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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.

Spring Finally At Hand, Locally

Apr 26, 2013

 Brugler

Market Watch Alan Brugler

April 26, 2013

Spring Finally At Hand, Locally

 

The weather has turned warmer, with more "normal" and even some "above normal" readings. The US weather pattern has also turned a little drier, particularly in the western Corn Belt. The combination means that a few more planters are out of the shed, and a many more farmers are anxious for the soil dry down that will allow them to get into the field.       

 

Corn futures for the May contract lost 8 cents, or 1.23% on the week. Ethanol production rose to an average 853K bpd last week. This is up 21K from last week and above the 4-week average of 824.5K. Ethanol stocks increased by 85K barrels to 17.692 million barrels. Stocks remain well below a year ago when over 21 million barrels were in storage. Exports sales were strong at 335,900 MT. Private exporters also reported a 240,000 MT new crop sale to China along with a 300,000 MT sale to an unknown. The new marketing year begins September 1. Cold and wet weather still kept most of the planters out of the fields, with USDA showing only 4% of the crop in the 18 major states planted as of April 21.  The CFTC Disag report shows managed money cut their net long position by 40,149 contracts to be net long 12,239 contracts.  This is the least-long managed money position reported since April 27, 2010.

 

Soybeans ended the week 2 cents higher, after a choppy week of trading.  May futures lost 15 cents on Wednesday, and then rallied back 19 cents on Thursday. US export sales last week showed a net reduction of 206,300 MT for 2012/13 due to a Chinese cancellation, and sales of 628,480 MT for the 2013/14 marketing year.  US export commitments are now 99.15% of the revised USDA expectation for the year. There are still concerns about cancellations this summer if exporters are double bought and the South American beans they have purchased are finally delivered.  Projected Chinese imports for 12/13 were lowered 2 MMT to 61 MMT. There is some trade talk that the number might be lowered to 59 MMT eventually, based on slow 1Q imports and the avian flu (H7N9) virus control efforts likely limiting second quarter demand. The net position of managed money was near unchanged as of last Tuesday. They are currently net long 73,705 contracts, down 864 from the previous report.

 

Wheat futures lost 2.86% in Chicago, and 1.76% on the Minneapolis exchange, but KC wheat gained 1.34% this week. The Brugler500 index for Winter Wheat condition dropped from 298 to 293 on a 500 point scale. The HRW rating declined again on freeze damage. The SRW rating held steady. Some areas actually got too much rain, with reports of localized ponding in some wheat fields of Ohio.  Managed money accounts increased their net long position in KC wheat by 1,756 contracts, and decreased their net short position in Chicago wheat by 6,308 contracts; indicating a friendlier attitude for both classes.  

 

Cotton was down 128 points on the week, losing 1.53%.  Global cotton consumption is expected to increase by 4% in 2012/13.  Global stocks are expected to shrink 10% due in part to China holding 55% of the world supply.  Export sales continue to be the bright spot in the domestic cotton market, with a combined 266,700 RB reported for the week.  Overall commitments stand at 96% of the USDA estimate for the marketing year.  The five year average pace is 98% for this date.  The CFTC commitment of traders report showed managed money decreased their net long position in cotton by nearly 1%.  

 

 

 

 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

04/05/13

04/12/13

04/19/13

04/26/13

Change

% Change

May

Corn

$6.29

$6.59

$6.52

$6.44

($0.08)

-1.23%

May

CBOT Wheat

$6.99

$7.15

$7.09

$6.89

($0.20)

-2.86%

May

KCBT Wheat

$7.26

$7.53

$7.46

$7.56

$0.10

1.34%

May

MGEX Wheat

$7.88

$8.08

$8.26

$8.11

($0.15)

-1.76%

May

Soybeans

$13.62

$14.14

$14.28

$14.31

$0.02

0.18%

May

Soybean Meal

$391.80

$400.30

$412.40

$417.90

$5.50

1.33%

May

Soybean Oil

$48.83

$49.30

$49.16

$49.66

$0.50

1.02%

Apr

Live Cattle

$126.03

$125.85

$126.35

$127.85

$1.50

1.19%

May

Feeder Cattle

$144.30

$140.93

$139.20

$141.80

$2.60

1.87%

June

Lean Hogs

$89.70

$89.90

$90.20

$92.53

$2.33

2.58%

May

Cotton

$86.65

$85.02

$83.48

$82.20

($1.28)

-1.53%

May

Oats

$3.60

$3.80

$3.92

$3.91

($0.01)

-0.32%

May

Rice

$15.50

$15.82

$15.23

$14.80

($0.43)

-2.82%

 

 

Cattle futures were up 1.19% for the week, gaining $1.50.  Boxed beef was also higher this week.  Choice gained $2.79 and Select was up $.80 from Friday to Friday.  This brought the spread to $8.46, which is $1.99 wider than it was last Friday. Cash cattle trade showed some slight improvement from last week with some cash cattle changing hands late Thursday with sales at $1.28 in Iowa on a live basis. Sales took place at $2.03 on a dressed basis which is slightly higher than reports last week of $2.02.  Texas also had sales at $1.28, which is up $2 from last week.  The weekly slaughter numbers this week were 10,000 head larger than last week, and the same period last year.  This week’s figure is 625,000 head including the Saturday estimate. Beef export sales for the week totaled 15,854 MT.

 

Hog futures were $2.33 higher this week, gaining 2.58%. The CFTC report, which runs Tues to Tues, shows managed money added to their net long position with an increase of 488 contracts.The pork carcass cutout gained $3.81 or 4.54% for the week.  The overall cutout was well supported with the Loins and Butts cuts both gaining more than 4%, and Pics were up 5.85% while the Hams cut gained 6.31%. The estimated weekly slaughter is 2.148 million head including Saturdays projected kill. Hog slaughter is now running 0.3% behind a year ago.  USDA reported weekly pork export sales of 12,184 MT which up from the prior week when they were put at 8,324 MT.

 

Market Watch

 

Grain futures will start the week reacting to the loss of "coverage" of May futures, as the May options expired on Friday. Some folks have "surprise" positions to be adjusted on Monday. The traders will be very interested in the weekly USDA Crop Progress report on Monday afternoon, expecting it to show corn and spring wheat planting progress that is still well behind the normal pace. Winter wheat ratings are also expected to be down again because of further freeze damage.  The USDA Export Inspections (Monday) and Export Sales (Thursday) will also be key gauges of disappearance. April live cattle futures will expire on Tuesday. May cattle options will expire on Friday. Not to be overlooked, the Fed will be meeting on Tuesday and Wednesday.

 

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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