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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.

Vertically Challenged

Jul 24, 2009

           

 

Market Watch Summary with Alan Brugler

July 24, 2009

 

Vertically Challenged

 

Corn futures were the story of the week, with a major rally of 19 cents on Thursday. However, the bulls didn’t accomplish what they needed, which was to see a higher weekly close. The net loss for the week was 6 cents as the Board gave back more than half of the rally on Friday. Bulls just didn’t have confidence that the gain would hold up over the weekend. The rally came on USDA’s announcement that it would re-survey producers in 7 states to ascertain whether the crops considered planted in June but not yet in the ground were actually planted (or if producers were forced to switch to soybeans or another crop). Some in the trade jumped to the conclusion that such a survey would show fewer corn acres, but historically some revisions have been only the hundreds of thousands of acres, not millions. Strong weekly export sales helped support prices for the week, while generally favorable pollination conditions weighed on the market by threatening higher average yields.

 

Soybeans managed to eke out a 1.1% gain for the week, despite the risk of USDA finding more acres in the special survey. Higher soybean meal futures were the main driver, helping to boost crush margins. Ongoing Chinese buying interest is also supportive to the beans. They have approximately 40 million bushels of old crop yet to ship, and about 125 million bushels of new crop already on the books. The numbers can add up fast when South America is pretty much sidelined after the beginning of the US harvest!

 

Wheat futures were mixed. CHI was up a penny for the week, but the higher protein wheat markets were lower as winter wheat harvest moved north and uncovered pockets of better wheat (and export interest for those classes remains lukewarm). The Egyptians went back to buying Russian wheat, apparently having made their point about expecting to receive the quality specified in the contract.

 

Cotton futures were down a steep 7.6 % for the week. Poor weekly export sales were part of the story, along with liquidation selling that also afflicted the other field crops at times during the week.

 

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

 

 Market Watch

 

 

 

 

Weekly

Weekly

 

07/02/09

07/10/09

07/17/09

07/24/09

Change

% Change

September Corn

$3.46

$3.28

$3.22

$3.16

-0.06

-1.86%

September CBOT Wheat

$5.29

$5.19

$5.15

$5.16

0.01

0.29%

September KCBT Wheat

$5.64

$5.48

$5.67

$5.49

-0.18

-3.09%

September MGEX Wheat

$6.23

$6.03

$6.16

$5.92

-0.25

-4.02%

August Soybeans

$11.54

$10.45

$10.10

$10.21

0.12

1.14%

August Soy Meal

$382.20

$344.80

$317.50

$323.20

5.70

1.80%

August Soy Oil

$35.34

$32.73

$34.82

$33.89

-0.93

-2.67%

August Live Cattle

$84.88

$83.48

$86.38

$84.52

-1.86

-2.15%

August Feeder Cattle

$103.45

$102.93

$104.60

$102.55

-2.05

-1.96%

August Lean Hogs

$61.15

$63.60

$64.67

$59.05

-5.62

-8.69%

October Cotton

$59.00

$60.39

$62.10

$57.39

-4.71

-7.58%

September Oats

$2.25

$2.12

$2.15

$1.95

-0.20

-9.41%

September Rice

$12.89

$13.02

$12.97

$13.40

0.43

3.32%

 

Cattle futures lost $1.86 for the week, or 2.15%. Packers were able to put a little money on the cutouts, while at the same time buying cash cattle at steady money or even a dollar lower in some cases. That helped the packers, but didn’t give the futures a reason to rally. There was also a fair amount of position squaring ahead of Friday night’s Cattle on Feed report and the semi-annual Inventory report. The COF report showed June placements only 91.6% of year ago, and July 1 On Feed at 94.73 of last year. The Inventory report showed another 1% decline in the size of the herd as we head into the next cattle cycle low. The calf crop was 98.6% of year ago, vs. trade estimates of 98.8%. That is not a substantial miss.

 

Hogs had a tough week, losing $5.62/hundred for the week.  The surging pork carcass cutout prices fell apart at mid-week on weakness in loins and other cuts. Technical weakness was also a problem, with several indicators all pointing in the southerly direction at the beginning of the week. Packers like their work better now, as the downtime did improve wholesale prices and margins. Some Saturday kills are planned, and there is no known scheduled downtime for this week.

 

 Market Watch:  As we head into the end of July, month end profit taking and asset allocation adjustments come into play. The rise to new highs for the year in the stock market will cause some cash to be diverted, and shorts also have some big gains in corn, wheat, etc. that may need pruning. Monday night’s crop condition ratings are expected to be a little lower for corn and soybeans, since that is the seasonal tendency and there are a couple dry pockets out there. The trade will be very interested in the extent of any such decline. Any fall out from the July 24th options expirations and exercises will play out on Sunday night and Monday. Friday will be first notice day for August soybean complex deliveries.

 

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 @ www.bruglermktg.com.

 

© 2009 Brugler Marketing & Management, LLC

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COMMENTS (1 Comments)

Anonymous
I'm on here asking if june report is actual or intended. Everyone responds its actual not intention. Guess what there all intentions until certification numbers are compiled. Certification around here extended to aug 30 so actual numbers won't be till january. Any numbers released are total speculation and the market eats them up. The way I see it all these big firms were way off in there survey based numbers, the usda has no good survey data, so why should any data released be taken for anything more than someones big guess on whats out there. I bet the usda has no idea how many acres could be planted, they say well the US is this big and 40% is farmable so there must be this many acres planted, or maybe we should remeasure due to beach erosion this could sway planted acres 4-7 million easy. My biggest wonder is if these truly are intention based and the producers surveyed all happen to live in areas not adversly affected by weather then there numbers could still be totally bogus. Maybe we will find that those beaches did get planted after all.
11:04 AM Jul 25th
 
 
 
 
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