Apr 23, 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 Shaky Bunch of Markets

Mar 11, 2011

 brulogomed

Market Watch with Alan Brugler
March 11, 2011
A Shaky Bunch of Markets
 
The markets were still in turmoil this week, showing more panic and fear. If there was more greed, it was of the bearish variety. There is an awful lot of red ink on our weekly change table below, with feed grains down 8% or more, and wheat dropping 10 to 13% and thus becoming cheap enough to become a feed grain in the United States. The commodity markets were under pressure early in the week from apparent gains by Gadhafy forces in Libya, threatening to prolong the conflict and thus the oil disruption. A highly touted “day of rage” in Saudi Arabia fizzled, but the markets were building in more risk premium against a flare up. Then, on Friday, the 8.9 earthquake hit Japan and there were tsunami concerns for the first half of the trading day. That just encouraged more longs to cash out and go home for the weekend.
 
Corn lost 8.6% for the week, or 62 cents per bushel. USDA made no change in their US ending stocks or cash price forecasts on Thursday, preferring to wait until they have the Grain Stocks numbers to be released on March 31. The Feed & Residual use category is a derived number, and the grain stocks data is needed to true up the use estimate. The USDA weekly export sales were a very anemic 776,000 MT, with old crop sales dropping off 56% from the previous reporting week. These sales were for the week ending March 3 and thus coming at the time of some of the highest prices for the year.
 
The soybean complex was down, but only 5.77% in the beans and 4.87% in the meal. Soy oil was down 5.89%, but benefitted from the instability in crude oil supplies because so many countries are now using vegetable oils for biodiesel and reducing their exposure to the crude oil market gyrations. Soybean meal dropped along with its feed grain competitors. Soybean export sales were only 470,000 MT, up 14% for the week but limited by increased availability of new crop South American supplies in the world market.
 
Wheat futures were under pressure all week. On Thursday, USDA raised projected global ending stocks to 181.90 MMT. That was up 4.13 MMT or 152 million bushels from the February estimate.   US ending stocks were raised to 843 million bushels, as USDA revised its estimate for 2010/11 exports downward by 25 million bushels. Export commitments continue to run slightly below the pace needed to meet the previous USDA estimate of 1.3 billion bushel. The quantity of HRW export sales on the books is a multi-decade high for this time of year, but there are legitimate questions about whether it can all be moved into position and shipped by May 31.
 
Cotton futures sold off after setting all time highs of 2.27 dollars per pound. USDDA reported solid 2011/12 export sales bookings of 394,100 RB of upland cotton. However, old crop booking through March 3 were down 46% from the previous week. There were small cancellations by China and “unknown” but the biggest factor is the lack of uncommitted old crop cotton to sell. In the WASDE report, USDA made no significant changes to the US balance sheet. Global production was cut slightly, while global use was raised fractionally. The net result was ending stocks up 42.33 million bales. That figure was 1.2% smaller than the February estimate.
 
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
02/18/11
02/25/11
03/04/11
03/11/11
Change
% Change
Mar
Corn
$7.10
$7.12
$7.21
$6.59
0.62
8.60%
Mar
CBOT Wheat
$8.22
$7.77
$8.01
$6.95
1.06
13.18%
Mar
KCBT Wheat
$9.30
$8.88
$9.18
$8.21
0.98
10.62%
Mar
MGEX Wheat
$9.56
$9.16
$9.53
$8.53
1.00
10.47%
Mar
Soybeans
$13.68
$13.66
$14.08
$13.27
0.81
5.77%
Mar
Soybean Meal
$362.00
$359.70
$363.80
$346.10
17.70
4.87%
Mar
Soybean Oil
$56.49
$56.95
$58.96
$55.49
3.47
5.89%
Apr
Live Cattle
$115.15
$114.10
$114.05
$117.13
3.08
2.70%
Mar
Feeder Cattle
$130.08
$129.83
$129.95
$131.55
1.60
1.23%
April
Lean Hogs
$92.28
$90.20
$88.48
$88.15
0.32
0.37%
May
Cotton
$194.93
$184.23
$212.70
$204.94
7.76
3.65%
Mar
Oats
$4.10
$3.69
$3.81
$3.46
0.36
9.32%
Mar
Rice
$14.75
$13.96
$13.91
$12.79
1.12
8.05%

 
Cattle futures were the exception to the rule, up a smart 2.7% for the week. Beef production for the week was down an estimated 1.3% from the prior week, but up 3.4% from the same week in 2010. The main story for the week was the $5 jump in cash cattle prices, with numbers trading at $118 in the south. That is the highest price level since pre-BSE days in 2003. Beef production YTD is up 1.1%, but the export market is draining off some of the surplus beef. USDA reported 10,500 MT of export sales for 2011, with Mexico the largest destination.
 
Hog futures were supported by beef prices, but an apparent slow down in export bookings took the edge off of the wholesale pork market. Nearby April futures were down 0.37% for the week.  Estimated pork production for the week was up 0.7% from last week, and 3.2% larger than the same week in 2010. On a Thursday/Thursday basis, pork cutout value was up 73 cents per hundred. Ham prices started the week about even with last year, but were the worst performing component.
 
Market Watch:  The market will start the week assessing weekend news developments. The two major concerns are any new threats to oil supplies coming from the Middle East and the amount of infrastructure damage done by Friday’s earthquake off of Japan and the resulting tsunami. The latter can affect import needs for reconstruction, and also import restrictions due to port damage. Monday is the last trading day for the March grain futures contracts. NOPA will also issue a monthly Crush report on Monday. The Fed FOMC meets on Tuesday. Thursday will feature the USDA weekly Export Sales report, and a few traders distracted by St. Patrick’s Day festivities. Friday will see USDA monthly Cattle on Feed and Milk Production reports.
 
Upcoming Brugler Webinars: There is a lot more information available on these markets and whether they might go under several different scenarios. To get your head around the swirling fundamentals, sign up for one of our upcoming webinars. The National Ag marketing Strategy Group webinar is on Monday, March 14. We’ll also have a webinar examining the March 31 USDA reports in detail on the evening of March 31. Visit our Webex site to register. Go to http://bruglermktg.webex.com and click on the “Upcoming” tab.
 
Looking to enhance your existing Ag Marketing Professional subscription? Add free futures market quotes sent to your cell phone via our Market Monitor service. Or “push” the daily recommendations out to your phone as they happen with Market Messenger 2. Call in consulting service with Alan is also available for a limited number of new customers in our Ag Marketing Professional Premium package. Call our office for details on either service at 402-289-2330.  
 
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