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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.

A Touch of Red

Jun 14, 2013

 

Brugler

Market Watch with Alan Brugler

June 14, 2013

A Little Bit Red

You can turn red from embarrassment, red from sunburn, or red from a paintball accident. The grain futures turned red this week, with corn, wheat, and the soy complex all posting negative net changes. It can be argued that they got a little sunburn, with the NWS 6-10 and 8-14 day forecasts consistently showing above normal temps for the bulk of the nation out through the end of June. That offers needed GDD accumulations for corn, and potentially drier fields to wrap up soybean plantings and allow more widespread wheat harvesting. Cotton might have rallied out of embarrassment, surging 7.7% after USDA confirmed that US ending stocks may only be 2.6 million bales. Hogs looked more like they had been shot out of that paintball gun, with June rallying to $102.30 before expiration on Friday. That was the highest trade in front month hogs since August 2011.

Corn futures lost 11 cents per bushel this week, a 1.7% loss which ended a string of 4 up weeks in a row. Ethanol plant margins are positive, although diminished by a retreat in futures prices. Weekly ethanol stocks dropped to 16 million barrels as consumption exceeded the net of production, imports and exports. Corn used by ethanol was about 95 million bushels for the week, depending on your assumed product yield. Corn export interest was poor. Since USDA lowered expected sales for the year to 700 million bushels, commitments YTD are now 98% of the forecast, and ahead of the 97% average pace for this date. Planting is still not completed. It should be around 98% on Sunday. The largest area of concern is the Dakotas, SE MN, Eastern IA, western IL and WI.

Soybeans lost 12 cents per bushel, after three up weeks. Meal futures were also down $1.80/ton in cautious pursuit of the corn market. Soybean meal export sales activity continues strong, with 144,800 MT booked in the most recent reporting week. Meal commitments are now 98% (typically only 92% by now) of the USDA forecast for the year, with soybean commitments at 101%.  The strong export sales pace for meal is raising concerns about availability of old crop beans for crushing in July and August. USDA did increase projected soybean imports another 5 million bushels in the Wednesday WASDE report. They left both old crop and new crop ending stocks UNCH, preferring to wait for better data from the June 28 reports.

 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

05/24/13

05/31/13

06/07/13

06/14/13

Change

% Change

July

Corn

 $     6.57

 $     6.62

$6.66

$6.55

($0.11)

-1.69%

July

CBOT Wheat

 $     6.98

 $     7.06

$6.96

$6.81

($0.16)

-2.23%

July

KCBT Wheat

 $     7.46

 $     7.51

$7.35

$7.12

($0.23)

-3.20%

July

MGEX Wheat

 $     8.06

 $     8.20

$8.20

$8.04

($0.16)

-1.92%

July

Soybeans

 $   14.76

 $   15.10

$15.28

$15.17

($0.12)

-0.77%

July

Soybean Meal

 $ 428.20

 $ 447.20

$452.50

$450.70

($1.80)

-0.40%

July

Soybean Oil

 $   49.24

 $   48.38

$48.53

$48.48

($0.05)

-0.10%

June

Live Cattle

 $ 120.58

 $ 121.30

$120.13

$119.00

($1.13)

-0.94%

Aug

Feeder Cattle

 $ 144.55

 $ 144.33

$143.63

$143.40

($0.22)

-0.16%

July

Lean Hogs

 $   93.30

 $   93.45

$96.20

$98.03

$1.83

1.90%

July

Cotton

 $   81.53

 $   79.36

$84.73

$91.29

$6.56

7.74%

July

Oats

 $     3.65

 $     3.74

$4.07

$4.00

($0.07)

-1.72%

July

Rice

 $   15.72

 $   15.30

$15.82

$16.51

$0.68

4.33%

 

Wheat futures were lower on all three exchanges, with Chicago down 2.21% and MPLS down "only" 1.9%. US weekly export sales for the first week of the new marketing year were 427,200 MT. MPLS was supported by ongoing wet weather. The last 5-10% of the crop may be too late to safely assume a yield if planted. USDA did report that 5% of the winter wheat crop has now been harvested. Our Brugler500 index was UNCH for winter wheat at 271 this week. USDA reported larger than expected winter wheat production at 1.509 billion bushels. Projected world stocks were trimmed 5 MMT to 181.25 MMT due to reduced expectations for Russia, Ukraine and the EU-27.

Cotton surged 656 points for a two week gain of 11.93 cents per pound. The US dollar continued to drop, and that made cotton cheaper in terms of importer currencies. USDA cut projected old crop ending stocks to a very snug 2.6 million bales on Wednesday. Global surplus supplies are still historically large at 92.49 million bales, but much of that inventory (58.93 million bales by August 2014) is in China and not available to global trade.  US weekly export sales were 198,400 running bales of upland and 3,500 RB for pima. Commitments YTD are now 100% of the newly revised USDA forecast for the year. That now lags the 109% average pace over the past 5 years.

Cattle futures lost $1.13 per cwt this week, about the same decline as the $1.18 from the previous week. Choice beef prices are reverting to the mean after their record levels in May. Wholesale beef prices were mixed this week, with Choice down 1.00% and Select up 0.2% on a Friday/Friday basis. There have been scattered cash cattle sales at $121, which would be $2 lower than last week. There is some resistance to the lower bids. US beef production YTD is 1.1% smaller than last year. Weekly slaughter was down 1.7% vs. 2012. Estimated carcass weight is 3# below last year’s actual of 788#.

Hog futures were up $.75 for the week, a continuation of a month long rally. Weekly export sales were much improved at 12,100 MT vs 6,600 MT the previous week. Estimated weekly slaughter was 1.949 million head. That was up 8.1% from the previous holiday week, and 0.6% larger than last year. Weekly pork production was down 3.5% from the prior week, and 10,000 head smaller than year ago. Average carcass weights were estimated to be a pound higher than year ago. Pork production YTD is 0.8% below last year at this time.  The pork carcass cutout value was up 8.09% for the week, with all of the primal cuts up by at least 3% and most up 10% or more.

 Market Watch

The main USDA reports for the week will be on the 21st, with Cattle on Feed and Cold Storage on tap. There is of course good interest in the Crop Progress report on Monday afternoon, both for planting progress and for crop condition ratings. Export sales data will come on Monday (Inspections) and Thursday (Export Sales). For flavor, the Fed Open Market Committee meets on Tuesday and Wednesday. July grain options expire on Friday as well. And, don’t forget, Friday will be the first official day of Summer!

There is a risk of loss in futures and options trading.  Such trading is not appropriate for all individuals. 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. Reproduction or rebroadcast of any portion of this article without written consent of Brugler Marketing & Management LLC is strictly prohibited.  Visit our web site at https://www.bruglermarketing.com or call 402-697-3623 for more information on our consulting and advisory services for farm family enterprises and agribusinesses.

Copyright 2013 Brugler Marketing & Management, LLC

 

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