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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.

Wet Weather Starts to Matter

May 08, 2009


            

 

Market Watch Summary with Alan Brugler

May 8, 2009

 

Wet Weather Starts to Matter

 

After weeks of talking about wet weather in the southern and eastern portions of the Corn Belt, the futures market finally started to look like it cared.  Corn futures were up 8 cents net for the week, or 1.9%.  There were a couple large range days, and indications of some fresh speculative money entering the market.  The gain was limited by active old crop cash sales on up days, and by demand concerns.  As the hog market firmed, those concerns appeared to abate.

 

Wheat bulls also appeared to be getting some traction, at least in terms of pre-report buying interest.  The CHI futures were up 4.1% for the week, and KC was up 3.25%.  The Kansas Wheat Quality Tour put the crop there at 333 million bushels on a 40.8 bpa yield.  Those were both down from last year, suggesting that the crop isn’t good enough to offset losses in OK and Texas tied to drought and freeze damage.  Export sales are still a struggle, but the weaker dollar also offered hope there.

 

Soybeans slowed down a little, but posted a significant technical marker by closing the week above the 38.2% Fibonacci retracement on the weekly chart.  May futures saw very little interest in deliveries against the contract, due to tight old crop supplies.  Traders are looking for USDA to raise exports and cut ending stocks on Tuesday.  New crop soybean futures were higher for the week, but traded more cautiously because of the potential for 2-4 million acres of intended corn and spring wheat to be planted to soybeans if the weather continues wet into the end of the month.  Soy futures also got a lift from crude oil. Soy oil bounced 5% in part because of the rising value of veg oils as biodiesel feedstock.  With Malaysian palm oil supplies at 20 month lows, and Indonesia likely to impose an export tariff, soy oil became a hot commodity and added to product value for the beans.

 

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

 

Market Watch

 

 

 

 

 

 

 

 

 

 

 

Weekly

Weekly

 

04/17/09

04/24/09

05/01/09

05/08/09

Change

% Change

May Corn

$3.76

$3.77

$4.06

$4.14

0.08

1.91%

May CBOT Wheat

$5.23

$5.32

$5.57

$5.80

0.23

4.13%

May KCBT Wheat

$5.72

$5.86

$6.07

$6.27

0.20

3.25%

May MGEX Wheat

$6.36

$6.65

$6.95

$6.93

0.02

-0.32%

May Soybeans

$10.51

$10.40

$11.02

$11.34

0.32

2.90%

May Soy Meal

$326.60

$325.40

$353.70

$359.50

5.80

1.64%

May Soy Oil

$36.77

$36.34

$37.43

$39.30

1.87

5.00%

June Live Cattle

$84.53

$82.60

$82.10

$82.97

0.87

1.06%

May Feeder Cattle

$99.53

$99.13

$97.45

$99.35

1.90

1.95%

May Lean Hogs

$72.25

$69.00

$58.48

$61.12

2.65

4.52%

July Cotton

$50.69

$52.70

$57.20

$59.85

2.65

4.63%

May Oats

$1.89

$1.93

$2.00

$2.22

0.22

11.00%

May Rice

$12.84

$12.87

$13.02

$12.58

0.44

-3.38%

 

Cotton futures were up 4.6% for the week despite an upward revision by a Memphis based forecasting firm in projected 2009 production and acreage.  The largest weekly export shipments of the year helped boost the market, along with some improvements in retail sales statistics that suggest consumers might again begin to nibble at textiles.  Speculative fund buying for the most part contributed to rallies in cotton futures hitting new highs in this week’s sessions.  Recent sharp drops in the US dollar index this week also lent support.

 

Live Cattle were up 1% for the week despite dropping wholesale and cash cattle prices for the week.  Net weekly change in choice and select cutout were -2.44% and -2.29% respectively.  Rally in live cattle is attributed to a recovery in hogs futures, and ideas that tighter pork and poultry supplies could help beef.  Renewed trade sentiment that consumer beef demand will increase with the onset of grilling season beginning Memorial Day weekend.  Feeder cattle were up near 2% for the week though trade sentiment that demand for feeders has eased.  Cash feeders sales were steady to lower and trading slow.  Rains in the southeastern parts of the Plains hampered movement, but will further improve grass pastures.

 

Hog futures staged a big 4.5% rally.  Pork cutout was up for week as indicated by a 6.5% increase in carcass value.  Despite May futures closing limit down and nearly closing limit down few times this week, futures have recovered some.  This is in part due to trade sentiment that the H1N1 “swine” flu hasn’t been proven to be transmitted to humans via pork consumption.  Pork carcass values also recovered after reaching a low of 54.67 for the week which also stemmed from reaction to the flu outbreak.  Cash hogs traded near $1.67 higher for the week.  Outlook for the recent ban of US pork is seen as temporary, as indicated by news that Russia, a major importer of US pork, is likely to resume trade by June 1.

 

Market Watch:  The big reports for this week will be in Tuesday morning.  That’s when USDA will release the monthly Crop Production and WASDE reports.  The former will have winter wheat production estimates, with the trade expecting something a little above 1.5 billion bushels.  The latter will include the first official S&D estimates for 2009/10 for both the world and the US grains.  Acreage and yield will still be “armchair” estimates for corn and soybeans, but the trade is very interested in the demand assumptions.  The weekly Export Sales report on Thursday morning will be of interest given rumors of Chinese cancellations.  NOPA will also release its monthly soybean crush report on Thursday morning.  May grain futures options also expire on Thursday.

 

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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