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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.

Fresh Money and Motivation

Apr 03, 2009

 

          

 

Market Watch Summary with Alan Brugler

April 3, 2009

 

Fresh Money and Motive

 

The commodity markets had fresh money and fresh motivations this week, and the price changes reflect that. USDA started the ball rolling on Tuesday, with the much anticipated Planting Intentions and Grain Stocks reports. The latter were price supportive for the grains because the inventory levels were below the average trade guesses. On the Intentions report, corn was above the average guess but the soybean acreage reported was 3 million acres below the pre-report guesses. That fueled a 50 cent rally in November beans on Tuesday, and the market was able to sustain the rally for the rest of the week. One key question from the intentions report is what happened to the missing acres. Adding up the acreage for what USDA calls Principal Crops resulted in 317.1 million acres. That was down 7.8 million from last year, and basically takes us back to 2006 cropping levels despite futures prices that are still significantly higher than in 2006. There are a lot of theories about where the ground went, or whether it was just under reported. The market is clearly making it a mission to ensure that some of those "retired" acres are actually planted.

 

Corn futures closed slightly higher on the day and about 20 cents higher on the week. The trend on the Commercial short positions since corn futures made the low the week of March 10th indicates Commercials have been purchasing cash on increasing prices and hedging their purchases. Higher livestock prices are helpful to corn prices down the road by preserving demand. Cold and wet weather in the western Corn Belt continues to delay planting.

 

Soybeans continued higher closing at the high end of the weekly range along with Soy Meal and Bean Oil. The net change for the week was a whopping 79 cents, as the trade tried to adjust to the smaller than expected increase in 2009 planting intentions. The March 1 soybean stocks were also smaller than anticipated. The CFTC Commitment of Traders report released this afternoon showed an increase in Fund long positions of 34% since the Soybean marked a low in the recent price range the week of March 10th. The lower dollar benefitted prices today.

 

Wheat futures prices were higher at all three exchanges, and Chicago wheat led all of the tracked ag commodities in % gain for the week with an 11% advance. Concerns over freezing temperatures in the southwestern Plains and winter storms in the northern Plains contributed to higher wheat prices, but so did fresh fund money coming into the market for the second quarter. Gulf basis was slightly lower to unchanged.

Cotton futures closed above the price range established earlier this week bringing the futures price more in line with the drop in the LDP rate. Freezing temperatures are forecasted for some areas of the cotton belt keeping ground temperatures less than ideal for planting. Cotton open interest for April 2, 2009 was 142,256 contracts and volume was 16,528. The weekly Commitment of Traders report indicates commercials are getting product purchased on the rally that developed from March 9th

 

Cattle and Feeder Cattle futures prices closed strong on Friday with a weaker dollar and the stock market showing a strong weekly close. Choice beef was 135.58 down .22 and Select was 134.94 down .24. This next wave of winter storms could temporarily slow down weight gains. Cash trade was very slow to develop, with some packers on reduced schedules and tight ready numbers.

Lean Hog futures closed much better on the day making most of their gains in the last hour of trade. Monthly pork values indicate the spread between the wholesale value and the Gross Farm Value of pork is narrowing with Wholesale prices decreasing and the Gross Farm Value increasing. Carlot pork carcass prices this afternoon are quoted at 56.94 up 81, Loins were 71.69 up 2.08, Butts were 63.76 up 1.09, Picnics were 37.73 up 1.98. Ribs were 101.11 up 16, Hams were 38.45 down 25 and Bellies were 74.85 up 4

 

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

 

Market Watch

 

 

 

 

 

Weekly

Weekly

 

03/13/09

03/20/09

03/27/09

04/03/09

Change

% Change

May Corn

$3.89

$3.97

$3.87

$4.05

0.18

4.52%

May CBOT Wheat

$5.18

$5.50

$5.07

$5.64

0.56

11.09%

May KCBT Wheat

$5.70

$6.03

$5.50

$6.08

0.58

10.45%

May MGEX Wheat

$6.09

$6.36

$6.08

$6.72

0.64

10.49%

May Soybeans

$8.77

$9.41

$9.17

$9.96

0.79

8.56%

May Soy Meal

$276.70

$300.50

$283.80

$306.00

22.20

7.82%

May Soy Oil

$30.17

$32.25

$32.42

$35.32

2.90

8.95%

April Live Cattle

$84.65

$85.20

$84.32

$86.05

1.73

2.05%

April Feeder Cattle

$92.05

$93.78

$93.12

$95.40

2.28

2.45%

April Lean Hogs

$63.20

$61.75

$60.47

$60.27

0.20

-0.33%

May Cotton

$42.83

$44.08

$43.34

$47.60

4.26

9.83%

May Oats

$1.86

$2.00

$1.96

$1.99

0.03

1.79%

May Rice

$11.63

$12.83

$12.38

$12.78

0.40

3.27%

 

Market Watch:  The cattle market will begin the week reacting to the expiration of the April cattle options and the resulting new futures positions. Export inspections will be out on Monday, but the main USDA report will be the WASDE reports on Thursday the 9th. USDA will use that report to reflect the numbers reported in the Grain Stocks report on March 31, with likely adjustments to feed and residual use. Friday will mark the expiration of the May cotton options. The CME is also closed on Friday, with trading scheduled to resume electronically the evening of the 12th.

 

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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