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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.

Beans & Cotton Carry Bullish Banner

Apr 13, 2012

Brugler

Market Watch with Alan Brugler

April 13, 2012

Beans and Cotton Carry Bull Banner

Soybeans swam against the tide and gained 3 cents for the week in the nearby May. USDA trimmed projected US ending stocks to 250 million bushels in a Tuesday report, raising both crush use and exports. Production estimates for Brazil continue to leak lower as the combines roll and the full extent of the drought damage is uncovered. Harvest there should be over 90% done. The B.A. Exchange cut its estimate for Argentine production to 44 MMT. US weekly export sales were very poor by recent standards at 460,100 MT for 2011/12 delivery and 176,300 MT for 2012/13 delivery. However, there were multiple sales announced under the daily reporting system which will show up in next week’s report. The largest March Intentions to June increase in planted soybean acres since 1997 is 1.46 million acres. The largest increase since 1960 was 3.3 million in 1977.

Nearby cotton futures rose a full 4%, the biggest bull move on our commodity list this week. USDA raised projected exports for the year by 400,000 bales, and the commitments as a % of sales were still 104% after the upward revision. The Indian pull back from the market is supportive. May deliveries are also coming up, with cert stocks fairly limited at about 103 thousand bales. US planting progress has been running slightly ahead of the 5 year average pace.  

 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

03/23/12

03/30/12

04/05/12

04/13/12

Change

% Change

May

Corn

$6.47

$6.44

$6.58

$6.29

($0.29)

-4.41%

May

CBOT Wheat

$6.54

$6.61

$6.39

$6.24

($0.15)

-2.35%

May

KCBT Wheat

$6.95

$6.96

$6.62

$6.43

($0.19)

-2.87%

May

MGEX Wheat

$8.17

$8.34

$8.46

$8.24

($0.22)

-2.57%

May

Soybeans

$13.66

$14.03

$14.34

$14.37

$0.03

0.19%

May

Soybean Meal

$373.00

$388.70

$391.90

$395.80

$3.90

1.00%

May

Soybean Oil

$54.88

$55.10

$56.64

$56.52

($0.12)

-0.21%

Apr

Live Cattle

$124.50

$120.45

$118.33

$120.53

$2.20

1.86%

Mar

Feeder Cattle

$153.30

$148.83

$148.73

$150.53

$1.80

1.21%

Apr

Lean Hogs

$85.03

$83.43

$84.50

$82.75

($1.75)

-2.07%

May

Cotton

$89.63

$93.52

$88.54

$92.08

$3.54

4.00%

May

Oats

$3.33

$3.41

$3.37

$3.28

($0.09)

-2.74%

May

Rice

$14.60

$14.77

$15.05

$15.31

$0.27

1.76%

 

Corn futures were the biggest loser, off 4.4% for the week. They lost 29 cents after picking up 14 cents per bushel the week before. USDA failed to trim projected ending stocks for the year, expecting strong new crop wheat feeding and an early harvest to leave more old crop bushels in the bin on September 1 than was generally expected. Weekly export sales for last week were still solid at 959,100 MT, with rumors of fresh Chinese business for the current week. US export sales commitments are 81% of the USDA forecast for the year. The 5 year average commitment is 82%, so we appear to be slightly below pace to hit the USDA number for the year. New crop corn again lost ground to soybeans in the revenue department, based on the soy/corn ratio. It was at 2.51:1 a week ago, and on Friday night it was 2.535:1. Historically, ratios over 2.3:1 start to attract swing acres to beans.

All three wheat markets were down 2% or more for the week. This time Chicago was a little firmer than the other two. USDA cut projected ending stocks to 793 million bushels, and also raised expected SRW exports. SRW was also the most threatened by the sub-freezing temps that swept across the country in the middle of the week. The 18-state USDA crop condition ratings hint at excellent production potential. The Brugler500 index was 362, vs. 291 a year ago. Export sales commitments are at 97% of the USDA sales total for the year, with 2 months remaining. They are typically at 101% by now. Weekly export sales were also on the low end of trade estimates last week, at 452,100 MT for 2011/12 delivery and 90,400 MT for 2012/13 delivery.

Cattle futures bounced back after several down weeks, gaining $2.20 per cwt. of 1.9% for the week. Cash cattle trade was higher than expected, and caught Board shorts leaning the wrong way at discounts of $3-4 to the cash. Cattle have both a supply problem and a demand problem at the moment. The number of cattle available for slaughter is expected to rise seasonally. Excellent rates of gain are being seen due to mild weather and good grain quality. Estimated carcass weights are now 27 pounds above last April’s actual.  Estimated beef production for the week was down 6.8% from the same week in 2011. Year to date production is down 3.4% despite larger on feed numbers. Weekly export sales for beef were improved at 23,500 MT, and typically get larger from now until July. Wholesale prices did rise for the week, with choice boxes up 90 cents and select quoted $2.03 higher on a Friday/Friday comparison.

Lean Hog futures lost 2.1% for the week. The pork carcass cutout value lost 1.95% on a Friday/Friday basis, keeping downward pressure on packer margins and what they could pay for hogs. Pork production year to date is up 1% from last year. Production this past week was down 3.8% from last week due to some Easter weekend down time, but up 1.4% from the same week in 2011. Carcass weights are estimated at 209 pounds, which would be up 1# from the 2011 actual weight.  

Market Watch: The main USDA reports this week will be the monthly Cattle on Feed and Cold Storage reports on Friday afternoon. There will also be interest in the weekly Crop Progress and Condition report on Monday afternoon, with corn planting expected to be at a record pace. We’ll also be watching for any drop in wheat condition ratings due to the freezing temps this past week. NOPA will release a monthly Crush report on Monday, and the April hog futures also expire on Monday. The May grain options also expire on Friday the 20th along with a bunch of equity market options.

 

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 2012 Brugler Marketing & Management, LLC

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