Apr 18, 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.

An Inflation Bull or Just a Soggy Bull?

May 31, 2013


Brugler

Market Watch with Alan Brugler

May 31, 2013

An Inflation Bull or Just a Soggy Bull?

 

Most of the ag commodities were in bull mode this week, although cotton and rice were exceptions and so were soy oil and feeder cattle. The US dollar index was down 0.5% for the week to provide a little support on ideas of inflation. That was one possible interpretation of the bond decline as well. Or maybe the Fed skipped buying bonds for a few days because the guy in charge of printing money was on vacation? The more fundamental explanation for the rally in the grains was wet weather. Planting delays continue, and the weather forecast calls for more of the same. Areas with 10" or more take a long time to dry out. A number of states are past their Prevent Plant dates for corn, which means the producer loses 1% of his insurance coverage each day that he has to wait to plant, unless he gives up and takes the insurance payment.

Corn futures rallied 5 cents per bushel this week, a 0.72% gain. Ethanol plant margins are positive. Weekly ethanol production dropped 12,000 bpd to 863,000 bpd.  There were ethanol imports for the first time in 6 weeks. Ethanol stocks were drawn down anyway, to a snug 16 million barrels. Corn export interest was on the upper end of diminished trade expectations, but still tepid. US planting progress expanded to 86% as of May 26, with trade estimates in the 90% range for this week. The largest area of concern is the Dakotas, SE MN, Eastern IA, western IL and WI.  

Soybeans gained 34 cents per bushels for the week after a 28 cent gain the previous week. On a close to close basis, November futures have now rallied $1.10 per bushel from the low day of April 24. Weekly soybean export sales were about as expected at 648,600 MMT. Soybean meal export activity continues strong, with 190,100 MT booked in the most recent reporting week. Meal commitments are now 101% of the USDA forecast for the year, with soybean commitments at 100%. 

Wheat futures were higher on all three exchanges, with Chicago up 1.15% and MPLS up 1.77% to lead the market. US weekly export sales were a solid 764,200 MT, including 35,900 MT of old crop that needed to be shipped by today. MPLS was supported by ongoing wet weather in Montana, western ND and parts of Minnesota. Winter wheat heading is also running behind the average pace. Old crop export commitments are 98% of year ago. They would typically be 104%, so there is some risk of undershooting the USDA forecast for the year.

Cotton lost 217 points for the week or 2.66%. That was a smaller loss than the week before, but still meant the lowest July futures prices since January. US export sales last week were OK at 153,000 RB. Total US export commitments are now 101% of the USDA forecast for the year. The 5 year average for this date is 105% (some sales are always carried over into the next marketing year). The marketing year ends July 31.

 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

05/10/13

05/17/13

05/24/13

05/31/13

Change

% Change

July

Corn

$6.36

$6.53

6.5725

6.62

$0.05

0.72%

July

CBOT Wheat

$7.04

$6.83

6.975

7.055

$0.08

1.15%

July

KCBT Wheat

$7.59

$7.37

7.4575

7.51

$0.05

0.70%

July

MGEX Wheat

$8.09

$8.04

8.0575

8.2

$0.14

1.77%

July

Soybeans

$13.99

$14.49

14.7625

15.1

$0.34

2.29%

July

Soybean Meal

$406.80

$425.10

428.2

447.2

$19.00

4.44%

July

Soybean Oil

$49.23

$49.52

49.24

48.38

($0.86)

-1.75%

June

Live Cattle

$120.45

$119.40

120.575

121.3

$0.72

0.60%

Aug

Feeder Cattle

$146.63

$143.38

144.55

144.325

($0.22)

-0.16%

June

Lean Hogs

$90.50

$91.53

94.875

95.625

$0.75

0.79%

July

Cotton

$86.48

$86.41

81.53

79.36

($2.17)

-2.66%

July

Oats

$3.79

$3.76

3.65

3.7425

$0.09

2.53%

July

Rice

$15.25

$15.24

15.715

15.295

($0.42)

-2.67%

 

Cattle futures gained $0.72 per cwt this week.  Wholesale beef prices were weaker, with Choice down 1.1% and Select down 1.7% after the former set a new all time record high the week before. Cash cattle trade was mostly $124 and $200 this week, above the futures but at a discount to the beef and about steady with the previous week. US beef production YTD is 1.1% smaller than last year. Weekly slaughter was down 1.7% vs. Memorial Day week in 2012. Estimated carcass weight is 9# below last year’s actual of 788#. USDA reported another sold week of solid weekly beef export sales @ 19,000 MT.

Hog futures were up $.75 for the week, a continuation of a month long rally. Weekly export sales were much improved at 15,100 MT, with Mexico the largest buyer. Estimated weekly slaughter was 1.867 million head. That was down 9.1% from the previous week, but 2.4% larger than last year. Weekly pork production was down 9.3% from the prior week because of the holiday, but 2.3% larger than the same week in 2012. Average carcass weights were estimated to be equal to year ago. Pork production YTD is 0.9% below last year at this time.  The pork carcass cutout value was down 0.12% for the week despite a 7% jump in pork belly prices.

 Market Watch

The calendar turns to June, with a pretty standard report line up for this week. USDA will release Export Inspections on Monday morning, with old crop wheat exports a focus. Will we ship enough to make hitting the USDA forecast likely? Soybean loadings will also be of interest, since recent weeks have tapered off to less than 4 million bushels. The usual Monday USDA Crop Progress report will be out in the afternoon, with the focus still on planting progress for spring wheat, corn and soybeans. USDA Weekly Export Sales will be released on Thursday. June cattle options will expire on Friday. Weather forecasts will also get some attention, due to the implications for completing planting.

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.  Visit our web site at https://www.bruglermarketing.com or call 402-697-3623 for more information on our consulting and advisory services for farm family enterprises and agribusinesses.

Copyright 2013 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