Grains and oilseeds higher ahead of USDA numbers: February 8, 2010

Soybeans hit one and a half week highs on technical and speculative buying, along with short covering and some outside market direction. The Dow was down for most of the trading day but the dollar was lower and gold and crude oil were higher. Analysts expect USDA’s monthly supply and demand update to show ending stocks down from January with the average estimate at 219 million bushels, compared o 245 million a month ago. USDA will also be reporting updated international ending stocks and production projections with the report due out at 7:30 AM Central. Bean oil hit three week highs and meal was up on spillover from beans and position squaring ahead of the USDA numbers.

Corn was higher on fund and technical buying, in addition to short covering and spillover from beans. Demand has increased after the recent losses, especially on the end user side and there is some talk that March has bottomed out at $3.50. Even with a probable reduction from the Ag Department, the trade expects fairly large ending stocks in the USDA update. The average pre-report estimate is 1.748 billion bushels, compared to January’s figure of 1.764 billion. Ethanol futures were higher.

The wheat complex was higher on technical buying, short covering and the lower dollar index. Analysts see U.S. ending stocks steady to a little smaller than the previous month’s report. Ahead of the report, the average projection is 973 million bushels, compared to 976 million in January’s update. Those fundamentals remain very negative with a large supply and weak demand, which should be reflected in the new supply and demand estimates. Snowfall’s a negative, giving cover to the dormant hard and soft red winter crops. Iraq bought 400,000 tons of wheat from Canada. FO Licht estimates 2009/10 world wheat production at 675.5 million tons, up 1.5 million from January on a better than expected crop in the Black Sea region. Russia, according to Dow Jones Newswires, will be building a new grain export terminal on their second largest Black Sea port of Tuapse. The terminal’s expected to have an annual capacity of 2.4 million tons.

Lean hogs settle sharply higher on outside markets

Cattle country was typically quiet on Monday with significant trade volume not likely until mid-week or later. The new show lists appear to be generally smaller than last week with only Texas showing more offerings. Negotiated sales last week were confirmed at 158,130 head. Live cattle in the South last week sold 1.00 to 2.00 higher from 86.00 to 87.00. In the North dressed sales were 1.00 to 2.00 higher from 137.00 to 138.00. The early asking prices on this week’s cattle are 89.00 plus in the South, and 140.00 plus in the North. Monday’s slaughter was estimated at 11 7,000 head, 8,000 less than last week and 10,000 below last year. Boxed beef cutout values closed firm on light demand and light to moderate offerings. Choice beef was up .75 at 138.65, and select was .98 higher at 136.48.

Chicago Mercantile Exchange live cattle contracts settled 17 to 45 points higher supported by the higher cash trade last week. A lower U.S. dollar was seen as supportive to futures as it may prompt importers to buy more beef. Higher boxed beef values at midday leant additional support to futures. February was 25 points higher at 87.67, and April was up 40 at 90.80.

Feeder cattle ended the session 20 to 90 points higher with support coming from the outside markets and the live pit. March was 90 points higher and settled at 99.22, April ended at 100.02 up 35.

Feeder cattle receipts at the Oklahoma National Stockyards on Monday totaled 6800 head. Compared to the last test two weeks ago, feeder cattle were steady to 1.00 higher and calves were steady. Demand was good. Snow was falling again in the state; however, this one is not as strong as the previous two storms.  Feeder steers medium and large 1 weighing 500 to 600 pounds traded at 103.50 to 113.00. 5 to 6 weight heifers brought 94.00 to 100.75.

Iowa/Minnesota barrows and gilts closed .72 higher at 64.46 on a carcass basis, the West was up .82 at 64.90, and the East was 1.78 higher at 63.56.Missouri direct base carcass meat price closed 3.00 to 4.00 higher from 58.00 to 62.00.  Hog slaughter was estimated at 422,000 head, 10,000 more than last week, but 1,000 less than last year. Mid-winter numbers are about as tight as they are going to get with the country offerings set to increase in the March/April time frame. Snow and cold temperatures could curtail weight gains and livestock movement in the Midwest through the middle of the week.

Lean hogs settled 80 to 222 points higher with the most significant strength in the April through August contracts. Support came from outside markets bouncing higher after heavy selling late last week. Midwest storms once again are bringing snow and strong winds to be followed by very cold temperatures and that helped to support the cash market. February hogs settled 80 points higher at 67.57, and April was up 205 at 69.77. Pork carcass cutout value was .30 lower at 68.82. Pork trading was slow with light to moderate demand and offerings.

Pork bellies settled 95 to 200 points higher on the gains in the lean contracts as well as upward momentum in the outside markets. February settled 100 points higher at 81.00, and March was up 200 at 82.00.

Closing Grain and Livestock Futures: February 8, 2010

March corn closed at $3.56, up 4 and 1/2 cents
March soybeans closed at $9.29 and 1/2, up 16 cents
March soybean meal closed at $274.40, up $3.40
March soybean oil closed at 37.95, up 95 points
March wheat closed at $4.84, up 10 and 3/4 cents
February live cattle closed at $87.67, up 25 cents
February lean hogs closed at $67.57, up 87 cents
March crude oil closed at $71.89, up 70 cents
March cotton closed at 69.16, up 254 points
February Class III milk closed at $14.14, up 4 cents
Dow Jones Industrial Average: 9,908.39, down 103.84 points

Cattle trade at higher prices than last week

Cattle trading was light with good demand in Nebraska on Friday. Compared to last week live sales are 1.00 higher from 84.00 to 85.00. Compared to Thursday, dressed sales were 1.00 higher at 138.00. Some producers passed all bids due to the strength of the February live cattle contract. Trading was light to moderate in Colorado with good demand. Compared to last week, live sales sold 1.00 higher at 85.50. Trading had not developed in the South by late afternoon. The weekly cattle slaughter was estimated at 642,000 head, 13,000 more than last week, and 17,000 above last year. Boxed beef cutout values were weak on light to moderate demand and offerings. Choice beef was down .81 at 137.90, and select was .64 lower at 135.46.

Chicago Mercantile Exchange live cattle contracts settled 10 to 87 points higher. The upward surge in prices was attributed to stronger cash cattle prices in the direct trade. Weather is causing muddy conditions in feedlots, reducing the number of cattle available for market and stressing animals. The strength of the dollar, which may slow exports, was a pressuring factor for futures. February settled 87 points higher at 87.42, and April was up 32 at 90.40.

Feeder cattle ended the session 10 to 107 points higher on the strong gains in the live pit and lackluster trade in the grains. March settled 107 points higher at 98.32, and April was up 70 at 99.67.

Receipts of feeder cattle at Missouri auctions this week totaled 29,551 head. Compared to last week, feeder steers trended steady to 4.00 higher, heifers were steady to 3.00 higher. Feeder steers medium and large 1 and 1-2 weighing 500 to 600 pounds traded from 93.50 to 124.00, 6 to 7 weights brought 84.50 to 104.50. 500 to 600 pound heifers traded from 80.00 to 106.50 and 7 to 8 weight heifers at 81.75 to 93.75 per hundredweight.

Barrows and gilts in the Iowa/Minnesota direct trade closed .71 higher at 63.59 on a carcass basis, the West was up .14 at 63.93, and the East was up .37 at 61.82. Missouri direct base carcass meat price closed steady from 54.00 to 59.00.  The weekly hog slaughter is estimated at 2,149,000 head, 7,000 more than last week, and 67,000 less than 2009.Country receipts remained limited on Thursday, leaving several plants needing live inventory for Friday and Saturday, as well as starters for next week. The Saturday kill is estimated to be 51,000 head.

Lean hogs settled 55 points higher to 22 lower. The spot February was supported by the live cattle contracts. The strength in the dollar weighed on the deferred issues. Concern continues over the Russian ban on U.S. poultry and that also pressured the deferreds. February settled 55 points higher at 66.70, and April was down 20 at 66.12.  Pork trading was slow with light demand and mostly moderate offerings. Pork carcass cutout value was down .03 at 69.12.

Pork bellies ended 75 to 175 points lower in a very light trade. The contradicting moves in the livestock market and outside markets kept belly traders at odds when looking at nearby and deferred contract months. February was 175 points lower at 80.00; March was also at 80.00 down 75.

Outside markets push corn and soybeans modestly lower: February 5, 2010

Soybeans were lower on fund and technical selling, along with outside market direction. The trade’s keeping an eye on the expected record South American crop and waiting for China to cancel export purchases. Over the near term, the supply and demand fundamentals continue to look supportive, limiting losses. It was an up and down day with no real fresh news one way or the other. Soybean oil was lower on product spread trade and spillover from beans and crude oil. Soybean meal was mixed with support from product spreading and good nearby demand against pressure from beans and the supply impact of a record South American crop. According to Argentina’s Ag Ministry, improved rainfall has aided that nation’s soybean crop.

Corn made new four month lows on fund and technical selling, along with spillover from the outside markets. The dollar was higher and the Dow and crude oil both broke what had been support during the session; the Dow eventually finished in positive territory and while March crude oil was nearly $2 lower, that was well above the session lows. Corn’s fundamentals look negative with the large supply mostly cancelling out the recent increase in demand. Ethanol futures were lower. USDA Brazil attaché has left its 2010 corn production estimate unchanged at 51 million tons.

The wheat complex was mostly lower on technical and fund selling, in addition to the outside markets. When the dollar goes up it raises the price of U.S. goods on the export market. U.S. wheat’s already at a premium to other origins and the available global supply is large. March Minneapolis was firm reasserting its premium over the CBOT and KCBT contracts. European wheat was lower on the outside market bearishness. Stats Canada reports that end of 2009 wheat stocks were near estimates with wheat stocks a little above the average guess and slightly lower than December 31, 2008.

Closing Grain and Livestock Futures: February 5, 2010

March corn closed at $3.51 and 1/2, down 2 and 1/2 cents
March soybeans closed at $9.13 and 1/2, down 1/2 cent
March soybean meal closed at $271.00, down 20 cents
March soybean oil closed at 37.00, down 21 points
March wheat closed at $4.73 and 1/4, down 2 and 1/2 cents
February live cattle closed at $87.42, up 87 cents
February lean hogs closed at $66.70, up 55 cents
March crude oil closed at $71.19, down $1.95
March cotton closed at 66.62, down 237 points
February Class III milk closed at $14.10, up 5 cents
Dow Jones Industrial Average: 10,012.23, up 10.05 points

Grains and oilseeds steady to firm on late bounce: February 4, 2010

Soybeans closed higher on oversold signals, technical support and commercial buying. Late short covering was an additional feature. Contracts were mixed for much of the day with pressure from the extremely negative outside markets as the Dow and crude oil shot lower and the dollar index moved higher. Also, weekly export sales were a marketing year low and South America’s crop is in generally good condition. Meal was higher on spillover from beans and oil was up on the marketing year high for export sales. Wednesday’s EPA decision was also supportive but there’s some uncertainty about biofuel mandates according to Dow Jones Newswires. The Buenos Aires Grain Exchange raised its 2010 Argentine production projection to 52 million tons thanks to improved rainfall over the past week.

Corn was mostly steady to firm on consolidation, short covering and commercial buying. Corn was also oversold and weekly export sales and shipments were solid. Contracts set new four month lows with March briefly moving below $3.50 before bouncing back. However, the recent uptick in demand is mostly offset by the large available supply and the fundamental outlook remains fairly negative. Ethanol futures were lower. South Korea bought 110,000 tons of 2009/10 U.S. corn ahead of the open.

The wheat complex is higher on technical buying and short covering. Wheat is oversold and due for a bounce after recent losses and the trade’s trying to buy back some acreage. That said – fundamentals are very negative with a large world supply and U.S. prices are quite a bit above competing origins. There were a number of wheat sales reported Thursday: Egypt bought 240,000 tons from Russia, France and Kazakhstan, South Korea picked up 55,000 tons of feed wheat, Japan bought 65,000 tons U.S. wheat along with 20,000 tons of Australian milling wheat and Iraq reportedly purchased “at least” 700,000 tons of milling wheat according to DTN with probable origins the U.S., Australia, Canada, Germany and Russia. Australia’s Bureau of Statistics reports export sales for December 2009 totaled 1.1 million tons, around 40% larger than November’s total.

Pork carcass cutout closes over a dollar higher

Chicago Mercantile Exchange live cattle contracts were 2 to 20 points lower with only spot February higher. A higher dollar, which may slow exports and a general weakness in outside markets, pressured the live issues. In addition, selling in futures was tied to weakness in choice beef cutouts which are at their lowest levels since January 6. February settled 10 points higher at 86.55, and April was down 2 at 90.07.

Feeder cattle ended the session 15 to 55 points lower. Feeder cattle trade was very sluggish with weakness in the outside markets limiting the interest of traders from stepping into the market. March settled 15 lower at 97.25, and April was down 40 at 98.97.

At the Huss Platte Valley auction in Nebraska on Wednesday receipts totaled 3300 head. Steers and heifers trended mostly steady to firm and demand and trade activity was moderate to good. Feeder steers medium and large 1 averaging 735 pounds traded at 101.07 per hundredweight, and 729 pound heifers brought 94.42.

Packer inquiry into the cattle was light to moderate with buying interest a bit improved in parts of the North. DTN reported they know of at least one regional buyer that offered to call in at 136.00 on a selective basis. DTN quoted private sources as saying a few sales were reported in Iowa and Nebraska from 135.00 to 136.00, steady with last week. Bids remain at 84.00 live in the South where asking prices are 87.00 plus, in the North and they are asking 138.00 plus. Cattle slaughter was estimated at 119,000 head, 4,000 more than last week, but 3,000 less than last year. Boxed beef cutout values were lower on light to moderate demand and moderate to heavy offerings. Choice beef was down 1.07 at 138.72, and select was 1.05 lower at 136.10.

Barrows and gilts in the Iowa/Minnesota direct trade closed .24 lower at 63.30, the West was up .04 at 63.99, and the East was 1.09 lower at 61.45. Missouri direct base carcass meat price closed steady from 54 to 59. Thursday’s hog slaughter was estimated at 423,000 head, 6,000 less than last week, and 8,000 under last year. While packers may be reluctant to chase prices higher with uncertain pork prices all over the place, buyers have been unable to gather a significant number of hogs. Iowa barrows and gilts last week averaged 268.4 pounds, 1.5 lighter than the previous week and .3 pounds below 2009. Live hog weights continue to fall, clearly signaling current finishing floors and respectable country leverage.

Lean hogs were 5 to 40 points lower with only February in the black. The main feature was the downturn in product values, the lowest level since late December. The discount of futures to the cash index combined with steady cash markets offered underlying support. February settled 2 points higher at 66.15, and April was down 15 at 66.25.  Pork trading was slow to moderate with light to moderate demand and mostly light to moderate offerings. Pork carcass cutout value was up 1.55 at 69.15.

Pork bellies ended 30 to 135 points lower following the lower move in the lean market as well as the sharp sell-off in the stock market through the morning trade. February settled 30 points lower at 81.75, and March was down 135 at 80.75.

Closing Grain and Livestock Futures: February 4, 2010

March corn closed at $3.54, up 1 cent
March soybeans closed at $9.14, up 6 cents
March soybean meal closed at $271.20, up $2.30
March soybean oil closed at 37.21, up 31 points
March wheat closed at $4.75 and 3/4, up 6 and 3/4 cents
February live cattle closed at $86.55, up 10 cents
February lean hogs closed at $66.15, up 2 cents
March crude oil closed at $73.14, down $3.84
March cotton closed at 68.99, down 83 points
February Class III milk closed at $14.05, up 9 cents
Dow Jones Industrial Average: 10,002.18, down 268.37 points

Grains and oilseeds lower on dollar and supply: February 3, 2010

Soybeans closed at or near the lows of the session on technical and speculative selling, along with profit taking after Tuesday’s gains and spillover from the outside markets. The dollar was higher while the Dow, gold and crude oil were lower. Traders are watching South America’s crop closely with Informa Economics raising their production projections to 66.5 million tons for Brazil and 54 million for Argentina. Harvest is underway in parts of Brazil with Michael Cordonnier of Corn and Soybean Advisor telling Brownfield harvest has picked up steam after early delays. Also, beans are waiting for China to cancel at least some export purchases as South American supplies hit the pipeline. Still, contracts did manage to hold above the recent lows for the move and the trade seems reluctant to push the most active contracts under $9. Soybean meal and oil were lower on spillover from beans, the higher dollar and that expected record South American soybean crop. USDA’s weekly export sales report is out Thursday at 7:30 AM Central. Soybeans are pegged at 600,000 to 800,000 tons, meal is seen at 100,000 to 300,000 tons and oil is placed at 10,000 to 20,000 tons.

Corn was lower on fund and technical selling, in addition to spillover from beans and the outside markets. Corn continues to look fundamentally bearish with the increase in demand canceled out by the large supply. Early estimates for next week’s supply and demand update have ending stocks above last month. The numbers are out Tuesday, February 9 at 7:30 AM Central. Contracts made new four month lows and reinforced the current sentiment that the path of least resistance is lower. The good South American crop conditions are also a negative for corn. Informa Economics’ latest estimate for Argentina is 18.2 million tons and Brazil is pegged at 53.3 million, both up from the USDA’s most recent estimates. Ethanol futures were lower. Weekly U.S. corn sales are estimated at 700,000 to 1 million tons.

The wheat complex also made new four month lows on fund and technical selling, along with profit taking and the higher dollar. When the dollar goes up it raises the price of U.S. goods on the export market. U.S. wheat’s already at a significant premium to other origins and the global supply is very large with U.S. supplies at a more than 20-year high and no major weather problems currently noted for the world crop. Reflecting the lack of demand for U.S. supplies, Jordan bought 100,000 tons of Black Sea origin wheat at $218 per ton. Weekly U.S. wheat sales are expected to be between 300,000 and 650,000 tons.

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