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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.

Everybody Up!

Nov 20, 2009

www.agmarketpro.com

 

Market Watch with Alan Brugler

November 20, 2009

 

Everybody Up!

 

It was close, but every ag commodity we follow closed higher this week. The dollar closed higher after two down weeks, but ag prices were able to get at least a little separation (it’s football season) from the defender and head up field. Gold has also been up 14 of the past 15 trading days and is up 10% during that period. Energy futures were lower on Friday, which didn’t do ethanol any favors. They were up for the week, however. Consumer demand continues to be suspect, but there are signs that the 90% of the population that is still working might be loosening up their checkbooks at least a little bit. Increased demand for a fairly fixed supply of goods is a key piece of the commodity asset bull argument , and they are still buying.

 

Corn was up only ½ cent for the week, as poor export sales weighed on the market and rapid harvesting also created a fair amount of hedge pressure. There was a record or near record open interest in Dec corn options heading into Friday’s expiration period. That drove a battle to “pin” one group of options holders at expiration. There was a large number of $4 calls open, but after trading in-the-money on Globex they expired worthless. The Dec 390 puts were also in-the-money on the lows of the day, but they also expired worthless. Chalk those up as wins for the options writers (sellers).

 

Wheat futures were up 3.8% in CHI, up 3% in KC and up 1% in MPLS. CHI settled at a 3 cent premium to the higher protein KC contract, which is unusual. It appears to be tied to more speculative interest in the CHI futures, and to the likelihood of a sharp drop in SRW ending stocks next year due to reduced plantings. US wheat export sales continue to be weak, with prices an estimated $20/MT too high to be competitive in the Egyptian tender.

 

Soybeans jumped nearly 6% for the week. NOPA showed stronger than expected October crush activity, and low soy oil yields compared to last year. That prevented a buildup of soy oil stocks despite the large crush activity. Weekly export sales were huge again, and exports are now geared up as well. China still has an estimated 375 million bushels of US beans to ship, with purchases rapidly closing in on 600 million bushels for the marketing year. Soy oil got a boost from biodiesel demand, with Brazil rumored to be looking to import some biodiesel to meet new usage mandates. Argentine estimates of a 47 MMT crop also boosted old crop US prices, raising doubts about the big world stocks buildup next spring. USDA’s estimate is at 53 MMT, 220 million bushels larger.

 


Below is our table showing the net weekly changes and 4 week history of selected agricultural futures Friday closing prices:

             

Market Watch

 

 

 

 

Weekly

Weekly

 

10/30/09

11/06/09

11/13/09

11/20/09

Change

% Change

December Corn

$3.66

$3.67

$3.91

$3.91

0.005

0.13%

December CBOT Wheat

$4.94

$4.97

$5.39

$5.60

0.21

3.85%

December KCBT Wheat

$4.99

$5.01

$5.41

$5.57

0.16

3.01%

December MGEX Wheat

$5.13

$5.18

$5.56

$5.64

0.08

1.48%

January Soybeans

$9.77

$9.55

$9.87

$10.46

0.59

5.98%

December Soy Meal

$297.00

$288.80

$301.10

$317.10

16.00

5.31%

December Soy Oil

$36.40

$36.77

$38.61

$39.71

1.10

2.85%

December Live Cattle

$85.68

$85.00

$83.32

$83.95

0.63

0.76%

January Feeder Cattle

$92.78

$91.73

$91.83

$92.68

0.85

0.93%

December Lean Hogs

$56.70

$55.70

$55.00

$57.60

2.60

4.73%

December Cotton

$67.64

$66.54

$67.10

$70.41

3.31

4.93%

December Oats

$2.55

$2.54

$2.27

$2.58

0.32

13.91%

January Rice

$14.69

$15.16

$14.86

$15.17

0.31

2.09%

 

Cotton futures were up nearly 5% for the week, and finally escaped the 67 cent range. Weekly export sales were again on the upper end of the published estimates prior to the report, and China appears to be a more active participant. China did release 500,000 MT of reserve stocks to the market, but availability appears to be piecemeal. USDA shows that world prices are high enough for another zero LDP week.

 

Cattle futures were up 63 cents for the week.  Wholesale prices were a little weak, due to “moderate to heavy” packer offerings. Going home on Friday, the Select cutout was back below $132. USDA issued a Cattle on Feed report on Friday afternoon. Placements were a little lighter than expected at 101.5% of year ago, but marketings were also light at 96.75% vs. the trade guess of 97.4%. An Ag Marketing Professional comparison of marketings vs. ready numbers shows that even with the 96.75% figure we were pulling cattle ahead pretty aggressively.  Estimated carcass weights for the week were down 8 pounds from the estimate for the prior week, and within 1 pound of the actual figure for Nov 22, 2008.

 

Hogs were up 4.73% for the week, with $1.62 of the $2.60 gain for the week coming on Friday ahead of the Cold Storage report. In that report, total frozen pork supplies were down 2% from September and 1% below 2008. Pork belly stocks were down 4% for the month, but still up 71% from last year. Keep in mind that “old crop” bellies are not deliverable against February futures. The inventory needs to be rotated, but doesn’t actually drop to zero.

 

 

Market Watch:  December grain market options expired on the 20th.   We’ll start the week with traders adjusting to any surprising exercises or lack thereof.  This will be a short week from a futures perspective. All the US markets are closed on Thursday for Thanksgiving, and several of them will close early on Wednesday and Friday. Trader participation will be down, with many taking off Tuesday night or early on Wednesday and doing only cell phone and laptop checkins for the rest of the week. USDA will release the usual Export Inspections and Crop Progress reports on Monday, with soybean harvest expected to be 96-97% done and corn in the 70’s.  The Census Crush and Cotton Consumption reports are now scheduled for Wednesday morning.

 

 

 

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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