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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.

40 Days and 40 Nights

Oct 23, 2009

 

Market Watch Summary

October 23, 2009

 

40 Days and 40 Nights

 

The wet weather in the Corn Belt hasn’t reached Biblical proportions yet, but there is definitely too much rain to permit harvesting corn and soybeans to catch up anywhere near the USDA 5-year average pace.  The ECB states did have a nice window for soybean harvest this past week, but are now for the most part shut down and awaiting drier weather.  The WCB is already in that condition.  Double crop SRW plantings are behind in the ECB states as a result of soybean harvest delays.  Cotton harvest throughout the Delta and Southeast so far this week are also well behind the USDA 5-year average pace.

 

Corn was up 6.92% for the week despite poor weekly export sales yesterday and weak export inspections on Monday.  Gains are attributed to the market’s reaction to harvest delays and an overall downward trend to the US dollar index.  Thursday’s open interest for the December corn futures was down 617 positions, leaving a total open interest in the December contract at 534,105 positions.  CFTC showed increases on Friday of about 3500 net long positions by Index Funds and an increase of about 24,000 contracts by Large Speculators.  The Small Speculators and Commercials offset in kind the increases by the Index Fund and Large Specs.

 

Wheat rose 9.82% in Chicago, 7.64% in Kansas City and 6.61% in Minneapolis for the week.  Strong weekly export sales of nearly 685,000MT as reported by the USDA on Thursday along with a down trending US dollar index for the week supported the rally in wheat futures.  SRW planting delays in the Midwest also brought a friendly tone to contracts.  Although, wheat production outlooks for Ukraine and Argentina may see a reduction, existing abundant global supply will offset any disruption in new crop stocks.

 

Soybeans were up 2.97% for the week, with strong gains in soy oil for both US futures and Dalian (China).  China is restricting rapeseed imports by requiring a new disease certification that will be hard for Canada to meet.  Bulls expect higher soy oil prices as a result.  Harvest delays due to wet weather this week throughout the Bean Belt and strong weekly export sales numbers for soybeans at 987,000 MT contributed to this week’s rally.  The US Census yesterday, indicated September soybean crushings at the high end of trade estimates at 113.97 Mbu and soymeal ending stocks at 239,179 short tons, which came out better than expected.  The Census oil mill data was friendly to both soybean and soymeal.  Soy oil received support from a $2 plus weekly gain in crude oil futures.

 

Unlike grains, cotton ended the week down 1.22%, but this week’s trading was range bound.  Marketing year lows in weekly export sales and shipments at 30,900 bales and 114,500 bales, respectively, offset some bullish tone to cotton futures.  Open interest at the ICE rising on speculative and investment buying by 1,917 positions at the close of trading Thursday, attributed to news of weather related harvest delays, lent a friendly tone to futures.  A sharp decline during Friday’s session in reaction to forecasted dry conditions this weekend over much of the Delta region, which will hasten harvesting quieted a weeks worth of rallies.

 

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

 

Market Watch

 

 

 

 

Weekly

Weekly

 

10/02/09

10/09/09

10/16/09

10/23/09

Change

% Change

December Corn

$3.34

$3.62

$3.72

$3.98

0.26

6.92%

December CBOT Wheat

$4.41

$4.68

$4.99

$5.48

0.49

9.82%

December KCBT Wheat

$4.60

$4.85

$5.11

$5.50

0.39

7.64%

December MGEX Wheat

$4.78

$5.04

$5.26

$5.61

0.35

6.61%

November Soybeans

$8.85

$9.64

$9.78

$10.07

0.29

2.97%

December Soy Meal

$267.80

$297.30

$294.70

$303.30

8.60

2.92%

December Soy Oil

$34.07

$35.20

$36.94

$37.94

1.00

2.71%

October Live Cattle

$82.95

$82.62

$84.10

$86.35

2.25

2.68%

October Feeder Cattle

$93.55

$94.17

$94.55

$94.25

-0.30

-0.32%

December Lean Hogs

$48.55

$52.78

$54.10

$53.02

-1.08

-2.00%

December Cotton

$60.66

$63.02

$68.21

$67.38

-0.83

-1.22%

December Oats

$2.21

$2.40

$2.52

$2.50

-0.01

-0.50%

November Rice

$13.11

$13.40

$13.66

$13.43

-0.23

-1.65%

 

            Hogs were down 2% for the week.  Weakness in wholesale pork cutout prices since Monday weighed on futures.  Friday afternoon’s average pork carcass value was $1.37 lower at $55.35 per 100 pounds compared to Monday’s value.  Strength in cash hog direct market trading this week where hogs sold $1.81 higher on a carcass basis, limited some downside pressure.  Earlier this week December contracts were trading at a large premium to the CME lean hog index, which weighed on futures as well.

 

Live Cattle for the week ended 2.68% higher.  Cash cattle traded at $85.50 to $86.00 on a live basis which was up $1 to $1.50 for the week.  Afternoon boxed beef prices for Choice rose $2.25 from last Friday to this Friday in support of this week’s live cattle price.  There were heavy deliveries notices posted against the October futures contract this week, where total deliveries stand at 891.  A reallocation by one of the Deutsche Band index funds also brought fresh buying into livestock futures.

 

Market Watch:  November options expired on Friday, October 23 for corn, wheat and the soy complex with some surprises in or out of the money.  Friday, October 30 is the first notice day for November soybeans, as well as the last trade day for October live cattle.  Thursday, October 29 is the last trading day for options and futures on October feeder cattle.  The USDA will release its weekly export inspections and crop progress reports on Monday.  The latest consumer confidence will be released on Tuesday.  New Home Sales and the weekly EIA report will be released on Wednesday.  The latest 3rd Qtr GDP, weekly export sales, and jobless claims will be released on Thursday.  The latest personal income will be reported on Friday.

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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