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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.

Corn Was Higher

Dec 06, 2013

 Brugler

Market Watch with Alan Brugler

December 6, 2013

Corn Was Higher

We haven't been able to say it much recently, but corn was higher this week. December corn futures gained 9 cents for the week, more than erasing the 7 cent dip from the previous week. Demand is a bright spot as low prices continue to work to cure low prices. Ethanol stocks are hovering near the lowest reading since reporting began in 2010. Imports have been zero for the past 9 weeks, as US prices have been cheaper than those in Brazil. That has the industry optimistic about export potential. Ethanol plant margins are very attractive. USDA reported slower corn weekly export sales of 593,600 MT for the week ending November 28. Those included fresh sales to China, which was simultaneously rejecting some arriving US corn cargoes for containing an unapproved GMO trait. Export commitments are already 73% of the November USDA forecast for the year. The 5 year average commitment for this time would be 50%. USDA gets a chance to revise that number on Tuesday.

 

Soybean futures lost 0.8% this week. Weekly US export sales were a larger than expected 1.16 MMT of combined old and new crop business. China continues to aggressively buy US beans for 1Q14 delivery. Total US export Commitments as a % of total exports are now at 95%, which compares to 78% last year and the 5 year average of only 69%.  Profit margins for end users continue to provide a positive influence.  Soybean meal export sales continue to be very strong (and front loaded) with 62% of the projected sales for the year already booked. The average pace would be 49%. South American planting activity continues, with the BAX estimating that 58% of the Argentine crop is now planted.  Some sources suggest that up to 5% of the Brazilian crop has reached the pod set stage. Brazilian basis levels suggest at least a few beans will be at the ports by February, with the basis quoted at +$1.20 for January and +$.45 for February.

 

Wheat futures were lower at all three exchanges. Stats Canada hammered the market at midweek with a sharp upward revision in their 2013 production estimate, to 37.5 MMT. The trade had been looking for something with a 33 in front of it. A 4 MMT surprise is about 147 million bushels of extra competition for US wheat at home and in the export market. Total US export commitments are still a larger % of the USDA forecast than usual for this date, currently at 76% vs. the five year average of 70%.  Weekly wheat export sales through November 28 were the slowest of the marketing year at 14 totaled 229,200 MT.  

Cotton futures rallied another 1.6% this week on top of a 3.9% gain the prior week. This was mostly short covering into expiration, which was on Friday. Global ending stocks are still projected to be record large at 95.71 million bales. Weekly export sales for the week ending November 28 totaled 271,800 RB of all classes and years. That was down a little from the 306,800 RB the preceding week. Export commitments as a % of total exports (for upland cotton) are now at 66%, which compares to 63% for this point last year, and lagging the 5 year average of 70%.    

 

Commodity

 

 

 

 

Weekly

Weekly

Month

11/15/13

11/22/13

11/29/13

12/06/13

Change

% Change

Dec

Corn

$4.22

$4.22

$4.15

$4.24

$0.09

2.11%

Dec

CBOT Wheat

$6.45

$6.50

$6.55

$6.37

($0.18)

-2.71%

Dec

KCBT Wheat

$6.983

$7.018

$7.13

$7.05

($0.08)

-1.12%

Dec

MGEX Wheat

$6.97

$6.99

$6.86

$6.63

($0.23)

-3.39%

Jan

Soybeans

$12.81

$13.20

$13.37

$13.26

($0.11)

-0.82%

Dec

Soybean Meal

$410.50

$427.80

$456.60

$447.30

($9.30)

-2.04%

Dec

Soybean Oil

$40.47

$41.16

$40.22

$40.28

$0.06

0.15%

Dec

Live Cattle

$133.40

$131.48

$133.48

$131.43

($2.05)

-1.54%

Jan

Feeder Cattle

$165.82

$163.50

$165.48

$164.48

($1.00)

-0.60%

Dec

Lean Hogs

$85.90

$85.63

$85.68

$81.68

($4.00)

-4.67%

Dec

Cotton

$77.12

$75.21

$78.14

$79.38

$1.24

1.59%

Dec

Oats

$3.43

$3.69

$3.65

$3.66

$0.01

0.21%

Jan

Rice

$15.77

$15.72

$15.96

$15.55

($0.42)

-2.60%

 

Cattle futures lost $2.05 this week, leaving us a nickel worse than two weeks ago. Feeders were down $1, or 0.6%. Cash cattle didn’t cause the futures weakness, as they traded mostly $132 and steady/higher from a week ago. Weekly slaughter was down 1.9% from the same week in 2012. Year to date beef production is down 1.2%.  Estimated carcass weights are running 8 pounds above last year’s actual of 797 pounds. Wholesale beef prices were down 0.7% on a Fri/Fri basis in the Choice, and down 1.8% in the Select. USDA reported weekly beef export sales of 11,500 MT, up from 9,500 MT the previous week.

 

Hog futures were down a sharp $4.00 this week as cash hogs failed to rally and December futures gave up their premium to cash. Pork production YTD is down 1.0% from year ago. Pork production this week was 0.5% larger than the same week in 2012. Estimated slaughter totaled 2.325 million head, down 1.6% from last year. Year to date slaughter through 11 months is down 1.5%, with higher carcass weights (4 lbs) offsetting some of the lost head count. The pork carcass cutout value was up 51 cents or 0.57% this week, with pork bellies the strongest component. USDA reported weekly pork export sales were an improved 9,900 MT vs. 8,700 MT the previous week.

 

 Market Watch

 

USDA will release the monthly Crop Production and WASDE supply/demand estimates on Tuesday morning. That will be the main scheduled news event.  We’ll also get the regular Export Inspections on Monday and weekly Export Sales on Thursday morning. Monday is first notice day for December cattle deliveries. Friday will be the last trading day for December grain contracts and December hogs.

 

Visit our Brugler web site at http://www.bruglermarketing.com, find our iPad app "AgMarket" in the app store, or call 402-697-3623 for more information on our consulting and advisory services for farm family enterprises and agribusinesses.

 

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.                  Copyright 2013 Brugler Marketing & Management, LLC

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