Alan Brugler is the President of Brugler Marketing & Management, and the primary analyst and advisor.
A Cold and Wet Weather Picture
Apr 19, 2013
Market Watch with Alan Brugler
April 19, 2013
A Cold and Wet Weather Picture
There is still drought talk around (central NE has seen less than 3" of moisture January 1), but most of the market has switched to concerns about planting delays because of heavy rains. The map below shows the 7 day accumulations, with totals of 4 to 5 inches in parts of IA, MO, IL, IN and MI. In most cases it will take a week to 10 days of warm and drier weather to get back into those fields. Flooding was expected on the Mississippi River over the weekend, interfering with barge movement. In many Corn Belt locations, soil temps are still too cold for corn seed to germinate. Not to be overlooked, there is also snow cover of as much as 20" in Minnesota and the Dakotas. The NWS 8-14 day forecast does show a somewhat warmer and drier pattern from April 27-May 3, particularly in the Western Corn Belt.
Corn futures for the May contract lost 7 cents per bushel this week after gaining 30 the previous week. Weekly US production of ethanol was 832K barrels/day. That was the second largest grind since January, but use outstripped production. EIA ethanol stocks declined by 281K barrels (ending @17.507 M barrels). There were no imports of ethanol last week for the second week in a row. Cold wet weather kept most of the planters out of the fields, with USDA showing 2% of the crop planted vs. the 7% average for this week and 16% last year.
Soybeans rallied another 1% this week, adding to a 3.8% advance the previous week. May futures were up 15 cents. Total export sales for last week totaled 566,800 MT. This brought the total export commitments to 99.7% of the USDA forecast for this marketing year vs. the 5-year average of 93%. Total soybean meal export commitments stand at 99% vs. the 5-year average of 80%. Bean oil commits are 80% vs. the 5-year average of 78%. 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 in the USDA report, and are now expected to decline further due to H7N9 flu issues and resulting losses of live chicken demand.
Wheat futures lost 0.77% in Chicago and 0.86% in KC this week. MPLS was 18 cents or 2.23% because of the planting delays for spring wheat. The Brugler500 index for Winter Wheat condition declined to 298 from 299 the previous week. The HRW rating declined again this week because of freeze damage. The SRW rating improved again this past week, thanks to rainfall filling in needy areas. Some areas actually got too much rain, with reports of localized ponding in some wheat fields in Ohio. The USDA reported 1.674 MMT in weekly export sales of both new crop and old crop. HRW sales were 372,575 MT. SRW sales were 991,226 MT, with most of that new crop and including a big sale to China. HRS totaled 164,529 MT. Total wheat export commitments stand at 94% of the USDA’s projected amount vs. the 5-year average of 101%.
Cotton was down 1.8% this week. Cotton export sales continue to move right along, with the USDA Export Sales report showing net weekly sales of 247,200 RB for Upland and 15,000 of Pima. Total export commitments stand at 94% of the USDA projection vs. the 5-year average of 97%. Planting is just getting underway.
Cattle futures were 50 cents higher this week. Boxed beef was mixed for the week; Choice boxes gained 58 cents per cwt, while Select fell back 51 cents. Cash cattle trade was mostly $1-2 lower than last week, with Nebraska showing $200-202 on Friday and Colorado mostly $126-126.50. The weekly slaughter was 1.5% larger than last week and 2.7% larger than a year ago. A glance at the COF report shows the reason, with cattle backed up from March into April. Beef production for the year to date is still down 1.5%. Beef export sales for the week totaled 16,809 MT, a > 60% improvement from last week. The Friday evening USDA Cattle on Feed report showed much larger placement activity in March than had been expected by the trade. Placements were 105.97% of year ago. March marketings were also lighter than expected at 92.3% of last year. The combination left April 1 On Feed numbers at 95.0% of year ago.
Hog futures finished Friday with a weekly gain of 30 cents per cwt in the June futures. The pork carcass cutout gained 3.34% for the week, or $2.71/cwt. Ham prices rose 8.1% in a week, but all the cuts were higher. The estimated weekly slaughter was 2.139 million head, up 2.7% from the same week in 2012. Hog slaughter YTD (Year to Date) is now running 0.5% behind a year ago. Pork production YTD is down 1.1% because carcass weights continue to run 2 pounds lighter than last year at this time. USDA reported weekly pork export sales of 8,324 MT, down from 13,278 MT the previous week and 48,355 MT three weeks ago.
Cattle traders will start the week reacting to the fundamentally bearish USDA Cattle on Feed report from Friday. Both cattle and hog producers will need to at least glance at the Cold Storage report numbers on Monday afternoon, due to market expectations that the pork numbers in particular could be at near record levels. Grain folks will be interested in the export numbers from the Inspections report on Monday and the Weekly Sales report on Thursday. They will also look hard at the USDA Crop Progress report on Monday evening. That report is expected to show ongoing delays in corn and spring wheat planting vs. the average pace. April feeder cattle futures expire on Thursday. The May grain options will expire on Friday the 26th.
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