Grains and oilseeds end the week on a strong note

Soybeans were sharply higher, making new six and a half month highs on speculative and technical buying. Beans are keeping very close watch on weather impact for soybeans in the U.S. Delta and oilseeds in Canada and China. Also, the near term supply remains very tight and demand continues to look solid, so it looks like price rationing is in effect. In any case, we’re headed into the critical phase of development for U.S. soybeans, so weather will continue to be the big mover. Soybean meal was higher on the sentiment that feed demand will rise due to world wheat quality issues and oil was higher following the lead of crude oil and beans. According to Macquarie Group, U.S. soybeans could average 42.9 bushels per acre, in-line with USDA’s July guess, but add it’s still too early to tell.

Corn hit new two week highs on short covering, technical buying and spillover from beans and wheat. Past that, there was no real fresh news one way or the other. Traders are keeping an eye on the hot, dry forecasts for early August across most of the Midwest and in any event, corn doesn’t want to get left behind, primarily due to the feed connection with wheat. However, with most of the corn crop through the pollination phase, weather’s a bigger worry for beans than it is for corn. Ethanol futures were higher. Macquarie Group, via Dow Jones Newswires, expects the final U.S. corn yield to be 163.1 bushels per acre, compared to USDA’s July guess of 163.5 bushels per acre.

The wheat complex was sharply higher on fund and technical buying. There are continued crop quality concerns for Canada, Eastern Europe and the Black Sea region. Chicago outpaced Kansas City and Minneapolis as that type is used for feed and a lot of the crop loss is feed wheat. In fact, according to the CME Group, nearby Chicago gained almost 42% during July, the largest percentage gain for a front month contract since 1951. There’s a lot of talk in the market that either Russia or Ukraine, or both, will severely restrict or even temporarily halt exports due to the tight supply, with Ukrainian firm Landkom, via Dow Jones Newswires, stating it expects Kiev to increase intervention purchases to keep domestic supplies at acceptable levels and the Ukraine Agrarian Federation pegging Russia’s exports at 9 million to 10 million tons, compared to SovEcon’s guess of 11 million and the IGC’s projection of 13.4 million. According to Russia’s Ag Ministry, 33% of that crop is harvested, with yield behind last year and the pace faster than average due to drought. German firm Toepfer has Europe’s wheat crop at 126 million to 129 million and the U.N.’s Food and Agriculture Organization is expected to make a big reduction to its production estimate. Japan bought 141,567 tons of wheat (70,101 tons U.S. dark northern spring, 36,126 tons Canadian western red spring and 35,340 tons Australian standard white) and Egypt issued a tender for 120,000 tons of wheat, mostly from the U.S.

Some feedlot cattle carried over into next week

Except for some clean up business in Texas the cash cattle trade was quiet on Friday. Trade volume totals were moderate at best with only 104, 207 negotiated sales confirmed through Friday morning. There appears to be a willingness to carry cattle over on the part of producers, and wholesale nervousness on the part of packers. Slaughter cattle traded 2.00 lower at on a live basis this week at mostly 93.00, and dressed at 147.00 to 149.00 mostly 3.00 lower.  The weekly slaughter was estimated at 654,000 head, 12,000 less than last week, but 15,000 more than last year. Boxed beef cutout values were weak to lower on light to moderate demand and offerings. Choice boxed beef was down 1.56 at 151.83, and select was .72 lower at 145.02.

Chicago Mercantile Exchange live cattle contracts settled 55 to 112 higher on short covering and fund buying. The shock of this week’s lower cattle trade worked its way through the futures market, with traders now focusing on potential market support early next week. Higher corn prices were once again supportive to the deferred issues; more expensive inputs may keep feedlot operators from increasing their herds. August settled .80 higher at 92.65, and October was up 1.12 at 94.60.

Feeder cattle ended the session mostly higher on support from the live pit and short covering. Gains were dampened some by the run-up in corn with the front months flat to lower and the deferred issues showing the gains. August settled unchanged at 113.75, and September was down .07 at 114.20.

Feeder cattle receipts at Missouri Auctions this week totaled 22,041 head. Compared to last week, feeder steers sold mostly steady, heifers weighing less than 650 pounds were 2.00 lower to 2.00 higher, heifers over 650 pounds steady to 2.00 higher. Feeder steers medium and large 1; 568 head averaging 577 pounds traded at 126.33 per hundredweight. 366 heifers averaging 573 pounds averaged 114.25.

Barrows and gilts in the Iowa/Minnesota direct trade closed 1.01 lower at 81.69 on a carcass basis, the West was down 1.03 at 81.49, and the east was 1.51 lower at 83.15. Missouri direct base carcass meat price closed steady from 74.00 to 75.00. The weekly hogs slaughter was estimated at 1,949,000 head 6,000 less than last week, and down 159,000 from last year. Hog supplies appear tight and three plants were down on Friday with three more scheduled to be dark on Monday. Pork trading was very slow, with light to moderate demand and light offerings. Pork carcass cutout value closed .44 lower at 89.82.

Lean hogs settled 30 to 97 points higher with the back months benefitting from the higher grain prices, which may discourage increases in production.  Tighter hog numbers were also supportive to the market. August settled .97 higher at 85.82, and October was up .95 at 79.02.

Pork bellies were unquoted.

Closing Grain and Livestock Futures: July 30, 2010

September corn closed at $3.92 and 3/4, up 13 and 1/2 cents
August soybeans closed at $10.52 and 1/2, up 25 and 3/4 cents
August soybean meal closed at $310.90, up $5.50
August soybean oil closed at 39.83, up 56 points
September wheat closed at $6.61 and 1/2, up 34 cents
August live cattle closed at $92.65, up 80 cents
August lean hogs closed at $85.82, up 97 cents
September crude oil closed at $78.95, up 59 cents
December cotton closed at 78.76, up 185 points
August Class III milk closed at $14.94, up 2 cents
Dow Jones Industrial Average: 10,465.94, down 1.22 points

Wheat continues to take the lead

Soybeans were higher on technical and speculative buying, along with spillover from wheat. Overall, the supply is tight and demand continues to look solid with weekly export sales towards the high end of estimates; old crop shipments were slow. Near term crop weather does look generally good but with the calendar turning towards August, traders are willing to take a step back and put some weather premium in due to the uncertainty. Soybean meal and oil were higher following the lead of soybeans. China bought 2009/10 tons of U.S. soybean oil, continuing their at least near term shift to U.S. supplies because of Beijing’s trade dispute with Argentina.

Corn was higher on technical buying and spillover from wheat. Also, even while the crop does look good overall, there are concerns about yield and quality. Forecasts for the coming week do have a hot, dry pattern and parts of the Eastern and Southern Cornbelt definitely need rain, but most traders took a wait and see attitude. Ethanol futures were higher. Ahead of the open, Mexico picked up 146,000 tons of U.S. corn (30,000 tons 2009/10 and 116,000 tons 2010/11). According to the International Grains Council, the U.S. is expected to see increases in exports of both corn and feed wheat to make up for global weather problems impacting wheat production.

The wheat complex was higher on fund buying and short covering. Weekly export sales were solid, including sales to Egypt, and the trade continues to watch weather and its impact on crops in Russia and the Black Sea region. That said – at least some of that is priced in right now and traders continue to keep an eye on U.S. and world harvest numbers. The International Grains Council has the global crop at 651 million tons, down from earlier projections, but still the third largest in history. According to the Wheat Quality Council’s spring crop tour, hard red spring yield is currently calculated at 46 bushels per acre and durum is seen at 38.4 bushels per acre, up from last year for both types. European wheat did see some profit taking after an earlier rise to two year highs with November and London Paris both down .8% on the day. Japan’s Ag Ministry issued a tender for 141,567 tons of wheat (70,101 tons U.S. dark northern spring, 36,126 tons Canadian western red spring and 35,340 tons Australian standard white).

Cash cattle and feeder and live contracts lower Thursday

USDA Mandatory reported cattle trading was light to moderate on light demand in the central and western areas of Nebraska on Thursday along with Kansas. Compared to Wednesday Nebraska sales were mostly steady at 148.00 dressed and 93.00 live. Compared to last week dressed sales were 2.00 to 3.00 lower and live trades were 1.00 lower. In Kansas live sales were 1.00 to 2.00 lower at 93.00, and dressed sales were 3.00 lower at 148.00. Trading was light in Texas, Oklahoma and New Mexico on light to moderate demand. Live sales trended 2.00 lower than last week at 93.00. Thursday’s cattle slaughter is estimated at 129,000, 1,000 less than last week, but 1,000 more than last year. Boxed beef cutout values were lower on light to moderate demand and light to moderate offerings. Choice boxed beef closed 1.31 lower at 153.49, and select was down .60 at 145.74.

Chicago Mercantile Exchange live cattle contracts settled 15 to 92 points lower after starting out the session moderately higher. By midday futures were pressured by the developing cash trade as well as weakness in the boxed beef values. Additional pressure came from the stock market s drop from early session highs. August settled .92 lower at 91.85, and October was down .72 at 93.47.

Feeder cattle finished the session 30 to 80 points lower on gains in the grain markets along with the inability for the live contracts to hold early gains. August settled .80 lower at 113.72, and September was down .57 at 114.27.

Feeder cattle receipts at the Ogallala Livestock Auction in Nebraska totaled 1,000 head. No comparison to last week, due to no feeder cattle sale. Steers accounted for 92% of the run, with weights over 600 pounds 99% of the offering.  Feeder steers medium and large 1; 276 head averaging 905 pounds traded at 110.03. Just a few heifers traded, those weighing 804 pounds brought 105.93.

Barrows and gilts in the Iowa/Minnesota direct trade closed 2.61 lower at 81.67 on a carcass basis, the West was down 1.98 at 81.51, and the East was up 3.73 at 84.80. Missouri direct base carcass meat price closed steady from 74.00 to 75.00. Thursday’s hog kill was estimated at 401,000 head, 2,000 more than last week, and 15,000 less than last year. Iowa market hogs last week averaged 268.4 pounds, 1.1 pounds heavier than the previous week and 2.1 pounds higher than 2009. Slower chain speed this month may be compromising the current status of the finishing floors according to DTN. Pork trading was slow to moderate, with light to moderate demand and offerings. Por carcass cutout value was up .03 at 89.38.

Lean hog settled unchanged to 147 points higher on Wednesday’s sharply higher cash market along with impressive gains over the last week in the pork carcass value. Several contracts posted new contract highs. August was up the most settling at 84.85 up 1.47, and October was 1.12 higher at 78.07.

Pork bellies were unquoted.

CLosing Grain and Livestock Futures: July 29, 2010

September corn closed at $3.79 and 1/4, up 3 cents
August soybeans closed at $10.26 and 3/4, up 16 and 1/4 cents
August soybean meal closed at $305.40, up $3.70
August soybean oil closed at 39.27, up 43 points
September wheat closed at $6.27 and 1/2, up 10 cents
August live cattle closed at $91.85, down 92 cents
August lean hogs closed at $84.85, up $1.47
September crude oil closed at $78.36, up $1.37
December cotton closed at 76.91, up 60 points
August Class III milk closed at $14.92, up 3 cents
Dow Jones Industrial Average: 10,467.16, down 30.72 points

Wheat leads corn and soybeans higher

Soybeans were higher on technical and speculative buying, along with spillover from wheat. Weather forecasts for early August now look a little hotter, especially in the already very dry Delta and we do still have a way to go in the growing season, keeping traders very uncertain. Also, China bought another 120,000 tons of new crop U.S. beans ahead of the open. China’s Ministry of Commerce projects July imports at 5.594 million tons and sees August at 3.884 million tons. Soybean meal and oil were higher, following the lead of beans. There was additional support in meal from talk of increased feed demand while gains in oil were kept in check by product spread trade. Weekly USDA export sales numbers are out Thursday at 7:30 AM Central. Soybeans are pegged at 700,000 to 1.25 million tons, meal is seen at 75,000 to 175,000 tons and oil is placed at 30,000 to 60,000 tons.

Corn was higher on technical buying, short covering and spillover from wheat. Contracts were due for a bounce after four days of losses and traders want to make sure corn outpaces wheat in global feed market share. At least to some extent, gains were limited by forecasts for generally non-threatening growing weather over the next 6 to 10 days. Ethanol futures were higher. Weekly U.S. corn sales are expected to be between 750,000 and 1.2 million tons.

The wheat complex hit new thirteen month highs on fund buying and short covering. The complex followed the lead of Europe, where contracts also hit new multi-month highs on concerns over weather impacting production in Russia, the Black Sea region and Kazakhstan. Also, it looks as though the drought may edge into eastern Ukraine, another huge world source of feed wheat. Still, it is worth noting that stateside, the fundamentals remain bearish and early spring harvest results look good. Weekly U.S. wheat sales are estimated at 250,000 to 450,000 tons.

Cash hogs trade higher but cattle are lower

A light to moderate cattle trade developed in the North on Wednesday, with live business nearly 2.00 lower at 93.00, and dressed deals off as much as 3.00 at 147.00 with a few up to 149.00 in Iowa and Nebraska. Most of these deals are probably linked to attractive basis opportunities. The South remained quiet with bids at 93.00, separated from asking prices by 2.00 to 3.00. Cattle slaughter was estimated at 130,000 head, the same as last week, but 6,000 more than last year. Boxed beef cutout values were weak on choice and firm on select. Choice boxed beef was down .53 at 154.70, and select was up .61 at 146.34.

Chicago Mercantile Exchange live cattle contracts settled unchanged to 50 points higher on the front month’s price discounts to last week’s cash cattle trade. Additional support came from short covering. Sharply higher corn values on the Chicago Board of trade helped to lift the deferred contracts. The lack of feedlot trade activity helped to secure the idea that cash prices could hold steady by the end of the week with overall beef values mixed at midweek. August settled .12 higher at 92.77, and October was up .27 at 94.20.

Feeder cattle ended mixed on pressure from the rally in the corn market. Traders in the feeder market were cautious given the increased feed cost associated with getting these cattle to market, but were not willing to give too much ground with nearby feeder contracts holding near 115.00. August settled .37 lower at 114.52, and September was down .25 at 114.85.

Feeder cattle receipts at the Ozarks Regional Stockyards at West Plains, MO totaled 3242 head on Tuesday. Compared to last week feeders trended steady to 3.00 higher. Steers medium and large 1 and 1-2 weighing 500 to 600 pounds traded from 117.50 to 127.00, 7 to 8 weights from 106.50 to 117.50. 500 to 600 pound heifers brought 107.50 to 116.50 and 7 to 8 weight heifers from 102.00 to 105.00.

Barrows and gilts in the Iowa/Minnesota direct trade closed 4.01 higher at 84.34 on a carcass basis, the West was 3.78 higher at 83.60, and the East was up .08 at 80.61. Missouri direct base carcass meat price is steady to 1.00 higher from 74.00 to 75.00. Wednesday’s hog kill was estimated at 400,000 head, 2,000 less than last week and down 18,000 from a year ago. Slaughter schedules throughout the week look pretty choppy, but processing margins look quite positive on paper and so far country receipts have been inadequately light. Pork carcass cutout value was up 2.49 at 89.35. The wholesale pork trade was slow with moderate to good demand and mostly light offerings.

Lean hogs settled 40 to 115 points higher on fund buying. Higher corn values on the Board of Trade helped to prop up the deferred months as higher feed costs may discourage producers from increasing production.  August settled 1.15 higher at 83.37, and October was up .72 at 76.95.

August pork bellies settled 3.00 higher at 102.75 on the run up in the lean pit.

Closing Grain and Livestock Futures: July 28, 2010

September corn closed at $3.76 and 1/4, up 13 and 1/2 cents
August soybeans closed at $10.10 and 1/2, up 12 and 1/2 cents
August soybean meal closed at $301.70, up $7.20
August soybean oil closed at 38.84, up 28 points
September wheat closed at $6.15 and 1/2, up 20 and 1/2 cents
August live cattle closed at $92.77, up 12 cents
August lean hogs closed at $83.37, up $1.15
September crude oil closed at $76.99, down 51 cents
December cotton closed at 76.31, down 39 points
August Class III milk closed at $14.89, down 11 cents
Dow Jones Industrial Average: 10,497.88, down 39.81 points

Wednesday midday cash livestock prices

The feedlot cattle trade is relatively quiet today with just a few bids reported at 93.00 in Kansas.  Cattle buying interest should start to improve at midweek with more preliminary bids on the table. However those bids are going to probably be 92.00 to 93.00 in the South and 148.00 in the North, well below the asking prices of 96.00 plus and 152.00. Barring a combination of lower futures and relatively firm bids, significant trade volume may be delayed until Thursday or Friday. Choice boxed beef is down .34 at 154.89, and select is up .82 at 146.55.

Feeder cattle receipts at the Ozarks Regional Stockyards at West Plains, MO totaled 3242 head on Tuesday. Compared to last week feeders trended steady to 3.00 higher. Steers medium and large 1 and 1-2 weighing 500 to 600 pounds traded from 117.50 to 127.00, 7 to 8 weights from 106.50 to 117.50. 500 to 600 pound heifers brought 107.50 to 116.50 and 7 to 8 weight heifers from 102.00 to 105.00.

Barrows and gilts in the Iowa/Minnesota direct trade opened 1.18 lower at 79.15 on a carcass basis, the West was down .82 at 79.00, and the East is down 1.11 at 79.42. Missouri direct base carcass meat price is steady to 1.00 higher from 74.00 to 75.00. Slaughter schedules throughout the week look pretty choppy, but processing margins look quite positive on paper and so far country receipts have been inadequately light.

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