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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.

On Hold

Aug 30, 2013

Brugler

Market Watch with Alan Brugler

August 30, 2013

On Hold

 The grain markets started out this past week with a bang, rallying sharply on forecasts for much above normal temps and below normal precip in the Corn Belt, where corn and soybeans are still filling out ears and pods. We spent the rest of the week leaking lower, as bullish traders banked gains ahead of month end.  By Friday the market was on hold for  the 3-day holiday weekend. History suggests that the Tuesday after Labor Day is anti-climatic, with the largest Tuesday gain since 1980 in corn just over 3.9% and the largest soybean gain 4.47%. Historically, corn has been up 54% of the time on the Tuesday after the holiday, with soybeans up 57% of the years.

September corn futures were down fractionally for the week, a 0.1% drop. December futures were up 12 cents thanks to a 30 cent rally on Monday. End of month and pre-holiday profit taking pared those gains. The trade, particularly the spec funds, continues to be bearish but less so because of the heat and dry weather in the western Corn Belt. The Commitment of Traders report on Friday showed the Managed Money category exiting 34,350 contracts from their net short position in the week ending 8/20. They were still net short 57,428 contracts as of August 27. US ethanol production was down 24K bpd from last week to 820,000 bpd, and stocks were down 200,000 barrels from last week.  Imports averaged 4,000 bpd, down from 19,000 bpd the previous week.  Weekly corn export sales were negative for old crop due to cancellations and rollovers, but increased by a net 673,800 MT overall. Record new crop corn yields have been reported by various producers in TX, LA and MS, with minimal aflatoxin problems to date.

Soybeans gained 59 cents per bushel (4.3%) this week in the September contract. New crop November futures were up 29 ½ cents after gaining more than 60 cents on Monday. Hot and dry weather in the Corn Belt is thought to be taking away yield potential, with a parade of firms lowering their expected national average yields to 40.8-42.5 bushels per acre. Much of the bull story was in soybean meal. Meal export sales continue to be quite strong, with 47,900 MT of old crop meal booked in the week ending August 22 (must be shipped by August 31). That is supporting basis for meal, and the meal price is propping up product value for the beans.

Wheat futures eked out a 9 cent gain in Chicago this past week following a 4 cent gain the previous week. The other two contracts also posted small gains. Wheat export sales continue to be excellent, with 51% of the USDA forecast for the year already on the books or shipped out. That average for this date would be 44%. Weekly sales were 551,300 MT, with Brazil buying additional wheat due to freeze damage to the crop there. On Friday the International Grains Council (IGC) raised projected global production 4 MMT to 691 MMT on stronger production in Canada, Ukraine and the EU. Their number is still smaller than USDA, however.

 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

08/09/13

08/16/13

08/23/13

08/30/13

Change

% Change

Sep

Corn

$4.66

$4.74

$4.96

$4.95

($0.00)

-0.10%

Sep

CBOT Wheat

$6.34

$6.31

$6.35

$6.43

$0.09

1.38%

Sep

KCBT Wheat

$6.973

$6.983

$6.945

$7.008

$0.06

0.90%

Sep

MGEX Wheat

$7.32

$7.37

$7.18

$7.20

$0.02

0.28%

Sep

Soybeans

$12.19

$12.83

$13.65

$14.24

$0.59

4.30%

Sep

Soybean Meal

$390.60

$408.80

$433.20

$468.20

$35.00

8.08%

Sep

Soybean Oil

$41.50

$42.81

$42.64

$43.89

$1.25

2.93%

Aug

Live Cattle

$122.50

$123.90

$123.10

$122.70

($0.40)

-0.32%

Sept

Feeder Cattle

$157.45

$157.65

$156.65

$156.93

$0.28

0.18%

Oct

Lean Hogs

$84.97

$86.62

$85.10

$87.63

$2.52

2.97%

Oct

Cotton

$89.05

$93.40

$84.24

$83.70

($0.54)

-0.64%

Sep

Oats

$3.59

$3.78

$3.63

$3.92

$0.29

7.85%

Sep

Rice

$15.19

$15.56

$15.78

$15.81

$0.03

0.19%

 

Cotton futures were fractionally lower after plunging a dramatic 9.8% the previous week. The US stocks/use ratio is still projected to be the tightest since 2010/11 in 2013/14. That is contingent on China keeping their huge stockpile out of the market. If they lighten up, it will likely diminish export potential for the US. US net weekly export sales through August 22 were only 81,000 RB. Commitments YTD was 35% of the USDA forecast for the year. They would typically be 41% by now.

Cattle futures fell back 0.32% this week after a small loss the previous week. Beef production this week was 1.2% smaller than the same week in 2012, and production year to date is down 0.9%. Weekly slaughter was 2.2% smaller than in 2012 but carcass weights continue to run about 7-8 pounds higher than last year. USDA reported weekly beef export sales had improved sharply to 23,200 MT last week. Wholesale beef prices were lower this week despite the strong export sales and reduced slaughter, with Choice down 0.27% and Select down 0.78% on a Friday/Friday basis. Cash cattle trade on Friday was $123-124 on limited volume. Most US packing plants will be dark on Monday for the Labor Day holiday.

Hog futures rallied nearly 3% this week. The estimated weekly slaughter rose to 2.21 million head. That was up 0.1% from the previous week but still down 3% from the elevated year ago levels. Pork production YTD is down only 0.3% from 2012 due to higher average carcass weights thus far in 2013. The pork carcass cutout value lost 5.6% this week after dropping more than 3% the previous week. The belly primal has begun its usual seasonal retreat, losing another 7.9% this week.  The USDA weekly export sales report jumped to 12,600 MT from 7,100 MT the previous week.

Market Watch

This will be a short week, with US markets closed on Monday for the Labor Day holiday. The regular Monday USDA reports (Export Inspections and Crop Progress) will be delayed until Tuesday. Weekly ethanol production and stocks will be delayed until Thursday, and USDA weekly Export Sales will be released on Friday. September grain futures contracts are in deliveries, with no daily price limits.

Please also look for Alan's comments on this weekend's US Farm Report TV Show.

Visit our Brugler web site at http://www.bruglermarketing.com 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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