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RSS By: Alan Brugler, AgWeb.com

Alan Brugler is the President of Brugler Marketing & Management, and the primary analyst and advisor.

No Fooling, Grains Down and Livestock Up

Apr 01, 2010
 


Market Watch with Alan Brugler
April 1, 2010
 
No Fooling, Grains Down and Livestock Up
 
It was a short week, with US markets closed on Friday for the Good Friday and the Easter weekend. Some European markets will also be closed on Monday. Just because it was a short week didn’t mean it was quiet and dull. USDA rolled out the much hyped Planting Intentions and Grain Stocks reports on Wednesday morning, and they moved the markets off of dead center. The US dollar index was also lower for most of the week, adding a little volatility to commodity prices overall. Crude oil was the main beneficiary (or victim, depending on your point of view), with May settling at $84.87 on Thursday.
 
Corn prices were down 3.3% for the week, the worst performance among the grains. USDA’s Grain Stocks report was the main reason for the sell off. March 1 inventory was 7.684 billion bushels, failing to show any feed use impacts of light test weight corn. It is highly likely that USDA will raise projected ending stocks for the year in the April 9 WASDE report, based on this information. The planting intentions figure at 88.798 million acres was neutral to friendly, but with the assumed increase in carryover stocks it could not be deemed bullish.
 
Soybeans dropped another 10 cents per bushel for the week, just over 1%. We said the same exact thing last week. Meal futures were a lot different, however, losing $5.10/ton for the week after double digit losses on Wednesday. Soy oil was up a mere 3 ticks for the week, and that was due to a 67 point rise on Thursday. Concerns about China limiting veg oil imports turned out to be more of an Argentine issue, and that allowed higher energy futures to spill over into the soy oil market on Thursday. Census also revised the February soy oil stocks lower in the Fats & Oils report than they had been in the Crush report. Looking at soybeans themselves, USDA’s acreage intentions figure of 78.098 million was regarded as neutral to friendly. However, the March 1 stocks figure of 1.27 billion bushels was above the trade average guess. It implies ending stocks of 200 million bushels or so, depending on your summer crush and export sales expectations. That is “comfortable” and fueled a sell off on Wednesday. The settlement of the Argentine stevedores strike (via a 27% wage hike) also put pressure on US soybean prices.
 
Wheat futures were again lower at all three exchanges. USDA reported larger than expected spring wheat planting intentions at 13.906 million acres. It also found a few more winter wheat acres than were shown in the January report. The new estimate is 37.698 million. Along with durum, that pushed total 2010 acreage to 53.827 million. With a billion bushels of old crop expected to still be in the bin on May 31, the extra acres were not welcome. Prices slumped to new life of contract lows on Wednesday. USDA weekly export sales on Thursday morning were at the upper end of the trade estimates. Egypt continues to favor cheaper Russian wheat, but the US is making sales.
 
Cotton prices were up 2.27% for the week, with inflation or at least consumer spending expectations fueling the higher prices. A weak US dollar also helped this week. The 2010 cotton planting intentions as of early March totaled 10.505 million acres according to the USDA survey. With ginning data suggesting that perhaps the 2009 crop was overestimated, the market rallied on the fact,  in an attempt to attract a few more acres by the time the planters are done rolling. Turkey was the largest buyer in the export market for the previous week.
 
Cattle futures had a nifty 2.8% gain for the week, offsetting a good chunk of the damage from the prior week. Weekly export sales slowed to 7,500 MT (?), but shipments are still solid and the U.S. consumer appears to be inclined to spend a little more on meat. Choice boxed beef on Thursday was quoted at $163.41. That was up 72 cents from the previous Friday. Cash cattle on Thursday traded at $156 in Nebraska, and $96 in the South.
 
Below is a table showing the net weekly changes and 4 week history of selected agricultural futures:
 
 
Market Watch
 
 
 
 
Weekly
Weekly
Month
03/12/10
03/19/10
03/26/10
04/01/10
Change
% Change
May
Corn
$3.64
$3.75
$3.56
$3.45
0.12
-3.30%
May
CBOT Wheat
$4.85
$4.83
$4.65
$4.55
0.10
-2.21%
May
KCBT Wheat
$4.95
$4.93
$4.76
$4.70
0.05
-1.16%
May
MGEX Wheat
$5.13
$5.09
$4.97
$4.89
0.08
-1.61%
May
Soybeans
$9.25
$9.62
$9.52
$9.42
0.10
-1.05%
May
Soybean Meal
$251.30
$270.25
$271.00
$265.90
5.10
-1.88%
May
Soybean Oil
$39.55
$39.30
$38.95
$38.98
0.03
0.08%
April
Live Cattle
$95.10
$97.97
$94.02
$96.65
2.63
2.80%
April
Feeder Cattle
$105.98
$108.68
$107.20
$110.37
3.17
2.96%
April
Lean Hogs
$72.65
$73.35
$69.67
$74.25
4.58
6.57%
May
Cotton
$80.47
$82.18
$79.69
$81.50
1.81
2.27%
May
Oats
$2.19
$2.25
$2.12
$2.11
0.02
-0.71%
May
Rice
$12.43
$12.70
$12.46
$12.38
0.08
-0.64%
 
Hogs spent all week reversing the sell off they had experienced in the week prior to the Hogs & Pigs report. The H&P report was bullish in almost all categories, leading to a mostly limit up day on Monday and a 6.57% rally for the week. Pork prices jumped to $74.14 on Thursday, up $3.38 for the week. There’s nothing like a Hogs & Pigs report showing fewer hogs in the pipeline to make that pork worth more to the seller!
 
Market Watch: April cattle options expired on Thursday, leaving a few traders with surprise positions or a lack of positions to be dealt with on Monday. Monday is also first notice day for deliveries against April cattle futures. Grain traders have the usual Export Inspections report on Monday and weekly Export Sales report on Thursday. The Monthly USDA WASDE report is scheduled for Friday morning, April 9. Many of the US balance sheet changes will be driven by the information from the March 31 reports, but there will be interest in exactly how USDA allocates the “extra” bushels found in the stocks reports. Adjustments in the world numbers can also affect US export forecasts.
 
There is a risk of loss in futures and options trading. Past performance is not necessarily indicative of future results. Comments made in this article are in no way to be seen as an endorsement of futures and options trading, or of any particular risk management technique. Reproduction or rebroadcast of any portion of this article without written consent of Brugler Marketing & Management LLC is strictly prohibited. Call 402-697-3623 for information on our more extensive paid subscription and consulting services.
 
                                                                                                                                      Copyright 2010 Brugler Marketing & Management, LLC
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COMMENTS (6 Comments)

Anonymous
Sold some corn for $1.75 a bushel. .80 cent basis and a .40 cent drying charge. Small amount. And some storage charges. And some test weight discounts. No more corn grown in this geographically disadvantaged area with high basis or transportation costs. If your able to contract $4.00 corn this spring considered yourself blessed by living and farming in the corny belt.
10:02 AM Apr 3rd
 
Anonymous
Amazing how we can not factor into the equation test weights. Markets always factor in bigger crops if they dont agree with USDA numbers. But it appears they will not factor in smaller crops, even though we all know test weights were lower on average. Why is this system even allowed to function. Too much corn not priced this year and market feels it has a right to steal this one.
9:54 AM Apr 3rd
 

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