Apr 21, 2014
Home| Tools| Events| Blogs| Discussions Sign UpLogin


Market Watch

RSS By: Alan Brugler, AgWeb.com

Alan Brugler is the President of Brugler Marketing & Management, and the primary analyst and advisor.

A Leaky Dome

Jul 22, 2011

Brugler

Market Watch with Alan Brugler

July 22, 2011

A Leaky Dome

 

This is definitely a weather market, but which weather forecast do you want to trade? The high pressure dome goes away for a couple days and then comes back. The NWS 8-14 day forecast still shows Much Above normal temps in early August, but it also shows some above normal rainfall to help ease the stress on the crops. All I know is that a lot of corn was curling pretty hard, and then it rained and night time temps started showing more high 60’s and 70’s in the Corn Belt, rather than night time 80’s. Will it warm up again? As the saying goes "It ain’t over until it’s over!"  

Corn futures were down 11 ¼ cents for the week, a 1.6% drop. The long range weather maps still show above normal temps in the bulk of the Corn Belt, but the high pressure ridge is oscillating from the east to the west and when it gets back to the Southwest that brings a flow of cool air out of Canada. With high humidity that triggers numerous showers. There is still much debate about the impact of the high temps on pollinating or early ear fill corn. USDA reported sluggish export sales for the week ending July 14, showing that there is some resistance to higher prices in the world market. That likely has something to do with the availability of the cheap Russian and Ukrainian feed wheat. USDA reported a combined 900,000 MT for old and new crop. 

Soybeans were down 0.4% for the week. The meal futures advance slowed to only 0.75%, as cheaper corn and DDG prices provided stiff competition. Estimates for the USDA weekly export sales report ran from 400 to 550 thousand MT.  USDA put the actual number at 445,900 MT, in the lower third of the range of estimates. Chinese futures were higher for the week in all three legs of the complex. Palm oil in Malaysia had firmed at mid-week due to stronger exports ahead of a holiday period beginning August 1.

Attend the Brugler Marketing Summer Seminar in Omaha on July 31-August 2 for the complete picture of the grain and livestock markets, also with some fantastic farmer oriented options training. Call 402-697-3623 and ask for a registration packet or send an email request to seanp@bruglermktg.com.

Wheat prices were higher once again in KC and MPLS. High temps may have stressed the spring wheat in a few areas. Chicago was down 2 ½ cents despite a late rally on Friday that "dressed up the close". New crop September MGE wheat was up 1.8% for the week. Higher protein wheat was more firmly bid than SRW, which sees the most direct competition from the re-emergence of a Black Sea export program. . USDA said the US actually booked 403,500 MTs for export  in the week ending June 14. That was in the middle of the range of trade estimates.

Here are the Friday night closes for the past four weeks, along with the net change for this week vs. the previous week:

 

Commodity

 

 

 

 

Weekly

Weekly

Month

07/01/11

07/08/11

07/15/11

07/22/11

Change

% Change

Sep

Corn

6.0675

6.4225

7.0125

$6.90

0.1125

1.60%

Sep

CBOT Wheat

6.1225

6.5125

6.9475

$6.92

0.0250

0.36%

Sep

KCBT Wheat

7.2075

7.2725

7.645

$7.80

0.1550

2.03%

Sep

MGEX Wheat

8.045

8.17

8.2375

$8.39

0.1475

1.79%

Sep

Soybeans

13.095

13.45

13.8575

$13.80

0.0550

0.40%

Sep

Soybean Meal

342.5

348.3

360.3

$363.00

2.7000

0.75%

Sep

Soybean Oil

55.55

56.55

57.35

$56.51

0.8400

1.46%

Aug

Live Cattle

112.85

114.65

110.6

$110.55

0.0500

0.05%

Aug

Feeder Cattle

140.475

143.6

135.7

$136.40

0.7000

0.52%

Aug

Lean Hogs

93.15

96.175

98.95

$100.83

1.8750

1.89%

Oct

Cotton

121.81

116.58

101.46

$99.14

2.3200

2.29%

Sep

Oats

3.47

3.495

3.55

$3.53

0.0200

0.56%

Sep

Rice

14.91

16.13

16.995

$16.74

0.2550

1.50%

 

Cotton Futures were down 2.20% for the week. Production concerns continue in the United States, with virtually no cotton rated good or excellent in the entire state of Texas. The Southeast did see some welcome rain. The main story, though, continues to be the inability of overseas customers to move higher priced yarn. The global economy just isn’t strong enough to handle the price increases necessary to make yarn from $1.50 cotton and break even. Thus, we’ve had nearly 3 months of net cotton export sales being a negative number. With one or two exceptions, weekly cancellations of old crop purchases have been larger than new sales. 

Cattle futures were down only a nickel in the nearby futures, having dropped by more than the cash market in the previous week.  Wholesale beef prices were under pressure, with the choice cutout down $5.68 per hundred pounds for the week. That is a 3.1% drop. Cash cattle also traded sharply lower for the week. On Friday night, USDA released a monthly Cattle on Feed Report.  It showed much larger than expected placements on feed during June, coupled with somewhat larger than expected marketings. These both appear to be a function of the high temperatures in the US, and the ongoing drought in the southern Plains. Here are the main USDA numbers, compared to trade average guesses. All are expressed in % of year ago terms.

 

 

USDA Actual

Trade Avg Guess

Range of Ests

On Feed July 1

103.8

102.7

101.5-104.1

June Placements

104.1

93.4

88.1-101.4

June Marketings

105.3

102.8

101.5-104.6


Lean Hog futures were up $1.87, a bullish performance given the weakness in cattle. One reason was the strength of the cutout values. The pork cutout was up a little over 1% for the week (Thur/Thur comparison), posting two days with prices over $100. Cash hogs were also firmer at midweek, reflecting the higher value of the hog and the difficulty in moving them with heat index readings in the triple digits. Slaughter was down from the previous week, with estimated pork production off 0.5%. Pork production YTD is still up 1.1%.


Market Watch: Next week we will be watching for the Crop Progress report Monday to show us how the crops are holding up in this crucial time period.  Also Monday is the Export Inspections report to show us how exports are holding up. Thursday has the Census Soybean Crush report along with Cotton Consumption, as well as USDA weekly export sales. Friday is Q2 GDP, showing us the performance of the economy for April-June compared to earlier estimates. Traders will be watching weather closely due to the significant impact the extremes can have on yields during this time period.


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 individualized subscription and consulting services.

 

 Copyright 2011 Brugler Marketing & Management, LLC

Log In or Sign Up to comment

COMMENTS

No comments have been posted, be the first one to comment.
 
 
 
The Home Page of Agriculture
© 2014 Farm Journal, Inc. All Rights Reserved|Web site design and development by AmericanEagle.com|Site Map|Privacy Policy|Terms & Conditions