Aug 27, 2014
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August 2013 Archive for Market Watch

RSS By: Alan Brugler, AgWeb.com

Alan Brugler is the President of Brugler Marketing & Management, and the primary analyst and advisor.

On Hold

Aug 30, 2013

Brugler

Market Watch with Alan Brugler

August 30, 2013

On Hold

 The grain markets started out this past week with a bang, rallying sharply on forecasts for much above normal temps and below normal precip in the Corn Belt, where corn and soybeans are still filling out ears and pods. We spent the rest of the week leaking lower, as bullish traders banked gains ahead of month end.  By Friday the market was on hold for  the 3-day holiday weekend. History suggests that the Tuesday after Labor Day is anti-climatic, with the largest Tuesday gain since 1980 in corn just over 3.9% and the largest soybean gain 4.47%. Historically, corn has been up 54% of the time on the Tuesday after the holiday, with soybeans up 57% of the years.

September corn futures were down fractionally for the week, a 0.1% drop. December futures were up 12 cents thanks to a 30 cent rally on Monday. End of month and pre-holiday profit taking pared those gains. The trade, particularly the spec funds, continues to be bearish but less so because of the heat and dry weather in the western Corn Belt. The Commitment of Traders report on Friday showed the Managed Money category exiting 34,350 contracts from their net short position in the week ending 8/20. They were still net short 57,428 contracts as of August 27. US ethanol production was down 24K bpd from last week to 820,000 bpd, and stocks were down 200,000 barrels from last week.  Imports averaged 4,000 bpd, down from 19,000 bpd the previous week.  Weekly corn export sales were negative for old crop due to cancellations and rollovers, but increased by a net 673,800 MT overall. Record new crop corn yields have been reported by various producers in TX, LA and MS, with minimal aflatoxin problems to date.

Soybeans gained 59 cents per bushel (4.3%) this week in the September contract. New crop November futures were up 29 ½ cents after gaining more than 60 cents on Monday. Hot and dry weather in the Corn Belt is thought to be taking away yield potential, with a parade of firms lowering their expected national average yields to 40.8-42.5 bushels per acre. Much of the bull story was in soybean meal. Meal export sales continue to be quite strong, with 47,900 MT of old crop meal booked in the week ending August 22 (must be shipped by August 31). That is supporting basis for meal, and the meal price is propping up product value for the beans.

Wheat futures eked out a 9 cent gain in Chicago this past week following a 4 cent gain the previous week. The other two contracts also posted small gains. Wheat export sales continue to be excellent, with 51% of the USDA forecast for the year already on the books or shipped out. That average for this date would be 44%. Weekly sales were 551,300 MT, with Brazil buying additional wheat due to freeze damage to the crop there. On Friday the International Grains Council (IGC) raised projected global production 4 MMT to 691 MMT on stronger production in Canada, Ukraine and the EU. Their number is still smaller than USDA, however.

 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

08/09/13

08/16/13

08/23/13

08/30/13

Change

% Change

Sep

Corn

$4.66

$4.74

$4.96

$4.95

($0.00)

-0.10%

Sep

CBOT Wheat

$6.34

$6.31

$6.35

$6.43

$0.09

1.38%

Sep

KCBT Wheat

$6.973

$6.983

$6.945

$7.008

$0.06

0.90%

Sep

MGEX Wheat

$7.32

$7.37

$7.18

$7.20

$0.02

0.28%

Sep

Soybeans

$12.19

$12.83

$13.65

$14.24

$0.59

4.30%

Sep

Soybean Meal

$390.60

$408.80

$433.20

$468.20

$35.00

8.08%

Sep

Soybean Oil

$41.50

$42.81

$42.64

$43.89

$1.25

2.93%

Aug

Live Cattle

$122.50

$123.90

$123.10

$122.70

($0.40)

-0.32%

Sept

Feeder Cattle

$157.45

$157.65

$156.65

$156.93

$0.28

0.18%

Oct

Lean Hogs

$84.97

$86.62

$85.10

$87.63

$2.52

2.97%

Oct

Cotton

$89.05

$93.40

$84.24

$83.70

($0.54)

-0.64%

Sep

Oats

$3.59

$3.78

$3.63

$3.92

$0.29

7.85%

Sep

Rice

$15.19

$15.56

$15.78

$15.81

$0.03

0.19%

 

Cotton futures were fractionally lower after plunging a dramatic 9.8% the previous week. The US stocks/use ratio is still projected to be the tightest since 2010/11 in 2013/14. That is contingent on China keeping their huge stockpile out of the market. If they lighten up, it will likely diminish export potential for the US. US net weekly export sales through August 22 were only 81,000 RB. Commitments YTD was 35% of the USDA forecast for the year. They would typically be 41% by now.

Cattle futures fell back 0.32% this week after a small loss the previous week. Beef production this week was 1.2% smaller than the same week in 2012, and production year to date is down 0.9%. Weekly slaughter was 2.2% smaller than in 2012 but carcass weights continue to run about 7-8 pounds higher than last year. USDA reported weekly beef export sales had improved sharply to 23,200 MT last week. Wholesale beef prices were lower this week despite the strong export sales and reduced slaughter, with Choice down 0.27% and Select down 0.78% on a Friday/Friday basis. Cash cattle trade on Friday was $123-124 on limited volume. Most US packing plants will be dark on Monday for the Labor Day holiday.

Hog futures rallied nearly 3% this week. The estimated weekly slaughter rose to 2.21 million head. That was up 0.1% from the previous week but still down 3% from the elevated year ago levels. Pork production YTD is down only 0.3% from 2012 due to higher average carcass weights thus far in 2013. The pork carcass cutout value lost 5.6% this week after dropping more than 3% the previous week. The belly primal has begun its usual seasonal retreat, losing another 7.9% this week.  The USDA weekly export sales report jumped to 12,600 MT from 7,100 MT the previous week.

Market Watch

This will be a short week, with US markets closed on Monday for the Labor Day holiday. The regular Monday USDA reports (Export Inspections and Crop Progress) will be delayed until Tuesday. Weekly ethanol production and stocks will be delayed until Thursday, and USDA weekly Export Sales will be released on Friday. September grain futures contracts are in deliveries, with no daily price limits.

Please also look for Alan's comments on this weekend's US Farm Report TV Show.

Visit our Brugler web site at http://www.bruglermarketing.com or call 402-697-3623 for more information on our consulting and advisory services for farm family enterprises and agribusinesses. 

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.               

 

Copyright 2013 Brugler Marketing & Management, LLC

Beans on Fire

Aug 23, 2013

Brugler

Market Watch with Alan Brugler

August 23, 2013

Beans on Fire

New crop November soybeans were up 68 ¾ cents this week. The market was literally on fire, with the NWS 6-10 and 8-14 day forecasts projecting in orange and bright red some much above normal temps from now to September 6 for most of the continental US.  Beans will hunker down in the heat and wait it out, but that isn’t what you want them doing in September. You abort a lot of pods that way. The precip situation will be key to the amount of stress, with the NWS maps showing above normal precip east of a line from ND to MS in the 10 day forecast, then drying out in the Plains/WCB for the second week. 

September soybeans were up 82 cents per bushel for the week. September is now up $1.52/bushel in three weeks. The meal market was responsible for much of the rally, gaining 6% for the week as crushers were having trouble sourcing beans, specs were fleeing a potential short squeeze, and export sales continue. On the bean side, new crop weekly export sales were disappointing by failing to make the million metric tonne mark. However, crop concerns multiplied all week due to declining soil moisture across much of the Corn Belt and above normal temps expected to persist into Labor Day. The Pro Farmer Tour reported low pod counts, particularly in the WCB, and projected a crop of only 3.158 billion bushels on a 41.8 bpa average yield. USDA is at 42.6 bpa, but PFA also assumed that the NASS August 1 resurvey of soybean planted acres missed 800,000 additional acres of prevented planting. We are not comfortable with that assumption.

September corn futures were up 22 cents per bushel, or 4.6% for the week. December futures were up 6 ½ cents. The trade, particularly the spec funds, continues to be bearish. The Commitment of Traders report on Friday showed the Managed Money category exiting 31,443 contracts from their net short position in the week ending 8/20. The weekly ethanol production slowed by 13,000 barrels per day. Ethanol imports declined to 19,000 bpd. Ethanol stocks rose slightly to 16.5 million barrels. Weekly export sales were positive for old crop at 58,200 MT but new crop bookings were only 434,400 MT. Pro Farmer issued a crop production estimate of only 13.46 billion bushels on a 154.1 bpa yield that was very close to the August NASS yield of 154.4 bpa. They assumed USDA will drop harvested acres by a large 1.8 million due to Prevented Planting insurance claims. If due to PP that would mean planted acres would be revised downward by the same amount, and would be the largest June-Final revision in planted acres since 1960! The Brugler Marketing Virtual Corn Tour estimate released Thursday calls for a 13.8 billion bushel crop.

Wheat futures eked out a 4 cent gain in Chicago this past week. The other two contracts were lower, however. Minneapolis saw the most selling pressure, down 2.6% as Stats Canada reported record large wheat production of 30.56 MMT was likely. Wheat export sales continue to be excellent, with 49% of the USDA forecast for the year already on the books or shipped out. That average for this date would be 42%. Weekly sales were 494,000 MT, with Brazil buying 188,800 MT due to freeze damage to the crop there.

 

Commodity

 

 

 

 

Weekly

Weekly

Month

08/01/13

08/09/13

08/16/13

08/23/13

Change

% Change

Sep

Corn

$4.76

$4.66

$4.74

$4.96

$0.22

4.59%

Sep

CBOT Wheat

$6.61

$6.34

$6.31

$6.35

$0.04

0.55%

Sep

KCBT Wheat

$7.068

$6.973

$6.983

$6.945

($0.04)

-0.54%

Sep

MGEX Wheat

$7.41

$7.32

$7.37

$7.18

($0.19)

-2.58%

Sep

Soybeans

$12.13

$12.19

$12.83

$13.65

$0.82

6.39%

Sep

Soybean Meal

$385.20

$390.60

$408.80

$433.20

$24.40

5.97%

Sep

Soybean Oil

$42.49

$41.50

$42.81

$42.64

($0.17)

-0.40%

Aug

Live Cattle

$120.65

$122.50

$123.90

$123.10

($0.80)

-0.65%

Aug

Feeder Cattle

$153.73

$153.85

$154.78

$155.00

$0.22

0.15%

Oct

Lean Hogs

$83.95

$84.97

$86.62

$85.10

($1.52)

-1.75%

Oct

Cotton

$85.32

$89.05

$93.40

$84.24

($9.16)

-9.81%

Sep

Oats

$3.39

$3.59

$3.78

$3.63

($0.15)

-3.84%

Sep

Rice

$15.80

$15.19

$15.56

$15.78

$0.22

1.38%

 

Cotton futures dropped a dramatic 9.8% in one week after climbing 4.88% the previous week. USDA trimmed projected US ending stocks on Monday to 2.8 million bales earlier in the month, and also tightened world ending stocks. The US stocks/use ratio if realized would be the tightest since 2010/11. World ending stocks outside of China continue to tighten, but rumor had it that China will begin selling some cotton out of their huge reserve stocks. If that happens, it will likely result in slower import interest. Speculative funds had also held a lopsided net long position in cotton, and prices plunged once the red line crossed the blue line and everyone wanted to leave the bull party at once.

Cattle futures fell back 0.65% this week after gaining 1.1% the prior week. Beef production this week was 2.2% smaller than the same week in 2012, and production year to date is down 1%. Wholesale beef prices were mixed, with Choice up 0.9% and Select down 1.2% on a Friday/Friday basis. USDA reported weekly beef export sales had improved to 16,100 MT last week. The USDA Cold Storage report on Thursday showed beef stocks down 4% from the previous month. The USDA Cattle on Feed report on Friday evening showed the August 1 head count only 94.1% of year ago.  July placements were smaller than expected at 89.6% of last year, while July marketings were close to trade ideas at 104.6% of July 2012.

Hog futures fell back 1.75% this past week. The estimated weekly slaughter rose to 2.207 million head. That was up 1.4% from the previous week but still down 2.9% from year ago. Pork production YTD is down only 0.3% from 2012 due to higher average carcass weights thus far in 2013. The pork carcass cutout value lost 3.07% this week after dropping 1.76% the prior week. The belly primal has begun its usual seasonal retreat, losing 11.2% this week.  The USDA weekly export sales report slowed to 7,100 MT from 8,500 MT the previous week.

Market Watch

This will be the last week of the USDA marketing year for corn and soybeans.  There will be the usual weekly updates on Export Inspections and Crop Progress on Monday, and the USDA weekly Export Sales report on Thursday. September futures will start out on Monday reacting to any surprised futures positions inherited via September options exercises on Friday. We’d be willing to bet that those short September 1360 calls never expected to be in-the-money at expiration. Crop condition ratings are expected to be lower for corn and soybeans due to the heat and drying soils. There will be interest in whether maturity (notably dough and dent stage in corn) is catching up with the higher temps. This is also the last week of the month, so some asset allocation selling and buying can be expected in commodities that saw big moves during the month. Friday is also first notice day (FND) for September futures deliveries.

Visit our Brugler 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.

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.               

Copyright 2013 Brugler Marketing & Management, LLC

Shaken and Slightly Stirred

Aug 16, 2013

 Brugler

Market Watch with Alan Brugler

August 16, 2013

Shaken and Slightly Stirred

 

The grain markets were shaken up a bit this week, with the bullish USDA reports on Monday followed by the preliminary but perceived as bullish Prevented Planting report from FSA on Thursday. USDA trimmed projected US corn and soybean production, and cut estimated ending stocks for corn, soybeans and wheat. The FSA report indicated 7.7 million acres of prevented planting claims, the largest since the 2011 flood year. Corn prevent planting was at 3.4 million acres, with soybeans at 1.6 million and wheat at 1.7 million. These were bigger numbers than expected, and fueled a rally on Thursday. The report was obviously incomplete, with less than 89 million corn acres shown as planted. The next update is scheduled for September 17. 

September corn futures were up 8 cents per bushel, or 1.72% for the week. December futures were up 10 ¼ cents. The trade, particularly the spec funds, continues to be extremely bearish. The Commitment of Traders report on Friday showed the Managed Money category adding another 10,149 contracts to their net short position in the week ending 8/13. Weekly ethanol production rebounded while ethanol imports declined to 31,000 bpd. That allowed ethanol stocks to tighten. Weekly export sales were negative for old crop due to cancellations and rollovers to new crop delivery. New crop bookings were a strong 836,100 MT. Cumulative new crop export sales are the largest for this date since the mid-1990’s.  

September soybeans were up 65 cents per bushel for the week. The bullish news was flowing all week. USDA trimmed projected 2013 yield by 1.9 bushels per acre and found 540,000 fewer planted acres on  a special re-survey. New crop export sales were huge for the week at 69 million bushels, reinforcing the notion that for much of the world the current prices are cheap enough to buy. Meal futures rose 4.7% for the week to support product value, and soy oil was up 3.2%.

Wheat futures managed gains for the KC and MPLS contracts, but Chicago was lower on unwinding of wheat/corn spreads that were not performing and were dumped by the spec funds. Wheat export sales continue to be excellent, with 47% of the USDA forecast for the year already on the books or shipped out. USDA hiked projected exports to 1.1 billion bushels in the Monday morning WASDE report, and tightened the projected ending stocks further to 551 million bushels.

 

Commodity

 

 

 

 

Weekly

Weekly

Month

07/26/13

08/01/13

08/09/13

08/16/13

Change

% Change

Sep

Corn

$4.92

$4.76

$4.66

$4.74

$0.08

1.72%

Sep

CBOT Wheat

$6.50

$6.61

$6.34

$6.31

($0.03)

-0.39%

Sep

KCBT Wheat

$6.915

$7.068

$6.973

$6.983

$0.01

0.14%

Sep

MGEX Wheat

$7.37

$7.41

$7.32

$7.37

$0.05

0.72%

Sep

Soybeans

$12.75

$12.13

$12.19

$12.83

$0.65

5.31%

Sep

Soybean Meal

$404.00

$385.20

$390.60

$408.80

$18.20

4.66%

Sep

Soybean Oil

$43.62

$42.49

$41.50

$42.81

$1.31

3.16%

Aug

Live Cattle

$121.80

$120.65

$122.50

$123.90

$1.40

1.14%

Aug

Feeder Cattle

$152.60

$153.73

$153.85

$154.78

$0.93

0.60%

Oct

Lean Hogs

$84.80

$83.95

$84.97

$86.62

$1.65

1.94%

Oct

Cotton

$85.37

$85.32

$89.05

$93.40

$4.35

4.88%

Sep

Oats

$3.31

$3.39

$3.59

$3.78

$0.19

5.15%

Sep

Rice

$15.89

$15.80

$15.19

$15.56

$0.37

2.44%

 

Cotton futures shot 4.88% higher for the week. USDA trimmed projected US ending stocks on Monday, and also world ending stocks. US ending stocks were trimmed to a projected 2.8 million bales, which would be the tightest stocks/use ratio since 2010. World ending stocks outside of China continue to tighten.

Cattle futures gained 1.1% for the week, extending the rally from the prior week. Feeder cattle were up 0.6%. The market continues to try to decipher the impacts of the Tyson decision on zilpaterol, particularly the effect on average carcass weights and overall beef production. On Friday, Merck announced that it was temporarily suspending sales of Zilmax to all customers as producers finish their current feeding cycle. Slaughter numbers are also declining as we head into the late summer low in On Feed numbers. Beef production this week was 3.7% smaller than the same week in 2012, and production year to date is down 0.9%. Wholesale beef prices were higher this week, with Choice up 2.9% and Select up 2.4% on a Friday/Friday basis. USDA reported weekly beef export sales had improved to 12,700 MT last week.

Hog futures hit new contract highs. Nearby hogs were up 1.9% for the week. The estimated weekly slaughter was 2.177 million head. That was up 7.8% from the previous week when there was some plant down time, but UNCH from a year ago. Pork production YTD is down only 0.2% from 2012. The pork carcass cutout value lost 1.76% this week. Picnics were under the most pressure, while rib prices firmed.  The USDA weekly export sales report improved to 8,500 MT.

Market Watch

This should be a little calmer week than last week, with the monthly grain reports out of the way. USDA will release the usual weekly export inspections report and Crop Progress report on Monday, and the weekly Export Sales on Thursday. The monthly Cold Storage stocks report is scheduled for Thursday, and the monthly Cattle on Feed report will be released on Friday, August 23. The September grain options also expire on Friday.

Visit our Brugler 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.

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.               

 

Copyright 2013 Brugler Marketing & Management, LLC

Many Questions, Fewer Answers

Aug 09, 2013

 Brugler

Market Watch with Alan Brugler

August 9, 2013

Many Questions, Few Answers

 

The sense of urgency has slacked off a bit in grains, due to the oncoming US corn and soybean harvest and the raw numbers of acres involved. The perception or attitude is that the crops are monster large, and that USDA is likely to show them even larger on Monday. There are still a lot of questions, however. First and foremost is acreage. USDA will issue an updated soybean planting figure on Monday. This will also be the first report of the year where USDA is measuring objective yield plots for corn and will have some "harder" numbers from NASS. Due to the lagging crop maturity, they won’t have as much as usual in the way of actual grain samples. That same crop maturity is an issue when it comes to frost/freeze risk (and the NWS 8-14 day is still below or much below normal on temps). However, that answer on dodging the Jack Frost bullet isn’t likely to be available until September. 

September corn futures were down 10 cents per bushel, or 2.15% for the week. December futures were down 10 ½ cents. The trade, particularly the spec funds, continues to be extremely bearish. The Commitment of Traders report on Friday showed the Managed Money category adding another     4,983 contracts to their net short position. Weekly ethanol production rebounded while ethanol imports were the largest in months. Ethanol stocks rose again as combined production and imports were larger than domestic off take. RIN values dropped back below $1 as EIA extended the period in 2014 for blenders to prove 2013 compliance on mandated use. Old crop weekly export sales were 290,100 MT, but new crop sales were a little slower at 220,900 MT. China has also been aggressively buying DDGs from the US, confirming over 700 thousand MT’s in the month of July.

Nearby August soybeans were up 10 cents for the week on a mini-squeeze in the soon to expire August meal contract. There have still be zero deliveries against either August beans or August meal. The weakened basis has created at least a threat of same, taking the starch out of the bulls. Meal was up 2.04%  for the week. Soy oil was down 2.3%. Weekly soybean export sales were a slow 79,400 MT for old crop, but a stout 1.017 MMT for new crop (37.3 million bushels).

Wheat futures were guilty by association. The tight stocks forecast for US wheat (lowest in 5 years) is dependent in part on feeding wheat. Sliding corn prices have made it a little more questionable about whether that wheat feeding activity will continue past September. USDA reported weekly export sales last week were 726,200 MT. Outstanding export commitments are now 47% of the USDA forecast for the year vs. the 5 year average of 37% for this date.

 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

07/19/13

07/26/13

08/01/13

08/09/13

Change

% Change

Sep

Corn

$5.44

$4.92

$4.76

$4.66

($0.10)

-2.15%

Sep

CBOT Wheat

$6.65

$6.50

$6.61

$6.34

($0.27)

-4.09%

Sep

KCBT Wheat

$7.053

$6.915

$7.068

$6.973

($0.09)

-1.34%

Sep

MGEX Wheat

$7.51

$7.37

$7.41

$7.32

($0.09)

-1.25%

Aug

Soybeans

$14.91

$13.50

$13.31

$13.41

$0.10

0.73%

Aug

Soybean Meal

$482.40

$430.30

$412.10

$420.50

$8.40

2.04%

Aug

Soybean Oil

$45.50

$43.58

$42.38

$41.40

($0.98)

-2.31%

Aug

Live Cattle

$121.98

$121.80

$120.65

$122.50

$1.85

1.53%

Aug

Feeder Cattle

$152.25

$152.60

$153.73

$153.85

$0.13

0.08%

Aug

Lean Hogs

$96.48

$97.78

$99.25

$100.53

$1.28

1.28%

Oct

Cotton

$86.52

$85.37

$85.32

$89.05

$3.73

4.37%

Sep

Oats

$3.55

$3.31

$3.39

$3.59

$0.20

5.98%

Sep

Rice

$15.17

$15.89

$15.80

$15.19

($0.61)

-3.86%

 

Cotton futures were down 1.33% this past week. Weekly export sales totaled 81,400 running bales (RB) of upland and 14,700 RB of pima. USDA also rolled 899,500 RB of previous year sales that had not been shipped into the new crop sales slot. Global stocks projections continue to be record large, but much of that cotton is tied up in China. As long as China doesn’t decide to dump it into the market, prices are being supported.

Cattle futures exploded at midweek and ended the week 1.53% higher. Feeder cattle were up only 0.08%.  The big news of the week was a decision by Tyson to suspend purchases of cattle fed the Zilmax beta agonist. That implied lower average carcass weights for fourth quarter marketings, although some feedlots will choose to just switch to Optiflexx (ractopamine) in order to retain some of the feed efficiency. Russia and China both prohibit imports of beef from cattle fed the latter, so this may not be a long term solution. Wholesale beef prices were higher this week, with Choice up 1.0% and Select up 0.6% on a Friday/Friday basis. Weekly US beef production was up 1.3% from the previous week but down 1.0% from the same week in 2012. YTD beef production is still 0.8% below last year. USDA reported weekly beef export sales had slowed to 8,900 MT last week.

Hog futures hit new contract highs, but did not take out the high on the continuation chart. Nearby hogs were up 1.28% for the week. The estimated weekly slaughter is 2.019 million head. That was down 0.1% from last week, and 0.2% smaller than the same week in 2012. Pork production YTD is down only 0.3%. The pork carcass cutout value gained 1.42% this week. Pork butts were up more than 5% for the week. The USDA weekly export sales report slowed to only 4,800 MT.

Market Watch

Grain traders will begin the week with the USDA Crop Production and WASDE supply/demand estimates at 11 am CDT on Monday morning. USDA will issue the usual weekly Export Inspections and Crop Progress reports on Monday. The Export Sales report will be on Thursday morning. Wednesday will mark the expiration of the August hog and soybean complex futures.

 

Visit our Brugler 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.

 

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.               

 

Copyright 2013 Brugler Marketing & Management, LLC

Getting Comfortable

Aug 02, 2013

Brugler

Market Watch with Alan Brugler

  August 2, 2013

Getting Comfortable

The grain markets are apparently getting comfortable with the idea of a 14 billion bushel corn crop and a 3.3 billion bushel soybean crop. That is the best way to view this week’s price action. Corn is past the silking stage on a big % of the crop, and did so without excessive heat. Some areas are still in drought, and in fact the drought area expanded in this week’s Drought Monitor. Without the heat to go with it, traders were willing to assume that the national impact would be minimal. Maturity of corn and soybeans is still behind the normal pace and well behind year ago. The funds have a record large short position in corn and appear willing to press the market until frost or freeze damage is seen in multiple states while it is still early enough to make a difference.

Corn futures dropped sharply this week, despite the delayed development that raises the threat of yield losses due to an early freeze. Since that is unlikely before Labor Day, the market is focused on the record production potential if we don’t get it. Nearby September futures lost 3.25% for the week. Pollination has clearly gone well for the majority of the US crop. New crop export sales bookings are running at a 5 year high, but there is still great skepticism about the degree of export recovery USDA is projecting for the 2013/14 marketing year. Old crop corn exports are laboring to make the USDA projection of 700 million bushels. New crop sales (for shipment after September 1) are the largest for this date in at least 5 years.

Soybean futures were hurt by unwinding of spec fund long positions and a collapse of the old crop soy meal demand. Nearby August only showed a net loss for the week of 19 cents per bushel or 1.4%. At times it seemed like the sell pressure was more severe than that. Open interest has come down sharply in the August, with the only longs remaining having very deep pockets and an obvious interest in obtaining physical bushels via delivery. Some of the longs have held the position since August 2012. Weekly export sales were still net positive for old crop, and excellent for new crop at 1.031 MMT. Old crop export commitments are 102% of the USDA forecast for the year. They would typically be 104% by the end of July. The unshipped portion (commitments) is at a multi-year low for this date due to completion from South American supplies.

Wheat futures were stronger, with KC up 2.2% on the week, Chicago up 1.6% and MPLS up 0.6%. There were a combination of factors at work including seasonal spread trades against corn, tighter world stocks projections and the winding down of winter wheat harvest pressure. Wheat again saw weekly US export sales at a solid 596,900 MT. Cumulative commitments for this marketing year are already 44% of the USDA projection for the entire year. The US would typically have sold only 34% by this date. Both US and world ending stocks are projected to be at a 5 year low by next spring, lending some urgency for those who need quality wheat to get it bought. USDA is expected to increase projected EU and Indian production in the August 12 crop report, but there are also reports about quality issues with the new crop French wheat.

Cotton futures were down 0.06%, so just call them UNCH for the week. The marketing year ended July 31, and the USDA weekly sales report covered business through July 25. Net export sales of old crop were slow as you would expect, at 33,600 MT. Cumulative export sales commitments are 106% of the USDA forecast for the year. The 5 year average would be 111%. That doesn’t necessarily mean USDA is too high on its forecast. It may just mean a smaller quantity of unshipped sales get rolled over to new crop delivery. The US dollar index retreated on Friday following the drop in US unemployment to 7.4% (the specs had been looking for a lower number).  Cotton was lower anyway.

 

Commodity

 

 

 

 

Weekly

Weekly

Month

07/12/13

07/19/13

07/26/13

08/01/13

Change

% Change

Sep

Corn

$5.45

$5.44

$4.92

$4.76

($0.16)

-3.25%

Sep

CBOT Wheat

$6.81

$6.65

$6.50

$6.61

$0.10

1.58%

Sep

KCBT Wheat

$7.0850

$7.053

$6.915

$7.068

$0.15

2.21%

Sep

MGEX Wheat

$7.67

$7.51

$7.37

$7.41

$0.05

0.64%

Aug

Soybeans

$14.29

$14.91

$13.50

$13.31

($0.19)

-1.39%

Aug

Soybean Meal

$442.90

$482.40

$430.30

$412.10

($18.20)

-4.23%

Aug

Soybean Oil

$46.22

$45.50

$43.58

$42.38

($1.20)

-2.75%

Aug

Live Cattle

$121.85

$121.98

$121.80

$120.65

($1.15)

-0.94%

Aug

Feeder Cattle

$150.13

$152.25

$152.60

$153.73

$1.13

0.74%

Aug

Lean Hogs

$94.90

$96.48

$97.78

$99.25

$1.47

1.51%

Oct

Cotton

$85.13

$86.52

$85.37

$85.32

($0.05)

-0.06%

Sep

Oats

$3.52

$3.55

$3.31

$3.39

$0.08

2.26%

Sep

Rice

$15.50

$15.17

$15.89

$15.80

($0.08)

-0.54%

Cattle futures were off $1.15 this week as traders went for the August 120 strike price ahead of options expiration. They did not succeed in getting that "pin". Wholesale beef prices were mixed this past week, with Choice up a minuscule $0.06 and Select down $1.81 on a Friday/Friday basis. Estimated weekly beef production was down 1.7% from last week and down 2.0% from the same week in 2012. Weekly slaughter was 629,000 head, down from 644,000 head for the same period last year.  Net weekly export sales for 2013 were reported by USDA at 11,400 MT.

Hog futures were $1.47 higher after a gain of $1.30 the prior week.   The USDA weekly export sales report showed net sales of 9,600 MT of pork for 2013. Estimated weekly slaughter was 2.022 million head. That was down 18,000 head from the same week last year.  Pork production for the week was 0.4% larger than year ago due to heavier average weights. The pork carcass cutout value jumped 4.5% for the week, greatly improving what packers could afford to pay for hogs. The pork belly primal price hit the highest value since early June. The background story for hogs is the expected loss of production from the PED virus outbreak. Various estimates have production down 2-3% from what otherwise would have been expanded production. Pork production YTD is down 0.3% from 2012.

Market Watch

This will be an "in between" week, with the monthly USDA Crop Production and WASDE reports coming out on Monday, August 12. We’re starting to get the private guesses, and will see most by mid-week. Cattle traders will begin the week adjusting to any unexpected positions resulting from August options exercises on August 2. USDA will release the usual Monday Export Inspections and Crop Progress reports. Traders are expecting weekly crop condition ratings to rise contra-seasonally due to cooler and wetter weather.  Weekly Export Sales will be on Thursday morning. The CFTC commitment of traders report will be released on Friday afternoon.

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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