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Weekly Roberts Market Report

20 June 2012

US - Corn prices continue to show price strength, writes Michael Roberts.

CORN futures on the Chicago Board of Trade (CBOT) closed up on Monday. The JULY’12 contract closed at $5.994/bu; up 20.0¢/bu. The DEC’12 contract closed at $5.340/bu; up 28.0¢/bu. Weather premium and strong buying interest from both commercial and noncommercial traders were supportive. Persistent economic concerns regarding Europe’s crisis slowed bull enthusiasm. Hot weather drying up soil moisture in key corn producing areas fueled speculation prices could strengthen on shorter production projections. Exports were neutral-to-optimistic with USDA putting corn inspected for export at 24,729 mi bu vs. estimates for 15-21 mi bu. This was well below the 34.3 mi bu needed to stay on pace with USDA’s 1.65 bi bu demand projection. (See chart) Exports compared to this time last year were over 43 mi bu.

Strong cash markets reinforced gains in corn, as basis, or the difference between cash and futures prices, remained firm in spite of the rally in futures. Usually basis weakens when futures prices rally. However, that wasn’t the case on Monday reflecting low availability of supply. Corn prices continue to show price strength.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed up on Monday. The JULY’12 contract closed at $13.842/bu; up 8.25¢/bu. NOV’12 futures closed at $13.392/bu; up 25.25¢/bu. New crop soybean contracts outpaced old-crop market supplies on weather concerns. Pit sources said they don’t think USDA’s 2012 yield forecast of 43.9 bu/ac will hold. Exports were not supportive with USDA putting soybeans-inspected-for-export at 7,897 mi bu vs. estimates for 10-16 mi bu. Inspections are running 13 per cent ahead of the total needed to stay on pace with USDA’s 1.335 bi bu.

Funds expanded net-bull positions as analysts continue to warn that supplies will tighten if hot weather persists. Funds were net-long 212,956 contracts for the week ended Tuesday, June 13, 2012. Short positions were placed at 5,984 lots. The net-long position is the difference between the number of long contracts (or bets that prices will rise) and short contracts (bets prices will fall). Funds’ net-long positions in soybeans has been large for a lot of the year on expectations that supplies will tighten after drought reduced South American soy production. Soybean prices should continue to strengthen for the next 10-14 days with some profit taking.

WHEAT futures in Chicago (CBOT) closed up on Monday. JULY’12 wheat futures finished at $6.302/bu; up 20.75¢/bu. The JULY’13 contract closed at $7.036/bu; up 15.75¢/bu. Futures were behind nearly all session until near the end when funds jumped in to buy late in the session. Lack of commercial interest held prices back amid speculative short-covering. Spillover from corn and soybeans weather concerns for wheat-crop making in China, Russia and the Ukraine were supportive. Fund managers expanded net-short positions in CBOT wheat futures to 6,367 contracts, more than double their net short of last week at 2,549 lots. USDA put wheat-inspected-for-export at 20,620 mi bu vs. estimates for 20-27 mi bu. This was 1.5 mi bu below the 22.1 mi bu needed to stay on pace with USDA’s 1.15 bi bu demand projection.

TheCropSite News Desk

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