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Pork Central
University of Nebraska Cooperative Extension 304B H.C. Filley Hall P.O. Box 830922 Lincoln, NE 68583-0922 1-800-PORKCTR 1-800-767-5287
Dr. Duane Reese
|  | Market Roundup
Producers are involved in many new and different
arrangements in the swine industry. Marketing, pricing, and delivering hogs
has become different from the past. Producers are more involved than ever
before. Send Pork Central your comments on the markets and what concerns you.
HOGS
Lean hog trade has been higher this week due to light chart buying. After three
days of trade, the weekly net change is 10 higher on the October contract and December
is 57 higher. The market has continued to build on the rally following the friendly Hogs
and Pigs report last Friday. Cash trade has slipped back below $50 due to the collapsing
cutout values. Chain speed remains aggressive which should limit cash selling interest,
but it will be important for processing margins to remain firm or packers will be unlikely
to maintain big weekend kill plans. There is some short covering in the futures market
which may continue near-term, but cash trade will likely dictate how long we can
continue our recent rally. The chart is holding above support at 4767 which is the 40-
day moving average, but a move below this area would likely promote additional long
liquidation. Hedgers call with questions. You should be looking at your margins now and
scaling into hedges.
Corn
Corn trade is higher on the week heading into Thursday due to chart buying, some
frost concerns and a friendly USDA Quarterly Stocks report. The weekly net change is 10
higher on the December contract. The outside market influence has also been supportive;
crude is over $4 higher and has recovered over half of the losses from last week. The
dollar is lightly lower and the DOW is steady. The USDA released the quarterly stocks
numbers on Wednesday. The September 1 corn stocks were listed at 1.674 billion bushels
versus the average trade guess of 1.719 and the low side estimate of 1.665. Exports have
been good and the ethanol usage pace picked up this summer, so the higher usage that
lead to a lower than expected is not a surprise. The final size of the crop we have begun
harvesting remains the biggest items we need to know. I believe this should limit upside,
but the chart still looks good so buying could be around near-term. The weekly crop
ratings were steady to 68% good to excellent. Progress numbers had denting at 90%
versus the 97% 5-year average, mature at 37% versus the 72% 5-year average and 6% of
the crop was harvested versus the 18% 5-year average. So the slow maturity remains a
concern that is limiting downside in corn even though the yields continue to look big and
many are expecting 2 to 5 bushels per acre yield increase on upcoming USDA reports.
The weekly export sales came in at 1.223 million tons which was above expectations. I
would advise hedgers to consider PUT options under all unsold bushels. The better than
expected yields may bring your breakeven costs down around the $3 area. There is still
an opportunity to create your own “LDP” with some cheap puts, which would offer
protection from a sharp price decline if we get record yields. Specifically buy some just
below the money puts to help lock in your break even costs as best you can. Call us to
discuss this. I am concerned a combination of a big harvest and a turn in the outside
markets could give us a tumble that we can not afford. Hedgers call with questions.
SOY COMPLEX
Soybean trade is lightly higher this week due to outside market support. Heading
into Thursday, the weekly net changes are 1 higher on the November contract and
January is up 2. Meal is $1.60 higher and oil is lightly lower for the week Position
squaring ahead of the Quarterly Stocks report was noted for the choppy trade. The
September 1 bean stocks number was pegged at 138 million bushels which was 26
million greater than the average trade guess. There are those that want to debate this
number, but the bottom line is that it just does not matter at this point. New crop beans
are coming in and what pipeline beans were put into the quarterly stocks number were
put into the number. At the end of the day, the yield numbers have been coming in bigger
than expected which means we really need the outside markets to step up to support
trade. Weather items should continue to dictate trade; recent rains have delayed the early
southern harvest. This should limit selling interest in the nearby November contract, but
there is some talk about increase South American acres which could keep market bulls on
the sidelines. The weekly export number was at 1.384 million tons which was above
expectations. Meal sales were below expectations with 5,900 tons of old crop and 60,900
tons of 2009/10. The soybean oil sales big with 52,800 tons of old crop and 144,700 tons
of new. The weekly progress report listed 63% of the crop dropping leaves versus the
77% 5-year average. Crop rating slipped 1% down to 66% good to excellent. On the
November chart, the market moved above the 10- moving average, which could promote
some follow-through buying, but nearby resistance is just above the current market at
$9.28 which is the 20-day and then up at $9.40. In the big picture yields should
determine if we break back toward the yearly lows at $8.82 or find support here. Hedgers
call with questions.
If you like the information in the Weekly Ag Market Breakdown and know
others that may benefit or enjoy the extra insight into the ag markets feel
free to forward on their email to " fiala@futuresone.com " and they will
begin receiving the weekly emails.
The information contained herein is gathered from sources we believe to be
reliable but cannot be guaranteed. Opinions expressed are subject to change
without notice. There is significant risk in trading futures. To find out
how to receive daily research, give us a call at 1-800-488-5121 or email me
at fiala@futuresone.com.
Glen Grimes & Ron Plain
Click here for the latest report.
Ron Plain
Click here for the swine economics report.
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Wayne D. Purcell
Agricultural and Applied Economics
Virginia Tech
Check here to see what Wayne has to say.
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Get the Carlot Meat Trade Here.
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Click here for the Feeder Pig Report.
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Pork producers who want to market their meat products may want to check the following
site for meat prices.
Click here for Urner Barry's Yellowsheet.
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Kansas State University's
Hog Market Databases
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