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Market Watch

RSS By: Alan Brugler,

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

Lions or Lambs?

Feb 27, 2009

Tradition has it that March “comes in like a lion and goes out like a lamb”, a reference to the blustery mix of winter and spring weather patterns at the beginning of the month and the tendency for warmer and somewhat calmer conditions at the end of the month. That leads to the question of March price behavior in the agricultural commodities. There were a number of ill winds blowing as we exited February, with a blanket of government spending and tax initiatives covering the ground, as well as the usual quota of hot air coming out of the USDA Outlook Forum held in D.C. on Thursday and Friday.


The thinly traded oats market was the big gainer for the week, followed by April hogs. Oats saw some concerns about 2009 acreage in the US and Canada, but they were also moving around due to position adjustments ahead of the delivery period for March futures. Hogs had been badly depressed the previous week (see the 4 weekly Friday closes below). Packer margins improved a bit, and the futures also saw a round of profit taking as the month ground to an end and a few traders tied to realized gains for their bonuses closed out some shorts. Weekly hog slaughter was still running ahead of both the previous week and year ago.

Corn futures had a promising start to the week, but closed almost UNCH with the previous Friday due to a collapse at the end of the month. Heavy deliveries against March corn futures provoked some selling in the nearby contract, and USDA used a larger 2009 corn acreage figure than some traders had anticipated in their initial outlook for 2009. Weekly export sales announced on Thursday morning were also poorer than those seen over the past few weeks and that information contributed to the sell off.


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


Market Watch




















% Change

March Corn







March CHI Wht







March KC Wht







March MGE Wht







March Soybeans







March Soy Meal







March Soy Oil







Feb Live Cattle







March Feeder Cattle







Apr Lean Hogs







March Cotton







March Oats







March Rice








Wheat futures were lower in KC and CHI, while a little higher in MPLS. Concerns about a lack of spring wheat acreage helped support the latter, while soft export interest and March delivery mechanics are still issues for the winter wheats. This is the anniversary of the massive short squeeze in Minneapolis, which carried futures over $24 per bushel. There appears to be no interest in a repeat performance.


The soy complex was higher for the week. Soy oil gained 2.08%, and meal was up 2.15% for the week. The higher product values allowed nearby beans to gain 12 cents per bushel, or 1.39% on the week. Much slower export sales bookings were a factor, along with the strength of the US dollar. The Census Crush report showed monthly crush activity about as expected, but also revealed an unwanted buildup in both soybean meal and soybean oil stocks. Another dry spell in Argentina increased caution about the rising yield forecasts there. Negotiations between the government and the farmers there have gone nowhere, with threats in the media that farming or the marketing of farm products in Argentina might somehow be nationalized.


Cotton prices continued to be bludgeoned by the world economy, losing another 2.25% for the week on demand concerns. Those were exacerbated by falling stock market prices and the Friday GDP revision to -6.2%, which was the worst since the early 1980’s. Export sales were actually a bright spot, with China starting to buy larger quantities, but the Census Consumption report on Thursday didn’t provide a whole lot of bullishness regarding domestic mill use.


Cattle futures were up $1.85 for the week. Cash cattle prices rebounded in the north by $1-3 from the previous week, although southern activity was very late to develop. Wholesale prices weren’t exactly strong, and we witnessed a very rare event early in the week. Choice beef, which is more expensive to produce than Select, saw prices briefly dip below Select (i.e. a negative choice/select spread). Both supply and consumption balance factors are at work there, but Choice volume picked up when it was “on sale” and quickly rectified the situation.


Market Watch:  The calendar turns to March, and trader’s thoughts turn to March futures deliveries, the Goldman roll, and the March 1 Planting Intentions survey being completed this week. The actual report won’t come out until March 31. The index fund rolling period officially begins on Friday, but pre-positioning has already started. This is quiet week for ag reports, with USDA’s export inspections and Export Sales reports on Monday and Thursday standing out. Some March options expire on Friday. Not to be forgotten, the annual start of daylight savings time was moved up a few years ago to save energy. You need to roll your clock ahead an hour on Saturday night (3/7).


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 @


© 2009 Brugler Marketing & Management, LLC
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