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Weekly Roberts Market Report

17 April 2013

US - Weather concerns over unseasonally below-freezing temperatures and little rain supported wheat futures, writes Michael T. Roberts.

CORN futures on the Chicago Board of Trade (CBOT) closed mixed on Monday with the two nearby contracts up and the rest down. MAR’13 corn futures closed at $6.334/bu; up 4.5¢/bu but 99.75¢/bu lower than last report. The DEC’13 contract closed at $5.320/bu; down 3.0¢/bu and 40.0¢/bu lower than last report. Prices were pressured futher by a higher US dollar, short-covering, and technical selling on continued uncertainty of just how the US corn crop will turn out. The CFTC data show a decrease of 66,692 contracts in the net-short position therefore showing that funds are more bullish on corn prices than the market might show. Pit soucrces say they expect the US corn ending stocks estimate to be placed between 825-875 mb in the next World Agriculture Supply Demand Estimate (WASDE) report due out this Wednesday. Exports are still weighing on prices with USDA putting corn-inspected-for-export at 10.098 mb vs. estimates for 35-40 mb. This is well below the 17.9 mb needed to stay on pace with USDA’s demand projection of 825 mb. Please see chart:

Corn cash prices weakened Monday on price uncetianty. The national average basis for corn was weaker at +6.0¢/bu over CBOT nearby May futures; 2.0¢/bu lower last report. Producers who have priced some of the 2013 corn crop to cover cost of production are in good shape. There should be more pricing opportunities if the US corn crop is not what it is cracked up to be again this year. On the other hand, if a good crop year is shaping up prices could decline further. Wednesday will shed more light on this.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed up on Monday. The MAY’13 contract closed at $13.780/bu; up 16.25¢/bu but 59.25¢/bu under last report. NOV’13 futures closed at $12.322/bu; up 4.25¢/bu but 36.75¢/bu lower than last report. Friday’s CFTC data showing funds and traders in 21,870 fewer bearish positions was supportive. Pit sources said bull-funds were buying while merchandisers were not hedging as much yet. Exports were bullish with USDA putting soybeans-inspected-for-export at 15.251 mb vs. estimates of 12-17 mb. This was well above the 6.1 mb needed to stay on pace with USDA’s demand projection of 1.345 bb. Please see chart:

Cash soybean prices were firmer today. The latest national average soybean basis was placed at -6.0¢/bu under the Chicago May 2013 futures contract; 3.0¢/bu better than last report. Producers who have priced soybeans on previous considerations in this report should have cost or production covered. The rest is profit. For those who have not priced any of the 2013 crop it would be a good time to wait and see what the USDA report will conclude on Wednesday.

WHEAT futures in Chicago (CBOT) closed up on Monday. MAY’13 wheat futures finished at $7.124/bu; up 13.5¢/bu but 14.75¢/bu under last report. The JULY’13 contract closed at $7.174/bu; up 13.25¢/bu but 11.75¢/bu lower than last. Weather concerns over unseasonally below-freezing temperatures and little rain supported wheat futures. Temps are expected to warm in wheat country amid persisting dry conditions. Heavy snow is expected in the Dakotas Monday through Thursday. Not much of the spring wheat crop has been planted at this time vs 21 per cent planted this time last year. Exports were bullish with USDA putting wheat-inspected-for-export at 27.161 mb vs. estimates for 17-24 mb. This was well above what is needed to meet USDA’s export demand projection. However, there were reports from India they may lower their prices to move some of their massive hard-red wheat inventory which would undermine US wheat global sales. Wheat basis was steady-to-weaker with the Soft Red Winter wheat basis index placed at -21.0¢/bu under CBOT May futures; down 1.0¢/bu from last report. Hard Red Winter Wheat basis index was steady at -29.0¢/bu under Kansas City May futures; same as last report. Hard Red Spring Wheat average basis index weakened 3.0¢/bu from last report to -26.0¢/bu under the Minneapolis May futures. To ensure covering cost of production wheat producers should consider pricing up to 25 per cent of the 2013 crop at this time.

 

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