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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.

98 Pound Weakling

Apr 21, 2011

brulogomed

Market Watch with Alan Brugler

April 22, 2011

98 Pound Weakling 

We are, of course, referring to the US dollar. The US dollar index dropped below the 2009 low on Friday, settling at the lowest reading since June 2008. That means US consumers have lousy purchasing power for imported goods, but does help the US in the export arena for countries that float their currency. China allowed the yuan to rise to the highest level in modern times as it again took tightening steps in the banking system. Against this weak dollar backdrop, gold set new all time highs in nominal dollars, and silver climbed to $46.27. It hasn’t been that high since the Hunt Brothers era.

Corn had the second down week in a row, losing 5 cents per bushel in the front month May futures. December futures were a different story, up 9 ½ cents on the week. That tells you what you need to know. There were signs of old crop demand rationing, including the smallest weekly ethanol production number since last fall. Wheat had been briefly below corn for the first time in 15 years, and soybean meal was also historically cheap vs. corn. That made it easy to assume that less corn was being fed. Exports weren’t worth writing home about, either. For new crop, the story was weather, specifically wet weather across the entire Corn Belt. The 8-14 day forecast offered some hints of dryer weather in the western fringe of the CB by early May, but weather premium was being put into the market.

The soybean complex was back in the bull camp, posting a 49 cent gain. Meal appeared to be getting some of its oversupply issues handled, and meal futures were up 3.94% for the week. Soy oil got a lift from rising energy futures, rising 2.5%. The weak US dollar has definitely helped to support the beans, which were also getting bearish feedback about Chinese demand and rising crop estimates out of South America. The newest Argentine figure is 50.4 MMT from the Ministry of Agriculture.  USDA is still below 50 MMT.

Wheat was up sharply at all three exchanges, advancing more than 7%.  The drought continued in the Southern Plains, with trade estimates for the Texas crop now below 45 million bushels. Oklahoma numbers in the 60-70 million range are also built into the bullish price move this week. MPLS futures were up on continued wet conditions that are presumed to continue into May, delaying planting of the 14.4 million acres of spring wheat shown in the March intentions report. Trade estimates are universally below 14 million acres now, although there is still plenty of time to plant the crop if the weather improves. Chicago futures got a boost from some feed buying interest, which in turn boosted basis bids sharply in some areas. At the end of the week, spot wheat futures were no longer a bargain compared to corn. Trade estimates for weekly export sales ranged from 400 to 850 thousand MT. Actual sales were disappointing; at 303,200 MT.

Cotton futures continued to slide, and in fact accelerated. They lost 4.5% this past week, vs. 3.67% for the previous week. Much of that was "get me out" trade after May options expired, and before May futures deliveries began. There is little old crop US cotton for sale, but availability of Southern Hemisphere new crop supplies has taken the edge off of the world market. USDA again reported net negative old crop sales in the weekly export sales report, as foreign buyers cancel purchases or delay them into new crop time slots because they can’t get enough out of the yarn to pay for the cotton.

Here are the Friday night closes for the past four weeks, along with the net change for this week vs. the previous week:

 

Commodity

 

 

 

 

Weekly

Weekly

Month

04/01/11

04/08/11

04/15/11

04/21/11

Change

% Change

May

Corn

$7.36

$7.68

$7.42

$7.37

0.05

0.64%

May

CBOT Wheat

$7.60

$7.98

$7.44

$8.00

0.55

7.42%

May

KCBT Wheat

$9.07

$9.33

$8.66

$9.33

0.67

7.74%

May

MGEX Wheat

$9.23

$9.53

$8.89

$9.52

0.63

7.03%

May

Soybeans

$13.94

$13.92

$13.32

$13.81

0.49

3.66%

May

Soybean Meal

$360.90

$357.20

$345.20

$358.80

13.60

3.94%

May

Soybean Oil

$58.68

$59.77

$56.84

$58.27

1.43

2.52%

Apr

Live Cattle

$122.08

$118.83

$117.40

$118.40

1.00

0.85%

Apr

Feeder Cattle

$138.10

$134.60

$132.15

$132.28

0.13

0.09%

May

Lean Hogs

$103.07

$100.97

$102.42

$102.05

0.37

0.36%

May

Cotton

$195.55

$202.97

$195.52

$186.67

8.85

4.53%

May

Oats

$3.75

$3.94

$3.83

$3.90

0.07

1.76%

May

Rice

$13.81

$13.69

$13.64

$14.00

0.36

2.64%

 

 Cattle futures were up $1.00 for the week, offsetting most of the $1.43 they lost the previous week. On a Thursday/Thursday basis the choice boxed beef value was down another $1.60 or 0.85%. The product weakness limited the ability of packers to pay up for cattle. Nebraska cattle did trade late on Thursday at $120 live and $190-193 in the beef. USDA released the Cattle on Feed report on Thursday afternoon. March placements were a little lighter than the average trade guess, at 103.3% of last year. Marketings during March were strong, at 104.5%. In fact, USDA said that was the largest March slaughter run in 11 years. That makes the March strength in the wholesale market all the more remarkable. April 1 on feed numbers were 105% of last year.

Hogs lost a modest 37 cents for the week, with May at $102.05. Wholesale pork prices continue to be record high for this time of year, but did drop 94 cents for the week on a Thursday/Thursday basis. That was 0.98%.  The USDA Cold Storage report on Thursday afternoon showed 52.5 million pounds of pork bellies in storage on March 31. That was up only 3% from February, and down 11% from year ago. Total pork in storage was 12% above last year, but up only 1% from last month. Ham inventory was 73% larger than the year before, but may have been affected by the late Easter this year.

Market Watch:  The main focus for grain traders this coming week will be the USDA crop progress reports on Monday night. Little planting progress is assumed to have been made over the past week, but there is an interest in quantifying the situation. Mid-range weather forecasts will also get a lot of scrutiny. The usual Export Inspections and Export Sales reports will be out on Monday and Thursday respectively. Census will also release their Crush report and Cotton Consumption report on Thursday morning. Cotton traders will be dealing with May futures deliveries, which begin on Monday. Friday will mark first notice day for May futures deliveries in the grains, and also the expiration of the April Live Cattle contract.


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.  Call 402-697-3623 for information on our individualized subscription and consulting services.

 Copyright 2011 Brugler Marketing & Management, LLC

Looking to enhance your existing Ag Marketing Professional subscription? Add free futures market quotes sent to your cell phone via our Market Monitor service. Or "push" the daily recommendations out to your phone as they happen with Market Messenger 2. Call in consulting service with Alan is also available for a limited number of new customers in our Ag Marketing Professional Premium package. Call our office for details on either service at 402-289-2330. 

 

 

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