Jul 24, 2014
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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.

The Heat Continues but the Market Cools

Jul 23, 2010

Corn finished the week 24 cents lower, down 5.95% from last Friday. Elevators and terminals began to back off bids with farmer selling into the rally. Elevators are looking for better quality corn to blend. Concerns this week focused on the extended heat in the FSU and Europe that has threatened the grain crop to the point where the rumor mill is speculating on an export tax in Russia. Corn exports were strong this week at a combined total of 1.155 MMT with new crop sales nearly equal to old crop. China demand has come back into the market after being absent the past four years and YTD China purchases total 1.1947 MMT.


Wheat, once again posted the largest percentage gains overall in our table. Continued weather problems in the FSU and Europe helped to fuel the rally in wheat but promises of Delta rains compliments of Tropical Storm Bonnie limited prices gains in the U.S. today. Some of this week’s price advance can also be credited to the falling dollar. The DTN National SRW basis is 57cents under the CBOT September contract, HRW DTNN basis is $1.42 under the KC September contract and HRS is 84 cents under the MGEX September. It appears as though the CBOT Variable Storage Rate is helping basis nationally. Export sales were better than last week but down from the four week average.


Soybeans were down .25% for the week, closing 3 cents lower, trading sideways since Monday. New crop export sales were impressive at 1.115 MMT, mostly for China with old crop sales really dismal. Soybean meal was down 2.57%, and soy oil was up 1.98% for the week. The energy markets helped the soy oil to keep a firmer tone. The U.S. Census Bureau monthly soybean crush came in below trade expectations at 129.17 million bushels and that added a bearish tone to the week. Private exporters continue announce new crop soybean sales for 2010/11. Announcements were for South Korea, (110,000 MT) China (175,500 MT) and Unknown (175,000 MT) this week. The U.S. Census Bureau monthly soybean crush came in below trade expectations at 129.17 million bushels and that added a bearish tone to the week.



Cotton was up .45 % for the week, down earlier in the week and then pulled up later in the week by the realization that certificated stocks are almost gone. Cotton condition ratings only reinforced the bearish sentiment about cotton, with expectations of a huge new crop balancing concerns of a shortage. ICE margins were increased this week on cotton which could have effected price action later in the week, as a bit of a wet blanket on specs. The Delta States should expect some welcome relief from Tropical Storm Bonnie to the recent lack of moisture that has affected crop development. Census Bureau reported domestic cotton mill use last month at an annualized rate of 3.491 million bales compared to 3.158 last year. Monthly consumption in June was at 331,684 RB up from May’s 274,517 RB. Weekly export sales were good with 287,300 RB sold for 2009/10 and 380,000 RB committed from 2010/11, mostly for China.


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


 

Market Watch

 

 

 

 

Weekly

Weekly

Month

07/02/10

07/09/10

07/16/10

07/23/10

Change

% Change

Sep

Corn

$3.73

$3.84

$3.95

$3.71

0.24

5.95%

Sep

CBOT Wheat

$5.03

$5.38

$5.87

$5.96

0.09

1.53%

Sep

KCBT Wheat

$5.16

$5.53

$5.99

$6.15

0.16

2.67%

Sep

MGEX Wheat

$5.31

$5.63

$6.12

$6.29

0.17

2.78%

Aug

Soybeans

$9.45

$9.93

$10.20

$10.17

0.03

0.25%

Aug

Soybean Meal

$286.00

$300.90

$307.80

$299.90

7.90

2.57%

Aug

Soybean Oil

$36.16

$37.50

$38.31

$39.07

0.76

1.98%

Aug

Live Cattle

$89.48

$90.20

$92.27

$93.42

1.15

1.25%

Aug

Feeder Cattle

$112.68

$113.25

$113.10

$115.17

2.07

1.83%

Aug

Lean Hogs

$80.05

$80.03

$81.70

$83.23

1.52

1.87%

Oct

Cotton

$77.83

$78.15

$79.96

$80.32

0.36

0.45%

Sep

Oats

$2.48

$2.65

$2.68

$2.55

0.13

4.77%

Sep

Rice

$9.81

$9.99

$9.86

$10.28

0.42

4.26%


Cattle futures were up $1.15 on good volume higher cash and boxed beef prices.  Cash cattle traded $1 to $2 higher, at mostly $95 around the country in the live and $150-151 in the dressed. There was good sales volume; Texas sales numbered 27,000 on last reports, Kansas sales at 38,000 and Nebraska sales volume at 52,000 head. Choice beef was up $1.41 from Thursday to Thursday, with most of the gain occurring on Tuesday. Select cuts narrowed the spread between the two, closing up $1.96 for the week. Yesterday’s Cold Storage report showed a 1.5% decline in beef stocks from May 31st and a drop of 12.9% from a year ago. The COF report was friendly when compared to average trade guesses for all categories. July 1st cattle on feed numbers were at 103% of a year ago, June placements were at 117% and June marketings were at 100% of a year ago. The inventory report showed an expected decrease in beef cows, down 2%, a decrease in beef replacement heifers of 2% and a 1% drop in the 500 and under calf crop.


Hogs were $1.52 higher for the week, up 1.87%. On a Thursday/Thursday basis, the pork carcass cutout was up 5.2%. Hams and Bellies were the strongest and Ribs were the weakest but all positive for the week. Fund buying was a bullish feature along with fund rolling from the August to October contract. The Cold Storage report showed pork leading the decline in meat supplies. Pork inventories in cold storage were down 7.3% from last month and 23.3% lower than a year ago. Bellie stocks were the largest contributor to the total decline in pork supplies, down 35 million pounds from last year.


Market Watch: Hot weather is still the fundamental story both in the U.S. and abroad. Rains continue to benefit the major grain areas tempering the effects of the heat. Monday’s crop progress report should show Winter Wheat harvest complete in those states that were nearly finished last week and some progress in the states that were significantly behind normal. Soybean and cotton crop development in the Delta will probably look better next week than this week. Most of the reports next week are financial. Although the Dollar was down sharply yesterday for the week it was nearly unchanged.


Looking for professional help with your marketing decisions? Consider subscribing to our daily Ag Marketing Professional service or Special Research Reports. Readers are also invited to attend our Summer Seminar in  Omaha, NE Aug 2-3. Call our office for details at 402-697-3623, or visit bruglermarketing.com.


There is a risk of loss in futures and options trading.    Such trading is not appropriate for all individuals. 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. 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 and consulting services.

 

                                                                                                                                      Copyright 2010 Brugler Marketing & Management, LLC

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