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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.

Market Watch with Alan Brugler Roasting Turkeys

Nov 22, 2013

Brugler 

Market Watch with Alan Brugler

November 22, 2013

Roasting Turkeys

 

The week started off fairly quiet for the grains.  It seemed as if the looming Thanksgiving Holiday weekend was permeating the grain market.  The traditional after-dinner nap hit the markets before the turkeys were even put into the oven!  Perhaps the markets were more like the turkey itself; slowly roasting in the oven.  Everybody knows it is there, people keep checking on it; rotating it, and turning it around every so often, but overall it really is not doing much.  When the export sales report came out on Thursday morning, the soybean market woke up and had two strong up-days in a row.  Like the smitten grin on a hungry family member who snitched an early nibble of the bird, the soybean market brought some holiday life to the grains.  This image of turkeys roasting was hard on the meats this week.  Both live cattle and feeders took a solid hit to start the week, and did not fully recover.  Lean hogs also had a losing week. 

 

December corn futures eked out a gain of less than one penny for the week, and held above the 7 year uptrend support line at $4.19 on the weekly and monthly continuation charts. Demand is a bright spot. Ethanol stocks dropped to the lowest reading since reporting began in 2010. Imports have been zero for the past 7 weeks, as US prices have been about 25 cents per gallon cheaper than those in Brazil. USDA reported good weekly export sales of 982,700 MT. Export commitments are already 68.5% of the newly revised USDA forecast for the year, hinting at another upward revision in the future. The latest Commitment of Traders data for the reporting period between Nov 12 – Nov 19 which showed managed money spec funds increased their net short position in corn by 7,026 contracts, bringing their total net short position to 146,086 contracts.

 

Soybean futures gained an impressive 3.05% this week, adding more than 45 cents per bushel between the Wednesday and Friday closes. Weekly US export sales were a strong 1.376 MMT, with China buying 83% of them.  Total US export Commitments as a % of total exports are now at 89.89%, which compares to 74% for last year and the 5 year average for this week which is 65%.  Strong profit margins for end users continue to provide a positive influence.  December soybean meal gained 4.21% on the week, closing the week $17.30 higher.  The latest Commitment of Traders data for the reporting period between Nov 12 – Nov 19 showed managed money spec funds increased their net long position in soybeans by 8,502 contracts, bringing their total net long position to 129,393 contracts.   

 

Wheat futures were higher this week in all three classes.  CBOT wheat gained a nickel, KC wheat was almost as strong with a 4 cent move, and then MPLS wheat added two pennies. Not the most convincing way to stop a losing streak, but it was the first positive week for all three classes together in over a month. The latest Commitment of Traders data for the reporting period between Nov 12 – Nov 19 showed managed money increased their net short position in CBOT wheat by 7,948 contracts bringing their total net short position to 55,199 contracts.  Total US export commitments are still a larger % of the USDA forecast than usual for this date, currently at 73% vs. the five year average of 66%.  Weekly sales through November 14 totaled 618,100 MT, up from less than 300,000 the prior week.  

Cotton futures lost 2.48% this week and on Thursday the December 2013 contract posted its lowest daily close since early November of 2012. Global ending stocks are still projected to be record large at 95.71 million bales. The Commitment of Traders data for the reporting period between Nov Nov 12 – Nov 19 showed managed money decreased their net long position in cotton by 916 contracts bringing their total net long position to only 4,968 contracts. Weekly export sales for the week ending November 14 totaled 318,300 RB of Upland, with 13,200 MT of the total for delivery in the 2014/15 marketing year.  Net Pima sales were reported at 26,200 RB, all of which was for 2013/14 delivery. Total Commitments as a % of total exports (for upland cotton) are now at 60%, which compares to 57% for this point last year, and lagging the 5 year average of 66%.    

 

Commodity

 

 

 

 

Weekly

Weekly

Month

11/01/13

11/08/13

11/15/13

11/22/13

Change

% Change

Dec

Corn

$4.27

$4.27

$4.22

$4.22

$0.00

0.06%

Dec

CBOT Wheat

$6.68

$6.50

$6.45

$6.50

$0.05

0.78%

Dec

KCBT Wheat

$7.335

$7.085

$6.983

$7.02

$0.04

0.50%

Dec

MGEX Wheat

$7.26

$7.12

$6.97

$6.99

$0.02

0.36%

Jan

Soybeans

$12.51

$12.96

$12.81

$13.20

$0.39

3.05%

Dec

Soybean Meal

$394.90

$422.30

$410.50

$427.80

$17.30

4.21%

Dec

Soybean Oil

$41.59

$40.24

$40.47

$41.16

$0.69

1.70%

Dec

Live Cattle

$132.08

$132.40

$133.40

$131.48

($1.93)

-1.44%

Jan

Feeder Cattle

$163.50

$164.43

$165.82

$163.50

($2.32)

-1.40%

Dec

Lean Hogs

$88.35

$88.13

$85.90

$85.63

($0.28)

-0.32%

Dec

Cotton

$76.58

$76.90

$77.12

$75.21

($1.91)

-2.48%

Dec

Oats

$3.30

$3.35

$3.43

$3.69

$0.26

7.58%

Nov

Rice

$15.20

$15.85

$15.77

$15.72

($0.05)

-0.32%

 

Cattle futures lost $1.93 for the week, or 1.44%. Feeders lost $2.32, or 1.40%. The latest Commitment of Traders data for the reporting period between Nov 12 – Nov 19 showed managed money decreased their net long position in live cattle by 10,944 contracts bringing their total net long position to 84,086 contracts.  Weekly slaughter was up 4% from last week. Wholesale beef prices were down 1.96% on a Fri/Fri basis in the Choice, and down 1.11% in the Select.  Cash cattle trade began to develop at $131 in the south on Thursday, but was being passed in the north on Friday. On Friday afternoon, the USDA November 1 Cattle on Feed reports were released after the close.  October cattle on feed were reported 94.25% of a year ago, which was slightly higher than the average of the pre-report trade expectations.  Placements came in at 109.82% of a year ago, which was 1.12 points above the average trade guess.  Marketings were a little bit lower than expected, coming in at 101.03% of a year ago compared to the industry’s average guess of 101.4%.  The cold storage report showed frozen beef supplies declining from the previous month, but still 3% higher than last year. Our calculations show that ready numbers should be below year ago into December, based on the Cattle on Feed placement data. 

 

Hog futures were down 0.32% this week.  Pork production YTD is down 0.8% from year ago. Pork production this week was 0.4% larger than last week.  Estimated week to date slaughter (including Saturday estimates) came in at 2,345,000 head compared to 2,347,000 head for the same period last week.  The pork carcass cutout value was down $2.29/cwt this week, a 2.94% drop largely due to a 6.94% down-week for bellies.  The latest Commitment of Traders data for the reporting period between Nov 12 – Nov 19 showed managed money decreased their net long position in lean hogs by 10,936 contracts bringing their total net long position to 70,539 contracts.  The USDA Cold Storage report released after the close showed total frozen pork supplies were down 0.19% from the previous month, and were 6.09% lower compared to the same period last year.

 Market Watch

We will start the week reacting to any surprise futures positions resulting from December options expiration on the 22nd.  Livestock traders will also be reacting to the USDA Cattle on Feed and Cold Storage reports released Friday after the close. We will have the regular Monday USDA Export Inspections report. Weekly Export Sales will be delayed until Friday because everything is closed on Thursday for Thanksgiving in the US.  Friday will be a short trading day for livestock, with an early CME close. Friday will also be first notice day for December futures deliveries in the grains and financials.

 

 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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