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Steven G Biehler
Risk Management Consultant
apbrokerage@alidapearl.com 

Daily Recap for 9/3/10

DJ MARKET TALK:

U.S. wheat futures are at three-week highs on strong export demand and trading above key technical levels.  The USDA gave prices a boost by announcing U.S. exporters had sold 275,000 tons to unknown destinations and 110,000 tons to Egypt, the world's top wheat importer.  Demand for high-protein U.S. wheat, traded at KCBT and MGE, has increased sharply since weather problems have trimmed global output expectations.  Drought slashed production in Russia, while excessive rains hurt Germany's crop.  Lingering dryness is also a concern in Argentina and Australia.  CBOT Dec wheat broke out of its recent range to a session high of $7.41 1/2 a bushel, its highest price since Aug. 13.  Pre-placed buy orders accelerated gains, traders say.  CBOT Dec wheat is up 24 1/4 cents at $7.38, KCBT Dec wheat is up 21 3/4 cents to $7.54, and MGE Dec wheat is up 20 3/4 cents at $7.55 3/4.

U.S. corn futures are at their highest level since October 2008 as bullish crop projections and heavy fund buying fuel gains.  The market opened higher and climbed another leg after Informa Economics projected the final 2010 corn yield at 158.5 bushels per acre, well off the USDA's most recent estimate of 165 bushels per acre.  Such a yield reduction would tighten the nation's corn supplies just as exporters are expected to surge because of Russia's grain shortage.  Funds have bought an estimated 18,000 contracts, a sign that the rally has been fueled by speculative money flow, a trader says.  Sep corn is up 18 cents, or 4.2% to $4.51 per bushel and Dec corn is up 19 cents to $4.66 1/2, a session high.

U.S. soybean futures are sharply higher on spillover support from neighboring grain markets.  Most-active CBOT Dec corn and wheat are each up more than 3.5% and helping lift soybeans, traders say.  Corn prices soared to a 23-month high after private analytical firm Informa Economics estimated final corn output would be dramatically smaller than USDA is currently predicting.  Soybeans need to keep pace with corn because the crops will compete for acreage in the spring, say Brian Hoops, president of Midwest Market Solutions.  Informa projected USDA next week will keep its soy output estimate nearly unchanged from last month.  Commodity funds have bought an estimated 5,000 soybean contracts.  CBOT Nov soybeans are up 28 cents, or 2.8%, soyoil is up 0.69 cent at 40.89 cents per pound.

LIVE CATTLE - At 11:45 a.m. CDT, October up 0.700 cent, or 0.71 percent, at 99.150 cents per lb and December up 0.200, or 0.2 percent, at 101.525 cents.

• By midday, futures were back higher after trading both sides of unchanged earlier.
• Early selling that began in the Globex market knocked futures in both markets lower early.
• Once that was finished, cattle futures crawled back higher, with buyers encouraged by the higher stock market and jobs data.
• The stock market advanced on Friday after government data showed non-farm payrolls fell less than expected, plus private sector employment increased by a surprising 67,000.
• Open interest rose 4,207 contracts in Thursday's higher market.
• Boxed beef was mixed early on Friday with choice up 60 cents at $163.51 per cwt, its highest since Tuesday.
• Cash cattle traded at $97 per cwt in southern Plains this week, down $2.50 from the mostly $99.50 per cwt sales last week and $100 the previous week, highest price since early May.

• Feeder cattle are down about 1.4 percent for the week.
• Double-digit gains in corn futures prevented feeder cattle from following live cattle higher.
• Higher feed grains costs often reduce what investors and cattle producers will pay for feeder cattle.
• Near midday, CBOT December corn was up 16 cents, or 3.6 percent, at $4.63 1/2 per bushel.
• Open interest dropped by 157 contracts in Thursday's higher market to 37,354.
• CME feeder index for Sept. 1 was off 0.35 cent at 114.12 cents per lb.

• October and December peaked Friday at the highest since Aug. 25 before  gains were trimmed.
• Higher pork prices, bullish jobs report and higher stock market supportive.
• USDA's average cash pork price on Thursday up $1.65 at $92.38 per cwt, Wednesday's price was lowest since Aug. 13.
• Average pork price up, but still down $4.36 since setting a record high on Aug. 24.
• Latest Lean Hog Index off 0.35 cent at 82.66 cents per lb.

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  **The risk of loss in trading commodities can be substatial, and past performance is not necessarily indicative of future results.  Therefore, you should carefully consider whether such trading is suitable for you or your organization in light of your financial condition.  Information contained herein was obtained from sources believed to be reliable, but is not guaranteed as to its accuracy.  Neither the information, nor any opinion expressed shall be construed as an offer to buy or sell any futures or options on futures contracts.