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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.

Frantic Friday's

Sep 24, 2010

brulogomed

 Market Watch and Tech Talk

September 24, 2010

Frantic Friday’s

Forget the midweek action. Lately we’ve been seeing big volume and volatile trading on Friday’s. For the corn and soybeans, additional sell paper is available as elevators pre-hedge anticipated weekend cash grain purchases. That gives the funds something to buy against. Dollar weakness and the potential for weekend surprises is also a background factor.

Soybeans were the bull leader this week, with all contracts out through September 2011 breaking the $11 barrier. You could get a lot of different stories, from crop losses in Minnesota due to heavy rains to the weak dollar to insatiable Chinese buying. Unwinding of corn/soy spreads also helped boost beans, and there were definitely some stops triggered above $11. While U.S. ending stocks appear comfortably above 300 million bushels, the pace of expansion in use demands that South America hold up their end of the two season global marketing year. Dryness in parts of Brazil and Argentina are concerning, because parts of those countries are usually dry in a La Niña weather pattern such as the one currently in place. Some of the buying interest in beans may be the market’s hidden way of trying to entice more Brazilian soybean planting to ensure supplies.

Corn was lower earlier in the week but finished strong bringing it positive for the week. Corn was lower on news of low export sales and looked like it was going to continue lower for the week but the market changed its sentiments. The dollar was influential on corn this week: due to uncertainty about the dollar and continued quantitative easing. Adding to that were concerns of delayed harvest from Midwestern rains.

Wheat was under pressure for much of the week. Technically, the market failed to close overhead chart gaps, leaving an island top. That attracted new selling interest. Some managed money and index traders were also liquidating longs at the end of the calendar quarter. A number of cancellations in the weekly Export Sales report also showed confusion in the market place as global users attempt to replace missing Russian and Ukrainian supplies. Egypt did buy four cargoes of US hard wheat at a mid-week tender, suggesting that they’re still not done buying. For the week, Chicago futures were down the most of the 3 wheat contracts but off of their lows thanks to Friday’s price action. KC and MPLS were down as well.

Cotton futures posted 15 year highs on front month contracts, and then sold off sharply at midweek. They staged a comeback on Friday with assistance from a sharply lower US dollar. They ended up 3.78% positive for the week. Cotton export potential continues to be outstanding, with over 8 million bales already committed. That’s more than half of USDA’s forecast for the entire year. Pakistan was hurt badly by the flooding during the summer. India is apparently trying to keep tight controls on exports, leaving room for US sales.  The Census Cotton Consumption report shows a rebound in U.S. mill use, with use up year over year in 8 of the past 9 months.

Hogs were firmer for the week, with shorts covering positions ahead of the Friday evening USDA Hogs and Pigs report. Futures continue to trade below the cash hogs and below the values implied by the pork cutouts. The cutout was down 2.44% for the week on a Thursday/Thursday basis. The Hogs and Pigs report showed All Hogs on September 1 at 97.4% of year ago. The breeding herd was down, at 98.2% of last September. Hogs kept for market were at 97.1% of last year. These were all in line with trade estimates.

Below is a table showing the net weekly changes and 4 week history of selected agricultural futures:

 

Commodity

 

 

 

 

Weekly

Weekly

Month

09/03/10

09/10/10

09/17/10

09/24/10

Change

% Change

Dec

Corn

$4.65

$4.78

$5.13

$5.22

0.09

1.66%

Dec

CBOT Wheat

$7.41

$7.37

$7.39

$7.20

0.19

2.60%

Dec

KCBT Wheat

$7.58

$7.59

$7.68

$7.58

0.11

1.40%

Dec

MGEX Wheat

$7.58

$7.57

$7.73

$7.63

0.11

1.39%

Nov

Soybeans

$10.35

$10.31

$10.69

$11.26

0.57

5.33%

Oct

Soybean Meal

$301.50

$291.25

$304.70

$313.20

8.50

2.79%

Oct

Soybean Oil

$40.47

$41.36

$41.91

$44.48

2.57

6.13%

Oct

Live Cattle

$94.45

$97.15

$99.40

$96.02

3.38

3.40%

Oct

Feeder Cattle

$115.08

$111.83

$111.85

$109.50

2.35

2.10%

Oct

Lean Hogs

$77.20

$77.25

$77.70

$79.02

1.32

1.70%

Oct

Cotton

$90.95

$90.87

$97.61

$101.30

3.69

3.78%

Dec

Oats

$2.95

$3.24

$3.56

$3.52

0.04

1.12%

Nov

Rice

$11.72

$11.79

$12.08

$12.36

0.28

2.32%

 

Cattle futures sold off hard following the monthly Cattle on Feed report and it’s larger than expected August placements.  The cutout values have also ground lower. Cold storage numbers showed a drop in ground beef during August, but were not a major market factor. USDA’s weekly export sales report was bull friendly, as the weakening US dollar made prices look even more attractive to foreign buyers. The cutout was mixed on a Thursday/Thursday basis, up .33% on the Choice and down .95% on the select, spreading out the two.

 Looking for professional help with your agricultural marketing decisions? Consider subscribing to our daily Ag Marketing Professional service or Special Research Reports. Call our office for details at 402-697-3623, or visit www.bruglermarketing.com.

 Market Watch:  October grain options expired on Friday, so there is potential for a few folks to be surprised by futures positions they are now holding. The hog market will also be reacting to Friday’s Hogs & Pigs report. Grain traders and producers will start the week looking once again at USDA weekly crop progress and condition reports, trying to determine if yield prospects are deteriorating from those shown in September. That report is on Monday night. The main grain reports for the week are on Thursday, with USDA releasing a much anticipated Quarterly Grain Stocks report that will be the official ending stocks for old crop corn and soybeans. The Small Grains report will also be out on Thursday, firming up production numbers for wheat, oats, barley, etc.  Weekly export sales will be out on Thursday morning. Thursday is also the last trading day for September feeder cattle futures. 

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