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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.

No Sun, No Glow

Jan 22, 2010

 

Market Watch with Alan Brugler

January 22, 2010

 

No Sun, No Glow

 

Much of the western and central Corn Belt continues to be mired in snow, fog, and ice. There have been very few sunny days, which reflects the disposition of the ag futures and cash markets this week. There was no warm and bullish glow, just declining prices and red numbers on the screen. The decline wasn’t limited to the ag commodities, with the Dow Jones Industrial Average posting the worse weekly loss in nearly 1 year (prior to the slide into the March low).

 

Nearby March corn futures dropped 52 cents during the crop report week. That slowed only 7 cents this past week, all of the net loss occurring on Friday. It is still a bear market, however, as bullish news (1.6 MMT weekly export sales, the largest total of the year) failed to boost the market on Friday.

 

Soybeans suffered the largest percentage loss of the ag markets we track, down 2.31% for the week. Soy oil was down 2.18%, with the 82 point drop equaling 9 cents of soybean value at current oil yields. The $5.30/ton drop in soybean meal accounted for the other 14 cents of loss in the March beans. The USDA showed 990,600 MT of combined old crop and new crop soybean export bookings. That was on the top end of private estimates heading into the report. Softness in gold and energy futures weighed on the soy complex to a degree, suggesting a little less speculative enthusiasm. Bigger South American crops can cause that as well!

 

Wheat futures have continued under pressure, with Chicago down 2.25% for the week. KC and MPLS were a little firmer as the trade works through the implications of the winter wheat acreage cuts, and the distribution of world demand for US wheat by class. On Friday, USDA showed weekly export sales that were double the size of the trade estimates; at 825,800 MT. Bulls see that as a hopeful sign of prices having reached market levels. They are clearly still too high to compete effectively in the Egyptian market, or in other markets where freight costs from the US are higher than those seen by the competitors.

 

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

 

Market Watch

 

 

 

 

Weekly

Weekly

12/31/09

01/08/10

01/15/10

01/22/10

Change

% Change

March Corn

$4.15

$4.23

$3.72

$3.65

-0.07

-1.82%

March CBOT Wheat

$5.42

$5.69

$5.10

$4.99

-0.11

-2.25%

March KCBT Wheat

$5.36

$5.60

$5.12

$5.02

-0.10

-1.95%

March MGEX Wheat

$5.45

$5.75

$5.21

$5.13

-0.08

-1.54%

March Soybeans

$10.49

$10.22

$9.74

$9.52

-0.23

-2.31%

March Soybean Meal

$306.10

$298.30

$291.70

$286.40

-5.30

-1.82%

March Soybean Oil

$40.78

$39.91

$37.53

$36.71

-0.82

-2.18%

February Live Cattle

$86.17

$85.82

$87.35

$86.62

-0.73

-0.84%

January Feeder Cattle

$95.87

$96.35

$97.97

$97.10

-0.87

-0.89%

February Lean Hogs

$65.60

$67.25

$69.97

$69.85

-0.12

-0.17%

March Cotton

$75.60

$72.44

$72.08

$71.07

-1.01

-1.40%

March Oats

$2.77

$2.75

$2.31

$2.33

0.02

0.87%

March Rice

$14.89

$14.96

$13.98

$14.17

0.20

1.40%

 

Cotton futures were lower once again, suffering a double whammy of a stronger US dollar and a weaker stock market with corresponding concerns about the broader economy and cotton demand. As was the case with corn and wheat, USDA weekly export sales numbers were stronger than the trade estimates, but the market focus was on liquidating longs, not any future tightness. The actual net sales for the week were 321,900 RB of upland and 11,300 RB of pima.

 

Cattle futures backed off a little ahead of the Friday night Cattle on Feed report. The market had gained about $1.50 the week before, and gave back half of it after spiking to the new multi-month highs early in the week. Wholesale prices also fell back. USDA told us on Friday afternoon that the number of cattle in the feedlots on January 1 was 2% smaller than it was at the beginning of 2009. December marketings were 103.5% of year ago, while placements were only 93.9% of the previous December. All three numbers were a little more bullish than the average trade guesses, so a higher opening call for Monday is in place. Whether it has any legs will be determined by the general economic and political news over the weekend.

 

Hogs ended a string of strong up weeks, but just barely. February hogs were 12 cents lower than they had been on the previous Friday. The pork carcass cutout was down 17 cents on Friday at $77.18 after peaking at $78.63 on Wednesday.  The USDA Cold Storage report showed a sharp decline in total meat in Cold Storage, down 14%. However, pork bellies in Cold Storage were still above year ago levels at 57.954 million pounds (vs. 51.593 million a year earlier).

 

Market Watch:  Livestock traders will begin the week reacting to the Cold Storage and COF reports. They’ll end it with Friday’s semi-annual Cattle Inventory report, also from USDA.  Thursday the 28th will also be expiration day for January feeder cattle futures. Grain traders will have the usual Export Inspections report on Monday and weekly Export Sales numbers on Thursday morning.  In addition, Census Crush is scheduled for Thursday morning, along with Cotton Consumption.

 

There is a risk of loss in futures and options trading.  Past performance is not necessarily indicative of future results.  Comments made in this article are in no way to be seen as an endorsement of futures and options trading, or of any particular risk management technique. 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 subscription content.

 

2010 Brugler Marketing & Management, LLC

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COMMENTS (1 Comments)

Anonymous
My opinion is we need to take the additional 50 million acres out of production that the environmentalist want. We need to join forces and work together. It would be 50 mill less acres that would require ad hoc disaster programs in the future, cut green house, help prices, etc. The list goes on and on with benefits to farmers and the general public. No more gov payments on this land a one time payment. It would be a budget saver. Lets reduce land output if prices cant keep up with cost of production rather than increase.
3:47 PM Jan 25th
 
 
 
 
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