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Market Watch

RSS By: Alan Brugler, AgWeb.com

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

Spring Forward, Fall Back

Mar 10, 2009

 
Market Watch with Alan Brugler

March 6, 2009

 

Spring Forward, Fall Back

 

This is time change weekend, where most parts of the US advance their clocks one hour for Daylight Savings Time. The feed grain futures were able to also advance for the week, with corn up 2 cents and all three wheat contracts higher by 5 to as much as 16 cents. One of their main customers, the cattle market, saw futures prices down 4.16% for the week. Hogs on the other hand were able to respond to seasonally tighter numbers with a rally of 2.76%.

 

KC wheat was our bull leader for the week. While FAPRI released a larger projected 2009 wheat planting number than the one from USDA, the trade remained skeptical about an increase in spring wheat acres. Some were also beginning to get more nervous about dryness in the southern Plains as the rainfall pattern continued to miss a big chunk of Texas and Oklahoma. That allowed KC to gain 10 cents on CHI in the spread. Spring wheat is the one variety where price can still stimulate more acreage in 2009, and that allowed MPLS futures to climb a nickel higher.

 

Corn futures were also higher for the week, a moral victory for the bulls. Weekly export sales were just slightly above the high end of the trade estimates going into the report (791,900 MT) , but still light compared to bookings in January. We were starting to get a little short covering/profit taking ahead of this week’s USDA WASDE supply/demand estimates, with expectations for a possible cut in Argentine or Brazilian production.

 

The nearby March soybeans were able to post a 4 cent gain for the week, despite lower prices for both the meal and oil. A total lack of delivery notices against March soybeans fueled a mini-squeeze and had some shorts who had been expecting to receive deliveries (to redeliver against their later dated short positions) scrambling to get out. Soybean oil demand has been nicked a little by the recession, and also by negative margins in the biodiesel industry. Census against reported a slowdown in monthly US methyl ester production from soybean oil feed stock. Weekly export sales were also down sharply from those reported in recent weeks, despite uncertainties about Argentine delivery schedules. The total of only 155,800 MT was the smallest of the marketing year, which began on September 1.

 

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

 

Market Watch

 

 

 

 

 

 

 

 

 

 

 

Wkly

Wkly

 

02/13/09

02/20/09

02/27/09

03/06/09

Change

% Change

March Corn

$3.63

$3.50

$3.51

$3.53

0.02

0.57%

March CHI Wht

$5.36

$5.19

$5.11

$5.16

0.06

1.11%

March KC Wht

$5.75

$5.56

$5.52

$5.68

0.16

2.88%

March MGE Wht

$6.36

$6.22

$6.26

$6.31

0.05

0.80%

March Soybeans

$9.56

$8.63

$8.75

$8.79

0.04

0.52%

March Soy Meal

$297.70

$270.00

$275.80

$274.25

1.55

-0.57%

March Soy Oil

$33.00

$30.22

$30.85

$30.76

0.09

-0.30%

Apr Live Cattle

$87.00

$83.42

$85.92

$82.45

3.47

-4.16%

March Feeder Cattle

$94.47

$88.38

$92.60

$90.50

2.10

-2.38%

Apr Lean Hogs

$63.75

$57.95

$60.90

$62.50

1.60

2.76%

March Cotton

$44.03

$43.03

$42.06

$40.26

1.80

-4.18%

March Oats

$1.85

$1.69

$1.85

$1.74

0.11

-6.23%

March Rice

$12.51

$11.99

$12.37

$12.12

0.25

-2.04%

 

Cotton futures were down 4.18%, just about matching the cattle decline. Weekly export sales were slow at 240,300 RB, and China was only a marginal buyer of 88,700 RB. The trade had been looking for China to announce fresh stimulus moves at the People’s Congress, but new programs were not forthcoming as the week ended. The USDA hiked the LDP/MLG for this week to 19.21 cents per pound.

 

Cattle futures were lower, having trouble gaining bullish traction in the face of sluggish restaurant demand and some indications of reduced consumer spending on meat at home. The wholesale market was firmer on light packer offerings, but the choice/select spread continued to reflect a surplus of the fancier cattle compared to what the market was demanding. The stronger dollar is also a constraint on beef exports.

 

Hog futures saw gap higher price action at mid-week, on a combination of pre-positioning for the Goldman roll, seasonally tighter slaughter numbers, and reduced competition from poultry products. Estimated pork production for the week was up 0.2% vs. year ago, but cumulative production since January 1 is down 5.2%. The lean pork cutout still lost some ground during the week, ending at $55.06 with some softness in the rib cuts on Friday.

 

Market Watch:  USDA will headline things this week with their monthly WASDE report on Wednesday.  The market will be watching for changes to South American production in particular, and any world trade adjustments due to the economic slowdown. The other routine reports are the export inspections on Monday and the Export Sales on Thursday. March cotton futures expire on Monday the 9th. March grain and oilseed futures expire on Friday the 13th.

 

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

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