Sep 21, 2014
Home | Tools| Events| Blogs| Discussions Sign UpLogin

AgDay Blog


Market Watch

RSS By: Alan Brugler, AgWeb.com

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

Rising Interest

Oct 16, 2009

 

Market Watch Summary with Alan Brugler & Kyung Ra

October 16, 2009

 

Rising Interest

 

Corn was up 2.69% for the week, despite a double digit sell off on Thursday and a weak Export Sales number on Friday morning.  They say a rising tide floats all boats.  Most of the commodity boats were floating this week on a tide of new money coming into commodities.  Open interest rose in many contracts as new buying shifted to short covering and then additional new buying.  Harvest progress is clearly lagging, and the physical corn market needs to get the bushels that are available.  That can be done via either higher futures or a stronger basis bid.  The debate will likely continue into November as to how much production might have been lost to the early October freeze event in the Corn Belt.

 

Wheat has been trying to insert itself into feed rations all around the world, due to surplus inventory.  USDA reported 854 million bushels of projected ending stocks a week ago, but futures treated that news as already in the market.  The rally in wheat was aided by higher prices for its corn competitor.  SRW planting delays are also noted, as you can’t plant into soybean stubble if the soybeans haven’t been harvested yet.  It’s also not a good idea to mud the seed in.  Hard wheat prices were also firm, aided by an Iraqi purchase of 200,000 MT of US HRW that firmed up the cash basis while the trade worked to source the bushels.

 

Soybeans also had an up week, albeit with a smaller % gain at 1.4% than in the feed grains.  The rally was oil led rather than meal led, literally.  Crude oil traded above $78 and pulled heating oil/diesel prices up.  That supported soybean oil through the prospect of increased biodiesel consumption.  NOPA reinforced this idea by showing smaller than expected October 1 soy oil stocks.  Soybean meal continues to struggle with demand issues, as US livestock numbers are down and ethanol plant production of distillers dried grains (DDGs) is up.  That creates more price competition for protein in the feed ration.

 

Cotton posted the largest percentage gain at 8.24% on our list this week.  Export sales are still nothing to write home about, not even reaching 100,000 RB this week.  Projected ending stocks are also comfortable at 5.4 million bales.  The bull story stems from an inflation/weak dollar play, combined with ideas that the US and world economy are both improving.  Over time, that suggests more textile demand not only for clothes but for household goods like drapes and sofas.  Speculative buying was substantial, with open interest rising for both futures and options.

 

Below is a table showing the net weekly changes and 4 week history of selected agricultural futures:

 

Market Watch

 

 

 

 

Weekly

Weekly

 

09/25/09

10/02/09

10/09/09

10/16/09

Change

% Change

December Corn

$3.34

$3.34

$3.62

$3.72

0.10

2.69%

December CBOT Wheat

$4.50

$4.41

$4.68

$4.99

0.31

6.57%

December KCBT Wheat

$4.69

$4.60

$4.85

$5.11

0.26

5.26%

December MGEX Wheat

$4.87

$4.78

$5.04

$5.26

0.22

4.37%

November Soybeans

$9.26

$8.85

$9.64

$9.78

0.14

1.40%

December Soy Meal

$283.90

$267.80

$297.30

$294.70

-2.60

-0.87%

December Soy Oil

$34.44

$34.07

$35.20

$36.94

1.74

4.94%

October Live Cattle

$86.05

$82.95

$82.62

$84.10

1.48

1.79%

October Feeder Cattle

$96.60

$93.55

$94.17

$94.55

0.38

0.40%

December Lean Hogs

$49.03

$48.55

$52.78

$54.10

1.33

2.51%

December Cotton

$61.94

$60.66

$63.02

$68.21

5.19

8.24%

December Oats

$2.19

$2.21

$2.40

$2.52

0.12

4.79%

November Rice

$13.09

$13.11

$13.40

$13.66

0.25

1.90%

 

            Hogs were up 2.51% for the week.  The weak dollar appeared to stimulate some export interest, particularly in hams.  Actual data on pork export sales lags by several weeks, but the primal was up sharply on days that the dollar was weak.  The pork carcass cutout ended the week at $56.50, and was up $3.55 from the previous Friday.  Slaughter continues to run near the highest levels of the year, but this was expected and the trade is looking past the big numbers toward tighter 1Q10 supplies.  Carcass weights are still running a couple pounds above last year, “creating” hogs in terms of the amount of pork that must be sold.

 

Live Cattle rallied for the first time in three weeks.  There were heavy deliveries of heavy cattle against the October futures contract, but they eventually found a packer who wanted them and that stabilized the cash prices.  Late week cash cattle sales were as much as $2 higher than the previous week, but not uniform.  USDA reported that the number of cattle on feed October 1 was 100.57% from a year ago.  That was above the average trade estimate.  Placements were 104.69% of year ago and September marketing were 96.36% of last year.

 

Market Watch:  Cattle traders will begin the week reacting to Friday’s Cattle on Feed numbers from the USDA.  Grain traders will be keeping a close eye on the US dollar, which keeps threatening to go higher but doesn’t seem to have any traction.  There will be interest in harvest progress as reported by USDA on Monday afternoon, and also in any drop in crop condition ratings due to last weekend’s freeze.  Census will release its monthly Oilseed Crush and Cotton Consumption reports on Thursday morning.  USDA will put out the monthly Cold Storage numbers on Thursday afternoon with attention focused on any buildup in pork supplies.  Grain traders will see November options expire on Friday, October 23.

 

There is a risk of loss in futures and options trading.  Past performance is not necessarily indicative of future results.  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 content, or visit the web site @ www.bruglermktg.com.

© 2009 Brugler Marketing & Management, LLC

Log In or Sign Up to comment

COMMENTS

No comments have been posted, be the first one to comment.

MARKETS

CROPSLIVESTOCKFINANCEENERGYMETALS
Market Data provided by Barchart.com
Enter Zip Code below to view live local results:
bayer
 
 
The Home Page of Agriculture
© 2014 Farm Journal, Inc. All Rights Reserved|Web site design and development by AmericanEagle.com|Site Map|Privacy Policy|Terms & Conditions