Aug 30, 2014
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June 2014 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.

Residual Use is Key

Jun 27, 2014

Brugler 

Market Watch with Alan Brugler

June 27, 2014

Residual Use Is Key

 

We have the quarterly USDA Grain Stocks report on Monday. The report has a reputation for creating surprises in the market, in both directions. In our opinion, part of that is timing, since the March, June and September stocks reports all fall on fiscal quarter deadlines when traders are already moving money around for asset allocation and performance reasons. The new data just aggravates the volatility. The other factor here is that everyone, including the analysts at the World Outlook Board (creators of the monthly WASDE supply/demand reports) is waiting to see what the NASS division of USDA finds in the bins.  The market, and WAOB have a pretty good handle on exports, ethanol use and soybean crush. What is unknown is residual use, the things not directly measured via surveys. For corn that is shown as Feed & Residual use, and can be up to 35% of total annual use. There is plenty of room for a surprise there. For soybeans, the seed & residual category is smaller, typically only 100 million to 150 million bushels for the whole year, but crush has also taken on a residual use component since Census quit surveying crush plants a few years ago and NOPA only surveys members. All this is to say that the Stocks report gives us hard numbers as of June 1, and those allow a more accurate computation of residual uses.  The changes will be made in the July WASDE report, so implied residual use is the key.  What about acres? Also important, but easier to rationalize away any surprise by changing your yield assumption.

 

Corn lost ten cents on the week, down 2.26% since last Friday.  Weekly export sales were large, coming in  at 321,400 MT for 2013/14, and  232,100 MT for 2014/15.  The report showed some cancellations for unknown destinations, but Japan, Vietnam, Spain, and the Netherlands all picked up tonnage that was switched from unknown destinations.  The CFTC Commitment of Traders report this afternoon showed managed money decreasing their net long position in corn by 22,104 contracts as of June 24, giving them a net long position of 115,176 contracts.  Reports from much of the Corn Belt describe a very good looking crop.  A fairly large pocket surrounding the area where the four states of SD, MN, IA, and NE come together that is very wet.  Extremely severe weather has reportedly damaged more than 700 pivot irrigation systems in Nebraska.   

 

Soybean futures ended the week 16 cents higher, up 1.15% in the July contract.  Weekly export sales were large, and the amount of fresh old crop bookings helped the old crop rally on Thursday. Bookings for the 2013/14 marketing year totaled 317,200 MT, and were 457,700 MT for 2014/15, with most of the new crop sales slated for China and "unknown" destinations.  As of the close on June 24, CFTC shows managed money accounts decreasing their net long position for soybeans from the previous week by another 5,403 contracts, bringing their overall net long position down to 41,221 contracts.  That is the least-long net soybean position reported for managed money accounts since January 31, 2012.  Soybean oil lost 6 cents on the week, but soybean meal rallied $10.60 this week, gaining 2.31% after losing more than $8.00 during the previous week. 

 

 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

06/06/14

06/13/14

06/20/14

06/27/14

Change

% Change

July

Corn

$4.59

$4.48

$4.53

$4.43

($0.10)

-2.26%

July

CBOT Wheat

$6.18

$5.85

$5.85

$5.85

$0.00

0.00%

July

KCBT Wheat

$7.36

$7.11

$7.21

$7.26

$0.05

0.76%

July

MGEX Wheat

$7.09

$6.82

$6.90

$6.83

($0.06)

-0.91%

July

Soybeans

$14.57

$14.27

$14.16

$14.32

$0.16

1.15%

July

Soybean Meal

$487.60

$467.20

$459.20

$469.80

$10.60

2.31%

July

Soybean Oil

$39.01

$39.73

$40.04

$39.98

($0.06)

-0.15%

June

Live Cattle

$140.13

$147.60

$147.55

$152.25

$4.70

3.19%

Aug

Feeder Cattle

$200.52

$208.15

$206.88

$214.33

$7.45

3.60%

Aug

Lean Hogs

$129.30

$131.27

$129.15

$129.83

$0.67

0.52%

July

Cotton

$84.78

$86.95

$88.16

$80.89

($7.27)

-8.25%

July

Oats

$3.57

$3.47

$3.40

$3.32

($0.09)

-2.50%

July

Rice

$14.18

$14.51

$14.64

$14.59

($0.04)

-0.31%

 

Wheat futures ended the week pretty much steady to last week.  The July CBOT wheat posted its third Friday in a row with $5.85 as the closing price; a market in need of direction!  KC wheat added a nickel in the July contract after gaining a dime last week.  In Minneapolis, July wheat lost six cents this week on overall favorable growing conditions.  Winter wheat harvest progress was slowed again this week by the additional precipitation.  USDA reported the export sales figure for this week at 359,400 MT.  As of the close last Tuesday, managed money increased their net short position in CBT wheat by 11,494 contracts over the past week.  They are now net short -40,436 contracts.  The managed money accounts added another 205 contracts to their net long position in HRW wheat, giving them a net long position of 24,949 contracts as of the close on Tuesday.

 

July Cotton futures were big losers this week.  July14 cotton was down 727 points, or 8.25% posting its lowest closing price since the first week in December. Global cotton trade is forecast by USDA to reach only 35.6 million bales in 2014-15, down 13% from 2013-14 and the lowest in four years. Chinese imports are seen lower as they try to work down domestic supplies.  The weekly Commitment of Traders report showed managed money accounts decreasing their net long position in cotton by 562 contracts bringing their overall net long on June 24 to 24,702 contracts.  Weekly export sales reported by the USDA were weak, showing net sales of only 3,600 RB of Upland cotton for 2013/14, and 1,000 RB of Pima.  2014/15 Upland bookings were for 24,100 RB.  

 

Front month cattle futures were up 3.2% for the week tacking on $4.70 since last Friday.  August feeder cattle shot up 3.6% despite some profit taking on Friday.  Cash cattle trade was reported mostly $5 higher than last week at $154-$155 in the South, and $7 to $8 higher at $243-$245 in the North.  Wholesale beef prices were sharply higher this week.  Choice boxed beef gained $5.09 or 2.1%, and select boxes increased $4.38 or 1.9% from Friday to Friday.  The grocers should be stocked up for the 4th of July holiday demand by now, so a dip in boxed beef prices next week would be typical.  USDA reported weekly beef export sales at 17,100 MT for this past week, up 1,000 MT from the previous week. Weekly FI slaughter was estimated to be 615,000 head vs. 613,000 the prior week and 654,000 head a year ago.  The weekly Commitment of Traders report showed managed money accounts increasing their net long position in cattle by 3,247 contracts, bringing their overall net long on June 24 to 127,647 contracts.

 

August Hog futures were 0.52% higher this week.  The pork carcass cutout value was sharply higher again this week, gaining $5.51 or about 4.32% from Friday to Friday.  Ribs notched out a whopping 10.08% gain on the week, and loin cuts were up 5.65% since last Friday.  Weekly pork export sales surged from 6,500 MT to 17,100 MT, thanks to a bid sale to Mexico.  The weekly Commitment of Traders report showed managed money accounts expanding their net long position in lean hogs by 3,531 contracts, bringing their overall net long on June 24 to 58,844 contracts.  Pork production YTD is down 0.6% from year ago despite slaughter being down 4.2%. Estimated hog carcass weight at 215# would match last week, but be 11# higher than year ago.  The hogs and pigs report released today after the close was quite bullish.  All hogs on June 1 came in at 95.3% of a year ago.  Those kept for breeding were reported at 99.5% of a year ago, and those kept for market were 94.9% of a year ago.  All three of these figures came in smaller than the lowest end of the pre-report trade estimate.

 

Market Watch

 

We start the week off with a bang and end it with a whole bunch of bangs. USDA will release the quarterly Grain Stocks and Planted Acreage reports at 11 am CDT on Monday morning. These reports have a reputation for stirring up big price moves, particularly in corn. Monday is also first notice day for July grain futures contracts. There were only 21 delivery receipts registered for soybean delivery heading into the weekend. USDA will issue the regular Export Inspections and Crop Progress reports on Monday, along with Export Sales on Thursday. Thursday will also be the last trading day for July live cattle serial options.  Friday is the July 4th Independence Day holiday in the US and all markets are closed. The bangs to end the week will of course be from the fireworks!

 

 

 http://www.bruglermarketing.com, find our iPad app "AgMarket" in the Apple app store, or call 402-697-3623 for more information on our consulting and advisory services for farm family enterprises and agribusinesses.

 

 

 

Copyright 2014 Brugler Marketing & Management, LLC

 

Chop, Chop, Chop. Chopping Around.

Jun 20, 2014

Brugler 

Market Watch with Alan Brugler

June 20, 2014

Chop, Chop, Chop. Chopping around.

 

The meat markets stayed in their respective uptrends this week, but the feeder market was especially choppy.  Limit down in several contracts on Wednesday, then September feeders were limit up the very next day.  Wholesale beef was one directional, streaking higher every day this week as retail stores start to stock up the shelves for the 4th of July Holiday.  The butchers will be doing some extra "chopping" this week too.  A bit humorous that after all of that chopping, the retail stores will eventually be "chopping" the prices of the cuts that did not sell before the holiday rush!  The grain markets were chopping around quite a bit this week too, as it seemed like fund money was unsure of where to go after the fed meeting.  Soybean meal chopped around this week and lost more than eight bucks per contract, even after posting an $8.00 gain on Friday.  So you could say that the movement of money caused some "chopping" while it was "shhh-opping" for the best value in the market this week.

  

Corn was 1.23% higher for the week, netting a six cent gain since last Friday.  This was the first week where corn ended higher since the week of May 12th.  Fundamental news was somewhat mixed this week.  Ethanol production in the weekly EIA report was reported at one of the highest levels of any week on record.  Stocks of ethanol were able to shrink, even with all of that production.  Weekly export sales were 109,000 MT for 2013/14, down from the 409,700 MT  reported the previous week.  Cancellations from "unknown" destinations were 396,900 MT in this report.  China is trying to rotate out state reserves of old crop before the new crop harvest is coming on.  Total commitments as a % of total projected exports are still at 97%, with 11 more weeks to book old crop sales.  The CFTC Commitment of Traders report this afternoon showed managed money decreasing their net long position in corn by 9,156 contracts as of June 17, giving them a net long position of 137,280 contracts.  Excessive rains in the northern Mid-West and the northern Corn Belt have the new crop market wondering if the "rain makes grain" adage is as true as it was a few weeks ago.    

 

Soybean futures were only down 8 cents this week, adding a fourth to the string of down weeks in the front month contract.  USDA reported weekly export sales for old crop at the top of the range of that the trade was looking for at 97,900 MT.  Bookings for the 2014/15 marketing year came in at 285,800 MT with 90,500 MT marked for China, and 185,000 MT slated for UNKNOWN destinations.  Another new crop bean export sale of 110,000 MT to UNKNOWN was announced this morning.  As of the close on June 17, CFTC shows managed money accounts decreasing their net long position for soybeans from the previous week by another 33,519 contracts bringing their overall net long position down to 46,624 contracts.  Soybean meal chopped around this week and lost $8.00, even after an $8.00 gain on Friday.  Friday was the most violent, with July bean meal futures posting a trading range of $20.50 and closing just 80 cents higher on the day.

 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

05/30/14

06/06/14

06/13/14

06/20/14

Change

% Change

July

Corn

$4.66

$4.59

$4.48

$4.53

$0.06

1.28%

July

CBOT Wheat

$6.27

$6.18

$5.85

$5.85

$0.00

0.00%

July

KCBT Wheat

$7.23

$7.36

$7.11

$7.21

$0.09

1.30%

July

MGEX Wheat

$7.07

$7.09

$6.82

$6.90

$0.07

1.06%

July

Soybeans

$14.93

$14.57

$14.27

$14.16

($0.11)

-0.77%

July

Soybean Meal

$500.20

$487.60

$467.20

$459.20

($8.00)

-1.71%

July

Soybean Oil

$38.50

$39.01

$39.73

$40.04

$0.31

0.78%

June

Live Cattle

$137.80

$140.13

$147.60

$147.55

($0.05)

-0.03%

Aug

Feeder Cattle

$198.13

$200.52

$208.15

$206.88

($1.28)

-0.61%

July

Lean Hogs

$120.48

$124.98

$127.00

$129.15

$2.15

1.69%

July

Cotton

$86.27

$84.78

$86.95

$88.16

$1.21

1.39%

July

Oats

$3.71

$3.57

$3.47

$3.40

($0.07)

-2.09%

July

Rice

$14.99

$14.18

$14.51

$14.64

$0.13

0.86%

 

Wheat futures were mostly choppy this week, but CBOT ended flat.  KC and MPLS ended the week 9 and 7 cents higher respectively.  Excessive moisture on thin stands of otherwise harvest-ready wheat fields in Kansas, brought a buzz to the wheat market earlier in the week.  The range of yields reported thus far is wide and has an extremely low end.  Traders were hot on all three wheat markets until they got tired of waiting for better yield reports, and let the prices slip today.  USDA said the export sales figure for this week’s report at 372,600 MT.  Total commitments as a % of total exports are currently 5 points ahead of the five year average for this week.  Mexico started booking US wheat for the 2015/16 crop year this week and was in for 8200 MT as the only new crop buyer in this report.  As of the close last Tuesday, managed money increased their net short position in CBT wheat by 1,807 contracts over the past week.  They are now net short -28,942 contracts.  The managed money accounts added another 87 contracts to their net long position in HRW wheat, giving them a net long position of 24,744 contracts as of the close on Tuesday.

 

July Cotton futures were higher everyday this week except for Thursday when it gave back most of what it gained on Monday and Tuesday.  December was lower for the week, but July was able to squeeze out a 1.39% gain, ending the week 121 points higher.  The weekly Commitment of Traders report showed managed money accounts increasing their net long position in cotton by 2,712 contracts bringing their overall net long on June 17 to 25,264 contracts.  Export sales were reported by the USDA this week with net sales of 153,100 RB for Upland cotton, and 2,100 RB for Pima.  2014/15 bookings were for 103,300 RB and another 200 RB of Pima sales.  Total commitments as a % of total exports for upland cotton are currently at 105%, which compares to the 106% last year and the 5 year average of 108%. New crop prices struggled to follow the front month higher, in part due to the projected ending stocks of 4.3 million bales, with USDA recently boosting expected harvested acres by 300,000.

 

Front month cattle futures were actually lower for the week, losing a net 5 cents in the June contract after chopping around its $3.675 trading range this week. August feeder cattle ended the week lower in large part due to a limit down move across the board for feeder contracts on Wednesday.   Cash cattle trade was reported mostly steady to higher than last week, with stronger demand from processors.  Texas, Kansas, and Nebraska all had reports of significant sales at the $150 level.  Dressed sales of 30,000 head sold in Nebraska were reportedly in the $237-$238 range.  In the monothly cattle on feed report that came out today after the market closed, USDA shows the average trade estimate for May placements was 92.6% of last year, and the report showed 93.04%.  Marketings were expected to be 95.6%, and came in at 95.74 %.   June 1 cattle on feed were reported at 98.39%, when the average pre-report estimate was for 98.3% of 2013.  The range of estimates was from 96.0%-99.0%.  Wholesale beef prices were sharply higher this week.  Choice boxed beef gained $9.57 or 4.14%, and select boxes increased $9.49 or 4.24% from Friday to Friday.  USDA reported weekly beef export sales at 16,100 MT for this past week, which is 33% more than the previous four week average.  The weekly Commitment of Traders report showed managed money accounts backing off of their net long position in cattle, bringing their overall net long on June 17 to 124,400 contracts, 1,709 smaller than it was on the previous Tuesday. 

 

June Hog futures were 1.69% higher this week, up $2.15 since last Friday.  The pork carcass cutout value was sharply higher this week, gaining $5.80 or about 4.77% for the week.  Ribs gained another 6.96% this week after adding 6.35% last week.  Anyone planning to eat ribs on the fourth of July this year?  Weekly pork export sales were only 6,500 MT this week, which is down 24% from the previous week. The weekly Commitment of Traders report showed managed money accounts expanding their net long position in lean hogs by 1,462 contracts bringing their overall net long on June 17 to 55,313 contracts.  Weekly FI slaughter was estimated to be 16,000 head smaller than last week, and 79K head smaller than the same week a year ago. The market got wind that a PEDv vaccination has been approved, but many vets are skeptical as to how reliable the vaccine will be once the temperatures drop, and it gets cold again this Winter.

 

-

Market Watch

 

We start the week with the typical export inspections report on Monday morning, followed by the cold storage report, and then the crop progress report.  Fresh economic data regarding consumer confidence and new home sales will be out on Tuesday.  The durable goods report and an update on GDP will be breakfast conversation on Wednesday, and then we get the next glimpse at corn use for ethanol in the weekly EIA report later that morning.  Thursday brings a new export sales report, and Friday features the Hogs and Pigs report at 2:00.  The quarterly grain stocks and acreage reports are not until the following week, but they are on the first day of that week and the last day in the month of June; and the last day of Q2…. don’t let those two reports sneak up on you!

 

 http://www.bruglermarketing.com, find our iPad app "AgMarket" in the Apple app store, or call 402-697-3623 for more information on our consulting and advisory services for farm family enterprises and agribusinesses.

 

 

Selling Grain and Buying Meat

Jun 13, 2014

 Brugler

Market Watch with Alan Brugler

June 13, 2014

Selling Grain and Buying Meat

 

It was a solid week for the meats, with both live cattle and feeders going parabolic, and gaining another $1.60 and $2.30 during today’s session.  Lean hogs also posted a solid week, finishing strong with July gaining more than a dollar today.  The grains were more of a selling story.  The big money has been looking at bearish weather, and they received some bearish fundamental data in the wheat market on Wednesday.  The wheat bulls got their lower production figure, but the statisticians were out in front of them slashing the usage numbers enough to come up with a net increase in the ending stocks projection, which fed the bears again.  Apparently the selloff on Wednesday and Thursday took the grain markets low enough for them to bounce back earlier today, and close mostly higher on the session, but the Chicago wheat struggled to stay above yesterday’s close.  Most grain farmers do not want to sell at these prices, but some of them may need to sell a little more if they want to buy meat at the grocery store this Summer!

 

Corn was down 2.51% this week. Ethanol stocks increased slightly and production was 6K barrels per day larger than last week.  Daily production (and corn use) was up but outrunning consumption.  Weekly export sales were solid for old crop at 409,700 MT, and new crop sales jumped up to 105,500 MT from just 19,600 MT the previous week; the lower prices must have looked attractive!  As of June 6th, China halted DDG imports from the US, citing possible traces of an unapproved GMO corn variety in the mix.  The CFTC Commitment of Traders report this afternoon showed managed money decreasing their net long position in corn by 27,724 contracts as of June 10, giving them a net long position of 146,436 contracts.  The WASDE report was a yawner for corn with more the significant grain stocks report coming at the end of the month. Brazilian corn production was projected slightly higher than it was last month.

 

Soybean futures were 30 cents lower this week, extending a 36 cent loss from the prior week, and losing another 2.08% since last Friday. USDA reported new weekly exports sales of old crop totaling 86,700 MT.  If the bookings keep coming, and the beans keep getting shipped, one must conclude that the US crop was larger than reported, or that crushers are very comfortable with imported supplies and are letting the export beans go past them.  New crop sales were 403,300 MT; the tenth largest weekly new crop booking so far in the 40 weeks of this marketing year.  As of the close on June 10, CFTC shows managed money accounts decreasing their net long position for soybeans from the previous week by 24,007 contracts bringing their overall net long position down to 80,143 contracts.  The USDA tightened old crop ending stocks by 5mbu that came from increased crush.  That carried into the new crop balance sheet, but the domestic data was largely unchanged.  

 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

05/23/14

05/30/14

06/06/14

06/13/14

Change

% Change

July

Corn

$4.78

$4.66

$4.59

$4.48

($0.12)

-2.51%

July

CBOT Wheat

$6.53

$6.27

$6.18

$5.85

($0.33)

-5.34%

July

KCBT Wheat

$7.45

$7.23

$7.36

$7.11

($0.24)

-3.30%

July

MGEX Wheat

$7.25

$7.07

$7.09

$6.82

($0.27)

-3.81%

July

Soybeans

$15.16

$14.93

$14.57

$14.27

($0.30)

-2.08%

July

Soybean Meal

$502.60

$500.20

$487.60

$467.20

($20.40)

-4.18%

July

Soybean Oil

$40.38

$38.50

$39.01

$39.73

$0.72

1.85%

June

Live Cattle

$136.30

$137.80

$140.13

$147.60

$7.47

5.33%

Aug

Feeder Cattle

$194.15

$198.13

$200.52

$208.15

$7.63

3.81%

July

Lean Hogs

$123.73

$120.48

$124.98

$127.00

$2.02

1.62%

July

Cotton

$86.64

$86.27

$84.78

$86.95

$2.17

2.56%

July

Oats

$3.46

$3.71

$3.57

$3.47

($0.09)

-2.66%

July

Rice

$15.25

$14.99

$14.18

$14.51

$0.33

2.36%

 

 

Wheat futures were down 5.34% in Chicago this week.  KC was down 3.30% for the week and MPLS was down 3.81%.  You could blame it on the rain, but the WASDE report was the more likely culprit. USDA increased old crop ending stocks 10 million bushels to 593 MB.  New crop production figures were smaller overall than in the previous report, but ending stocks increased due to large cuts in projected food use, feed use and exports for 2014/15.  The 5.2% margin for error for total production in the Crop Production report should keep the market guessing until more of the crop is actually harvested.  Weekly export bookings for the 2014/15 marketing year totaled 570,100 MT, a total of 1,550,500 MT was carried over from 2013/14 sales. Commitments for the first week of the marketing year as a % of total projected exports for the year are 26%, and the five year average is 20%.  As of the close last Tuesday, managed money accounts sold 28,172 contracts in CBT wheat for the week, switching them to a net short position of -27,135 contracts.  They are still net long 24,657 contracts in KC.

 

Cotton futures were up 2.56% this week, gaining $2.17 in the front month.  The weekly Commitment of Traders report showed managed money accounts decreasing their net long position in cotton by 8,759 contracts bringing their overall net long on June 10 to 22,552 contracts.  Export sales commitments are running 104% of the USDA forecast for the year. They would typically be 108% by now, due to business typically carried over to the following marketing year.  The mid-week WASDE report put world stocks for 2014/15 at a record high 102.7 million bales(MB), slightly higher than the 101.7 MB figure last month.  US Stocks for 13/14 came in at 2.70 M Bales, down from 2.80 M bales projected last month.  New crop stocks were hiked to a burdensome 4.3 million bales, however, with USDA boosting expected harvested acres by 300,000.

 

Cattle futures gained $7.47 this week, up 5.33%, adding to a 1.7% gain from last week.  Feeders were more than $7.63 higher on the week, amounting to a gain of  3.81%.  Futures were supported all week by their discount to the cash cattle market.  Cash cattle trade was mostly reported $3.00 higher than last week with cattle changing hands at $147 up to $150.  Trading in the Texas Panhandle was $2.00 higher than last week, but less active than in the WCB and Northern Plains this week.  Dressed sales reported were mostly $4.00 to $6.00 higher from $235 to $238.  Estimated weekly slaughter of 605,000 was off 9K head from last week and down 39K head from the same week in 2013. Year to date slaughter is running 6.3% behind last year.  USDA reported weekly beef export sales slowed to 6,700 MT this week, after posting a total of 16,700 last week.  Wholesale beef prices were higher this week, with choice boxed beef gaining about $1.01 and select boxes increased $2.91.  The weekly Commitment of Traders report showed managed money accounts adding 822 contracts to their net long position in cattle bringing their overall net long on June 10 to 126,109 contracts. 

 

June Hog futures were 1.62% higher this week, notching a $2.17 gain since last Friday.  The June hogs contract expired today at $115.80, with the CME index down at $113.69 (as of Wednesday).  Weekly FI slaughter was estimated at 1.915 million head, vs. 1.950 million head a year ago.  Slaughter YTD is down 4.1%.  The pork carcass cutout value was up nearly 1% for the week even after a $1.77 loss on Friday, closing at $121.68.  Ribs gained 6.35% from Firday to Friday.  Weekly pork export sales were off 35% from last week at 8,500 MT. The weekly Commitment of Traders report showed managed money accounts decreasing their net long position in cattle by 1,576 contracts bringing their overall net long on June 10 to 53,851 contracts. 

 

-

Market Watch

 

We start the week with NOPA crush numbers on Monday, along with the usual export inspections report in the morning and the crop progress reports after the close.  The EIA report on Wednesday will provide an update as to how the lower corn prices influenced the ethanol production last week.  Thursday brings the weekly export sales report and updates to the drought monitor.  The trade will be watching closely to see if the break in grain prices this week brought some international business to the US market.  We finish the week with the anxiously awaited Cattle on Feed report after the close on Friday.

 

 http://www.bruglermarketing.com, find our iPad app "AgMarket" in the Apple app store, or call 402-697-3623 for more information on our consulting and advisory services for farm family enterprises and agribusinesses.

 

 

Don't Get Too Comfortable

Jun 06, 2014

 Brugler

Market Watch with Alan Brugler

June 6, 2014

Don’t Get Too Comfortable

 

A little surprised at the big rallies in corn and wheat on Friday? Don’t be.  The big specs are able to lean on these markets pretty hard and take them to really oversold levels. When they decide to cash out ahead of the weekend or ahead of an upcoming government report or around month end, there may not be anybody to take the other side of the trade. That results in big corrective moves.  Producers who are long beans, cattle, feeder cattle or hogs shouldn’t get too complacent, it can happen to you as well, going the other way. 

Corn was down 1.45% this week. Ethanol stocks ballooned.  Daily production (and corn use) was up but outrunning consumption.  Weekly export sales were solid for old crop at 500,700 MT, but still sluggish at 19,600 MT for new crop.  China continues to unwind old crop commitments from the US. They are actively auctioning off reserve corn. Significant imports are not likely as they work off these Government stockpiles. The CFTC Commitment of Traders report this afternoon showed managed money decreasing their net long position in orn by 4,159 contracts as of June 3, giving them a net long position of 174,160 contracts.

Soybean futures were 36 cents lower this week, extending a 22 cent loss from the prior week. USDA reported weekly exports sales of 271,800 MT, down from 881,000 MT the previous week. Old crop export commitments continue to confound the skeptics. Those bushels are being shipped. One must conclude that the US crop was larger than reported, or that crushers are very comfortable with imported supplies and are letting the export beans go past them. As of the close on June 3, CFTC shows managed money accounts decreasing their net long position for soybeans from the previous week by 22,887 contracts bringing their overall net long position down to 104,150 contracts. 

Wheat futures were down 1.3% in Chicago this week, but the big Friday rally carried the hard wheat markets into plus territory. KC was up 1.7% for the week and MPLS was up 0.4%.  The market appears torn between ideas that rain has helped yield potential and ideas that the storms have damaged the crop, delayed harvest and increased disease problems for SRW. Weekly export bookings slowed to 343,400 MT. As of the close last Tuesday, managed money accounts sold 18,678 contracts in CBT wheat for the week, giving them a net long position of only 1,037 contracts.  They were still net long 30,017 contracts in KC.

Cotton futures were down 1.73% this week.  The weekly Commitment of Traders report showed managed money accounts decreasing their net long position in cotton by 4,353 contracts bringing their overall net long on June 3 to 31,311contracts.  Export sales commitments are running 104% of the USDA forecast for the year. They would typically be 105% by now, due to business typically carried over to the following marketing year.  ICAC continues to foresee further increases in global cotton stocks for both 2014 and 2015. They also expect a sharp reduction in Chinese imports.

 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

05/16/14

05/23/14

05/30/14

06/06/14

Change

% Change

July

Corn

$4.84

$4.78

$4.66

$4.59

($0.07)

-1.45%

July

CBOT Wheat

$6.74

$6.53

$6.27

$6.18

($0.09)

-1.43%

July

KCBT Wheat

$7.68

$7.45

$7.23

$7.36

$0.12

1.69%

July

MGEX Wheat

$7.40

$7.25

$7.07

$7.09

$0.03

0.39%

July

Soybeans

$14.65

$15.16

$14.93

$14.57

($0.36)

-2.43%

July

Soybean Meal

$480.20

$502.60

$500.20

$487.60

($12.60)

-2.52%

July

Soybean Oil

$40.75

$40.38

$38.50

$39.01

$0.51

1.32%

June

Live Cattle

$137.90

$136.30

$137.80

$140.13

$2.32

1.69%

Aug

Feeder Cattle

$193.33

$194.15

$198.13

$200.52

$2.40

1.21%

Jun

Lean Hogs

$125.25

$123.73

$120.48

$124.98

$4.50

3.74%

July

Cotton

$89.82

$86.64

$86.27

$84.78

($1.49)

-1.73%

July

Oats

$3.37

$3.46

$3.71

$3.57

($0.14)

-3.84%

July

Rice

$15.40

$15.25

$14.99

$14.18

($0.81)

-5.41%

 

Cattle futures were up 1.7% this week to add to a 1.1% gain from last week.  Cash cattle trade was mostly steady at $144 and some $145 on Friday, with the north at $232-233.  Futures were supported all week by their discount to the cash cattle market.  June went home at $140.12. Estimated weekly slaughter of 614,000 was up 14.3% from the holiday week but down 5.2% from the same week in 2013. Beef production YTD is 5.8% below last year, with slaughter down 6.3%.  Average carcass weight is about even with year ago.  USDA reported weekly beef export sales improved to 16,700 MT.  Wholesale beef prices were lower this week, with choice boxed beef down 0.8%  and select boxes down 0.5%. 

June Hog futures were up 3.74% this week. They are still at a premium to the CME Index. Weekly FI slaughter was estimated at 1.93 million head, vs. 2.006 million a year ago. Slaughter YTD is down 4.2% but pork production is only down 0.8% due to higher carcass weights. Carcass weights are up an average of 11 pounds per hog vs last year!  The pork carcass cutout value was up nearly 4% for the week at $120.60 on Friday. Hams had the largest gain for the week.  Weekly pork export sales were up 43%% from last week at 13,000 MT.

Market Watch

Cattle traders will begin the week dealing with any surprise futures positions following June options expiration on Friday and the near pin of $140. USDA will release the usual Export Inspections and Crop Progress reports on Monday, with Weekly Export Sales on Thursday morning. The main monthly reports will be Crop Production and WASDE supply/demand, both out mid-morning on Wednesday.


Visit our Brugler web site at http://www.bruglermarketing.com, find our iPad app "AgMarket" in the Apple app store, 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 2014 Brugler Marketing & Management, LLC

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