would not consider breaking up the company to sell but now seems to be rethinking the deal. Cash and wholesale prices remain firm and seem to be supporting futures. Cash prices were mostly flat on Monday with processors not being very aggressive. Late Monday USDA put the pork carcass cutout at 109.11; up 1.14 and 4.29 over this time last week. Seasonally smaller supplies are expected to continue through mid-to-late July.The latest CME two-day lean hog index was placed at 103.99/lb; off 0.24/lb but 3.38 higher than this time last week. The latest HedgersEdge packer margin was raised $8.55/head to a positive $10.00/head based on a $74.09/cwt buy vs. a breakeven of $77.72/cwt.

This table shows the maximum price a producer could pay for feeder pigs and still break even, assuming the costs and conversion/performance factors listed above. Producers should remain aware that calculations are based on averages. Courtesy DTN.