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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.

Market Watch with Alan Brugler February 13, 2009

Feb 14, 2009

February 13, 2009  

Lower Profile

The mid-winter thaw we talked about last week appears to have also melted the commodity bulls’ bank accounts.  Buying interest just seemed to be absent all week, with the notable exception of the hog market, which had some expiration week fireworks in the February futures.  Part of the malaise appeared to be tied to the Obama stimulus package, which was tied up in Congress all week.  As a huge bill, there are a lot of hidden items that will come to the market’s attention over time, but the initial impression was a lot of small incentives in the Ag sector, and rather incremental improvements in consumer balance sheets or spendable cash as the various tax cuts are phased in.

 

 February lean hogs future contracts were the biggest gainers for the week.  Friday at 12 noon Central Standard Time was when February lean hog futures expired.  February contracts expired 30 cents lower from the opening pit traded price, but closed $2.47 higher than its previous Friday last settlement, an increase of 4.38%.  Since the opening trade this past Monday, February 9 February lean hogs have slowly increased in contract price each day to expire at the CME lean hog index value on Friday.  Rally in cash hogs and the CME Lean Hog Index made their values at a premium to the futures.  Modest gains in lean pork cutout allowed cash and futures to move higher.  Pork packer profit margins reported-ably continue to be dismal.

Corn

Corn futures closed lower for the day and for the week.  Argentine weather seems to have been again the dominant factor affecting US corn futures, along with a potential farmer strike stalling exports there.  This past Tuesday the USDA did not increase US corn ending stocks, the market was expecting the USDA to increase corn ending stocks for 2008/09.  Weekly export sales continue to improve, with the highest net sales of the year reported on Thursday at 1.543 MMT. Concerns about domestic demand offset that needed improvement in export business. Ethanol processing margins continue to be poor, and livestock producers who do not hedge are reporting negative closeouts.  Late Friday, the Buenos Aires Grain Exchange reported its estimated Argentine corn crop to be 14 MMT for 2008/09, higher than the USDA estimate for Argentine corn crop at 13.5 MMT.

Soybeans

Soybeans futures end the day and week lower.  Like corn, Argentine weather and crop conditions there again dominated there affect on US soybean futures for the week.  This past Tuesday the USDA estimated Argentine soybean production at 43.8 MMT and Brazilian production at 57 MMT.  Though the USDA trimmed soy production for both countries, the figures were less than the market had expected.  Late Friday the Buenos Aires Grains Exchange estimated Argentina’s 2008/09 soy crop at 40MMT, from planting 17.75 million hectares.  This past Thursday the USDA reported the previous week net soybean export sales at 1.07 MMT, reaffirming the strong export demand for US soybeans by China.

Wheat

Wheat futures in Chicago, Kansas City, and Minneapolis end the day and week lower.  Spillover bearish pressure from corn and soybeans was one of the dominant factors to wheat.  Weather concerns in the HRW wheat crop areas of the US plains affected wheat futures, but the northern part of the plains has received snow to help replenish soil moisture there.  Continued dryness is evident in western Oklahoma and western Texas crop areas.  Though China weather concerns affecting wheat crops there were reported, China’s existing stock was adequate for their supply needs.  Continued competition for wheat exports from Russian wheat was evident by Egypt’s recent passing over US wheat for Russian wheat.  This past Tuesday the USDA didn’t significantly adjust any if its estimates for US wheat for 2008/09 market year.


Below is a table showing the net weekly change of selected agricultural futures contracts:

Market Watch

 

 

 

 

 

 

 

 

 

 

 

Wkly

Wkly

 

01/23/09

01/30/09

02/06/09

02/13/09

Change

% Change

March Corn

$3.91

$3.79

$3.77

$3.63

0.14

-3.71%

March CHI Wheat

$5.83

$5.68

$5.57

$5.36

0.22

-3.86%

March KC Wheat

$6.11

$6.01

$5.87

$5.75

0.12

-2.05%

March MGE Wheat

$6.61

$6.52

$6.55

$6.36

0.19

-2.86%

March Soybeans

$10.09

$9.80

$10.01

$9.56

0.46

-4.55%

March Soy Meal

$318.30

$311.00

$317.30

$297.70

19.60

-6.18%

March Soy Oil

$33.60

$32.73

$33.40

$33.00

0.40

-1.20%

Feb Live Cattle

$82.67

$82.00

$83.65

$84.05

0.40

0.48%

Mar Feeder Cattle

$92.75

$91.00

$94.35

$94.47

0.12

0.13%

Feb Lean Hogs

$58.92

$58.55

$56.35

$58.82

2.47

4.38%

March Cotton

$50.64

$49.41

$49.86

$44.03

5.83

-11.69%

March Oats

$2.15

$2.05

$1.95

$1.85

0.11

-5.38%

March Rice

$12.75

$11.77

$12.79

$12.51

0.28

-2.15%

 


Corn

Corn futures closed lower for the day and for the week.  Argentine weather seems to have been again the dominant factor affecting US corn futures, along with a potential farmer strike stalling exports there.  This past Tuesday the USDA did not increase US corn ending stocks, the market was expecting the USDA to increase corn ending stocks for 2008/09.  Weekly export sales continue to improve, with the highest net sales of the year reported on Thursday at 1.543 MMT. Concerns about domestic demand offset that needed improvement in export business. Ethanol processing margins continue to be poor, and livestock producers who do not hedge are reporting negative closeouts.  Late Friday, the Buenos Aires Grain Exchange reported its estimated Argentine corn crop to be 14 MMT for 2008/09, higher than the USDA estimate for Argentine corn crop at 13.5 MMT.

Soybeans

Soybeans futures end the day and week lower.  Like corn, Argentine weather and crop conditions there again dominated there affect on US soybean futures for the week.  This past Tuesday the USDA estimated Argentine soybean production at 43.8 MMT and Brazilian production at 57 MMT.  Though the USDA trimmed soy production for both countries, the figures were less than the market had expected.  Late Friday the Buenos Aires Grains Exchange estimated Argentina’s 2008/09 soy crop at 40MMT, from planting 17.75 million hectares.  This past Thursday the USDA reported the previous week net soybean export sales at 1.07 MMT, reaffirming the strong export demand for US soybeans by China.

Wheat

Wheat futures in Chicago, Kansas City, and Minneapolis end the day and week lower.  Spillover bearish pressure from corn and soybeans was one of the dominant factors to wheat.  Weather concerns in the HRW wheat crop areas of the US plains affected wheat futures, but the northern part of the plains has received snow to help replenish soil moisture there.  Continued dryness is evident in western Oklahoma and western Texas crop areas.  Though China weather concerns affecting wheat crops there were reported, China’s existing stock was adequate for their supply needs.  Continued competition for wheat exports from Russian wheat was evident by Egypt’s recent passing over US wheat for Russian wheat.  This past Tuesday the USDA didn’t significantly adjust any if its estimates for US wheat for 2008/09 market year.

Cotton

Continuing concerns over domestic and global demand and consumption of cotton as a result of the global slowdown and current US recession greatly affected cotton futures this week.  Supporting this sentiment was the USDA reduction of the world and US cotton consumption for 2008/09, by 4 million and 2million (480lb) bales, respectively.  Late Friday afternoon, the National Cotton Council reported US cotton producers will plant 8.107 million acres, a decrease of 14% from the previous year, with land shifting towards soybeans.  This amount was lower than the USDA estimate of 8.4 million acres.  Spillover selling from grains affected cotton for the week as well.

Cattle

Live cattle futures this week closely watch the US equities market and followed in kind, closing lower for the day but higher for the week.  Feeder cattle futures followed live cattle and closed lower for the day and higher for the week.  Total beef production was 0.9% lower from the previous week.  This supports market sentiment this week over declining beef demand especially higher price choice resulting from the present US recession.  The most recent USDA WASDE report released this past Tuesday projected a reduction of 400 million pounds of beef produced for 2009.  Choice boxed beef prices fell to a new 4 ½ year low.  Feeder cattle supplies showed a reduction for the week which lent support to feeder cattle futures.

Market Watch:  Monday is a market holiday, with no trading on the US exchanges. On Tuesday, traders will look forward to the release of the monthly NOPA soybean crush report, seeking evidence of either a further slow down or a recovery of demand. USDA will also issue Export Inspections on Tuesday.  The monthly Milk Production report will be out on Thursday, along with PPI, and jobless claims. On Friday, USDA will release the monthly Cattle on Feed and Cold Storage reports. March grain and financial options also will expire on Friday.

 

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 Ag Market Professional or SRR subscriptions, or visit the web site @ www.bruglermktg.com.

© 2009 Brugler Marketing & Management, LLC

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