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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.

Zig Zag Corn

Apr 30, 2010
 


Market Watch with Alan Brugler
April 30, 2010
 
Zig-Zag Corn
 
The volatile trade in corn continues. For the past three weeks, net Friday-Friday prices changes were up 18 cents, then down 11 cents, and then up 13 cents. Our recent Bull Side/Bear Side analysis for corn listed more than 20 variables at work in the corn market at the present time. Accurately measuring old crop demand is causing some headaches, given rising monthly ethanol production and the Chinese purchase of 115,000 MT of US corn announced this week. Financially stressed ethanol plants continue to exit bankruptcy and come on line, consuming more corn. Ethanol consumption and inclusion rates have increased as gasoline use rises with the warmer weather and improvements in the U.S. economy. There are many questions about the eventual size of Chinese purchases, anywhere from bearish assumptions that China will reject the two loads purchased on some GMO issue to ideas that Chinese stocks are tight enough to require the full 80 million bushels of imports requested by feed millers. The one thing not in question is that US export sales have improved in recent weeks, despite a move in the U.S. dollar index to new highs for the year.
 
Wheat futures were up for the week at all three exchanges, anywhere from 0.5% to 1.07%. EU wheat futures backed off from their highs of the week before. There were several factors at work there including labor disputes, a choppy euro, and expected improvements in EU wheat condition ratings following weekend rains. The U.S. continues to be a bit of a residual supplier to the world export market, but that hasn’t stopped index or spec funds from coming out of short positions and thereby supporting futures.
 
Soybeans started the week with May pinned at $10 and a lot of options traders on both sides getting exercised into positions over the weekend. The call buyers were the losers if they held onto their long futures all week, since May lost 11 cents for the week. Product value was a bearish influence on the beans, with both meal and oil futures lower for the week. Meal rallied with the corn, but couldn’t get back everything it lost early in the week. USDA export sales show a seasonal decline is underway, with South America capturing a larger percentage of the business. China continues to be a large buyer of US new crop beans, and in fact was the ONLY 2010/11 buyer reported in this week’s USDA report.
 
Cotton futures were down on the week. Export sales were smaller than the trade guesses on Thursday morning. Planting progress is also keeping up with the 5 year average pace and acreage is expected to be up. That limits the amount of weather premium being built into prices. Indian cotton export intentions are murky, with the ginners trying to force the government to re-open exports.
 
Hog futures continued their climb. Pork prices showed a couple days of weakness but came roaring back on Thursday and drove double digits gains in futures on Friday. Pork production YTD is down 4.6% from last year and that supply shortfall is certainly underpinning the strength in the pork product market. The pork cutout value for the week was down 34 cents or 0.4%.
 
Below is a table showing the net weekly changes and 4 week history of selected agricultural futures:
 
 
Market Watch
 
 
 
 
Weekly
Weekly
Month
04/09/10
04/16/10
04/23/10
04/30/10
Change
% Change
May
Corn
$3.46
$3.64
$3.53
$3.66
0.13
3.64%
May
CBOT Wheat
$4.66
$4.91
$4.93
$4.92
0.01
0.31%
May
KCBT Wheat
$4.91
$5.07
$5.06
$5.06
0.00
0.05%
May
MGEX Wheat
$5.01
$5.20
$5.27
$5.26
0.01
0.14%
May
Soybeans
$9.52
$9.85
$10.00
$9.90
0.11
1.07%
May
Soybean Meal
$265.30
$280.90
$292.30
$291.30
1.00
0.36%
May
Soybean Oil
$40.04
$39.80
$39.35
$38.58
0.77
1.93%
June
Live Cattle
$94.75
$94.65
$94.83
$94.22
0.61
0.64%
May
Feeder Cattle
$115.38
$112.68
$112.58
$112.80
0.22
0.20%
May
Lean Hogs
$83.88
$86.42
$87.40
$89.52
2.12
2.45%
May
Cotton
$75.80
$80.01
$84.26
$82.76
1.50
1.87%
May
Oats
$2.15
$2.15
$2.05
$2.05
0.00
0.12%
May
Rice
$13.79
$12.81
$12.41
$12.36
0.05
0.39%
 
Cattle futures were down 61 cents for the week. The wholesale market was firmer again this past week, gaining $1.25 in the choice boxes and up $1.36 in the select. Beef export sales were down from the prior week, but still well above the 4 week moving average. Cash cattle prices were mostly $.50 to $1.00 lower for the week. Weekly red meat production was up 0.4% from last week, but is still down 2.8% for the year to date. Beef production since January 1 is still down 1% from 2009 at this point.
 
Market Watch: This will be a slower news week in terms of the formal government reports. USDA will have the usual Export Inspections on Monday and Export Sales on Thursday morning. There will be significant interest in the Crop Progress and Condition ratings on Monday night, with US corn planting expected to be 70-80% complete. Thursday will mark the last trading day for the May cotton futures. Friday will be the last trading day for May options in currencies, live cattle and pork bellies.  
 
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 and consulting services.
 
                                                                                                                                      Copyright 2010 Brugler Marketing & Management, LLC
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