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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.

Rays of Hope

Oct 17, 2008
Is that a ray of sunlight or the headlight of an oncoming train? Unlike last week, we had 7 of the tracked commodities gaining on the week, vs. 6 that declined. And, the declines were smaller. Corn continued to slide, and broke the $4 barrier for a while before rallying back into the weekend. Export sales were a little stronger than expected on Friday morning, but a better stock market technical picture was still the main theme. It offered hope of a slowdown in the relentless liquidation of index fund long positions by presumably reducing the number of margin calls.
Below is a table showing the net weekly change of selected agricultural futures products:
Market Watch
% Change
Dec Corn
Dec CHI Wht
Dec KC Wht
Dec MGE Wht
Nov Soybeans
Dec Soy Meal
Dec Soy Oil
Oct Lv Cattle
Oct Fdr Cattle
Dec Ln Hogs
Dec Cotton
Dec Oats
Nov Rice
Cattle futures were up 2.16% for the week despite slow export sales and all of the negative news about consumer sentiment. The gain was somewhat artificial; thanks to a limit down plunge the previous Friday and some short covering ahead of this past Friday’s Cattle on Feed report. Wholesale prices were lower, and cash cattle traded about $2 lower at $90 in the south. The COF report showed a market that is current, with slaughter at 106.2% of year ago and above our projected ready cattle number for September. That doesn’t mean you can get the consumers to pay up for the product, however.
Hogs were down a sharp 6% for the week. The lean hog index was under pressure all week, and December futures chose to expect further weakness rather than rallying to close the gap when October futures went off the board. There was some justification for that attitude, with the lean pork cutout retreating and cash hog prices along with it. On the weekly continuation chart, there is little support until we reach the $50-51 level.
Soybeans were down another 16 cents per bushel for the week despite a higher trade in the meal. Crude oil’s drop below $70 and larger than expected EIA motor fuel inventories didn’t help soy oil prices any. BO was down another 4.8%. Palm oil continued to slide as we approach winter and northern biodiesel users cut back on use. China is active in the market, but some Chinese plants were devastated by the high world prices last summer and are still apparently out of the mark.
Wheat futures were mixed, with CHI and MPLS higher on the week but KC lower. Export sales commitments for 2008/09 are running 30% below year ago for this date, while USDA is projecting only a 20% decline for the year. Record world production is a big reason for this, with a number of last year’s importers working off of local supply at the present time.
Cotton futures were limit up on Friday, and take the price for largest gain of the week due to that one day effort. USDA showed surprisingly large weekly export sales of 398,200 RB. The trade had been looking for only about 250,000 running bales. Higher energy futures offered less competition synthetic fiber, and USDA announced a weekly LDP of more than 7 cents per pound.
Market Watch: Cattle traders will begin the week by reacting to Friday afternoon’s Cattle on Feed report. We’re back to a full week of trading with all of the government offices open. USDA will give us Export Inspections and Crop Progress reports on Monday. November crude oil futures are scheduled to quit trading on Tuesday. The main meat report for the week will be USDA Cold Storage, on Wednesday afternoon. Census will release the monthly Oilseed Crush report on Thursday morning, along with Cotton Consumption. USDA will be back to the Thursday morning schedule for Weekly Export Sales. On Friday, a whole bunch of November options expire, including soybeans, interest rates and the serial (settled against December) November options for corn, wheat, meal and bean oil.
There is a substantial risk of loss in futures & options trading. Past performance is not necessarily indicative of future results.                    
Copyright 2008 Brugler Marketing & Management LLC. Reproduction or rebroadcast of any portion of this article without written consent of Brugler Marketing & Management LLC is strictly prohibited.
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