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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.

Frost Rally Melts

Sep 21, 2009

 

Market Watch with Alan Brugler

September 18, 2009

 

Frost Rally Melts

 

Corn traders had a heck of a ride, as the long range forecasts on Tuesday appeared to have a substantial portion of the Corn Belt getting hit by a freeze or heavy frost. December futures were limit up at one point on Tuesday, peaking at $3.47 ¾. However, both the GFS and European models thawed out as the week went on, and by Friday night corn prices were showing a net loss of 2 cents for the week. Even the substantially weaker US dollar was unable to halt the slide. A huge Mexican corn purchase will show up in this coming Thursday’s Export Sales report, but wasn’t much help when visions of a 13 billion bushel crop were in the bears’ heads.

 

Wheat still struggled with bearish world fundamentals. A French forecasting firm left EU soft wheat production at about 130 MMT, down 7% from last year. However, some vulnerable (from an El Nino standpoint) crop areas in southern Australia saw nice spring rains and kept Aussie crop estimates in the 21-23 MMT range. The warmer weather forecasts for North America also leave the Canadians with more time to get their spring wheat crop mature and harvested. Russia continues to capture much of the export trade to Egypt, now that quality issues have been resolved. Brazil, on the other hand, detained a vessel of US wheat for vomitoxin testing after a reported “tip” from a Brazilian politician.

 

The soy complex was higher, with November beans gaining 4.2% for the week despite the removal of the frost threat and the likelihood of a record crop. The main story is the big fall export lineup, with China having already booked an estimated 382 million bushels of US new crop and other countries also showing more forward business than a year ago. US crushers are trying to short stop some of those beans from getting to the PNW or the Gulf, and some may be planning on getting some receipts via the delivery route. September futures expired weakly on Monday, but November rallied to close the chart gap on Tuesday and then held most of the value for the rest of the week.

 

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

 

Market Watch

 

 

 

 

Weekly

Weekly

 

08/28/09

09/04/09

09/11/09

09/18/09

Change

% Change

December Corn

$3.29

$3.06

$3.20

$3.18

-0.02

-0.55%

December CBOT Wheat

$4.95

$4.72

$4.67

$4.57

-0.10

-2.14%

December KCBT Wheat

$5.17

$4.90

$4.78

$4.72

-0.06

-1.20%

December MGEX Wheat

$5.40

$4.99

$4.94

$4.97

0.03

0.56%

November Soybeans

$10.11

$9.22

$9.03

$9.41

0.38

4.21%

October Soy Meal

$320.00

$287.20

$280.50

$290.00

9.50

3.39%

October Soy Oil

$36.27

$33.83

$33.52

$34.68

1.16

3.46%

October Live Cattle

$86.70

$86.65

$87.22

$85.55

-1.67

-1.91%

September Feeder Cattle

$98.15

$98.95

$99.17

$97.25

-1.92

-1.94%

October Lean Hogs

$48.07

$50.50

$52.47

$50.80

-1.67

-3.18%

October Cotton

$56.30

$57.53

$59.31

$63.18

3.87

6.53%

December Oats

$2.25

$2.08

$2.08

$2.13

0.05

2.40%

November Rice

$13.76

$14.16

$13.52

$13.47

-0.05

-0.41%

 

Cotton futures were actually the biggest bull story by the time the end of the week rolled around, gaining 6.53% for the week. Cotton appeared to be attracting a lot of speculative interest, perhaps encouraged by the sliding US dollar and certainly supported by improving economic indicators in several countries. The wet weather in the southern US is also seen as delaying harvest a bit, although there is plenty of carryover cotton from last year to keep the mills adequately supplied.

 

Cattle futures bulls lost the battle, with prices sliding to the lowest daily level since August 31 on Friday ahead of the Cattle on Feed report. Softening wholesale prices spoke volumes about US demand, as a large weekly export sales number and a weak dollar failed to turn values up. That translated into weaker US cash cattle prices on Thursday, with most at $84.50. The USDA report itself showed larger than expected placements at 102.4% of year ago. Marketings were slightly above estimates at 96.1%, but the net effect was September 1 on feed numbers that were 98.9% of last year. The trade also appears to be slightly behind on getting them moved out of the lot.

 

Hogs had a fighting chance of notching a 5th consecutive higher weekly close, but blew it on Friday when October futures dropped $1.37 and went  $1.49 below the most recent CME Lean Hog Index quote. Friday’s pork cutout was down a modest 25 cents at $56.79, but Russian and/or Mexican ham interest appeared to have been satisfied for the time being.

 

Market Watch:  As we anticipated in last week’s column, traders went back to weather forecasting after the crop report, trying to be the first to spot any potential for frost/freeze damage. Those who did so last week were burned, but the sport is likely to continue this week. The Monday night USDA Crop Progress report will be important input, showing how much maturity has advanced since last week and thus how many bushels of corn or soybeans are now safe from premature death. We know it will be a lot more than last week. Livestock traders will start the week working through the Cattle on Feed report from Friday night.

 

Tuesday will be the first day of Autumn and also the release date for the USDA Cold Storage report. Thursday will see weekly Export Sales, and also Census Crush and Census Cotton Consumption reports.  Thursday will be a busy day, as it is also expiration day for September Feeder Cattle and first notice day for October cotton deliveries. Not to be ignored, Friday will feature a USDA quarterly Hogs & Pigs report, and will also mark the expiration of October grain options.

 

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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COMMENTS (3 Comments)

Anonymous
6:04 PM
USDA says your corn will average 202 and all the analists on here say the crop is there. Maybe you are just not looking at your fields right and need them to estimate the yield for you.
The yields are spoted in avery state and there is no way all the corn acres will average over 160. Just a lot of people that want to force the markets into the ground.
1:01 AM Sep 20th
 
Anonymous
Im not sitting on good yield in my northern state. Your not the lone ranger. How about the guy that paid high cash rent, bought high priced fertilizer, didnt forward contract anything, and is sitting on a bad crop..... I sometimes hope the market can totally bottom out after corn harvest and end up with about a $1.00 a bushel ldp and have market go back up. It would be a nice way to recoup a little extra for our corn and make up some for the ridiculously high priced inputs trap we got caught in this year.
12:52 AM Sep 19th
 
 
 
 
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