Margin Watch: Mid-December

December 17, 2009 by Chip Whalen

Hog

Margins held relatively steady through the first half of December, with movements in hog & feed prices largely offsetting. Despite expectations for feed prices to succumb to pressure from year-end profit-taking and thin trading conditions, corn and meal futures remain quite firm. There is concern that unharvested corn acres through parts of the northern Midwest are vulnerable to losses after a significant snowstorm this past week hit the region, while continued demand from China has kept the soybean complex well supported. Meanwhile, a notable gain in the pork cutout… Get the Complete Report »

Dairy

Margins showed a general trend of improvement since the end of November,as milk prices continue to firm with a strengthening cash market. The latest round of the CWT’s herd retirement program has shrunk supplies while the export market remains quite firm. A poor spring flush in Oceania has led to very strong cheese prices there that are helping to keep U.S. exports competitive in the world market.Meanwhile, there is some concern that corn left unharvested in parts of the northern and western Midwest is susceptible to losses following the first significant snowstorm… Get the Complete Report »

Beef

Cattle production margins had a roller coaster ride through the first half of December, as a significant break in corn futures helped to boost profitability before prices rose again. The season’s first snowstorm left some unharvested corn acres under snow this past week in parts of the northern and western Midwest, and there are concerns that this will be reflected in lower harvested acreage, and/or loweryields in the upcoming USDA January report… Get the Complete Report »

Corn

Crop margins deteriorated slightly through the first half of December, as futures managed to recover from an early month sell off, although basis values weakened since the end of November. The market started the month off under pressure as it became clear U.S. corn was uncompetitive in the export market. The USDA lowered their export forecast 50 million bushels in the recent supply/demand report,… Get the Complete Report »

Soybeans

Margins weakened slightly since the end of November as futures prices appear to be stalling out at current levels following a significant advance last month. The strong fundamentals for the soybean complex remain in place with solid demand from China causing the USDA to raise their export forecast in the recent supply/demand report by 15 million bushels. Traders are becoming more cautious though as the weather conditions in South America have been quite favorable, and competition will intensify from Brazil… Get the Complete Report »

Wheat

Margins deteriorated since the end of November as futures succumbed to pressure over the past two weeks. Resistance appears to be very strong near$6.00 and the cash market is trading at significant premiums relative to other world origins, rendering U.S. wheat uncompetitive in the export market. Meanwhile, the USDA raised ending stocks yet again in their December crop report, as food use was projected… Get the Complete Report »

About the Author

There is a risk of loss in futures and options trading. Past performance is not indicative of future results. The information contained in this publication is taken from sources believed to be reliable, but is not guaranteed by Commodity & Ingredient Hedging, LLC, nor any affiliates, as to accuracy or completeness, and is intended for purposes of information and education only. Nothing therein should be considered as a trading recommendation by Commodity & Ingredient Hedging, LLC. The rules and regulations of the individual exchanges should be consulted as the authoritative source on all contract specifications and regulations.