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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.

Relentless

Jan 17, 2014

Brugler

Market Watch with Alan Brugler

January 17, 2014

Relentless

 

Our theme of the week is relentless markets. Those ag markets that are trending are being pushed, pulled and dragged in the direction of the trend, with corrections typically only 2-3 days. Cattle and oats and cotton present the bull cases, while wheat is the poster child for the relentless bear. A significant amount of investment money has been pulled out of the commodity markets over the past year (some estimates are as high as $42 billion), and those still in seem inclined to ride their winners hard and avoid markets that are chopping around like corn and hogs.

 

Corn futures gave back a chunk of the Jan 10 crop report gain this week, losing 9 cents per bushel or 2.02%. Demand is a bright spot as low prices continue to work to cure low prices. Ethanol stocks are hovering just a little above a three year low. Imports have been zero for the past 15 weeks, as US prices have been cheaper than those in Brazil. Ethanol plant margins are still very attractive. Private exporters reported export sales this morning of 204,000 metric tons of corn to Egypt for shipment yet this year.  Total commitments as a % of total exports are now at 80% compared to 73% at this time last year and the 5 year average of 58%.  According to the CFTC, managed money accounts decreased their net short position in corn by 27,520 contracts, bring their position as of last Tuesday’s close to the least-short reported position since August 27th.   

  

Soybean futures jumped 3% this week, adding 39 cents to the value of March beans. Weekly US export sales were a larger than expected at 1.22 MMT of combined old and new crop business. China continues to aggressively buy US beans for both old crop and new crop delivery. Total US export Commitments as a % of total exports are now at 102% of the newly revised USDA forecast for the year. Soybean meal export sales continue to be very strong (and front loaded) with 66% of the projected sales for the year already booked. The average pace would be 59%. South American planting activity is just about wrapped up, with 3-4% of the Argentine crop remaining as well as whatever double crop Brazil will do after first crop beans come off.

 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

12/27/13

01/03/14

01/10/14

01/17/14

Change

% Change

Mar

Corn

$4.28

$4.24

$4.33

$4.24

($0.09)

-2.02%

Mar

CBOT Wheat

$6.09

$6.06

$5.69

$5.64

($0.06)

-0.97%

Mar

KCBT Wheat

$6.44

$6.44

$6.26

$6.22

($0.04)

-0.60%

Mar

MGEX Wheat

$6.35

$6.32

$6.21

$6.18

($0.03)

-0.48%

Mar

Soybeans

$13.13

$12.71

$12.78

$13.17

$0.39

3.01%

Mar

Soybean Meal

$427.20

$407.10

$413.60

$434.50

$20.90

5.05%

Mar

Soybean Oil

$39.35

$38.60

$38.23

$37.74

($0.49)

-1.28%

Feb

Live Cattle

$134.95

$136.20

$136.70

$140.35

$3.65

2.67%

Jan

Feeder Cattle

$167.00

$167.63

$168.65

$170.00

$1.35

0.80%

Feb

Lean Hogs

$85.65

$86.68

$85.83

$86.18

$0.35

0.41%

Mar

Cotton

$84.12

$83.31

$82.90

$86.90

$4.00

4.83%

Mar

Oats

$3.56

$3.44

$3.87

$4.00

$0.13

3.36%

Mar

Rice

$15.48

$15.64

$15.57

$15.60

$0.03

0.19%

 

Wheat futures were lower at all three exchanges. The good news is that the declines were less than 1% for the week. Total US export commitments are still a larger % of the USDA forecast than usual for this date, currently at 81% vs. the five year average of 78%.  Weekly wheat export sales through January 9 were 319,900 MT. The EU has approved more than 15 MMT of export licenses this year, vs. just a little over 10 MMT a year ago. When combined with increased Canadian and Australian supplies, the US market has had to do some discounting to move bushels.   

 

Cotton futures rallied another 4.8% this week. Global ending stocks are still projected to be record large at more than 97 million bales or a 10 month surplus. Weekly export sales for the week ending January 9 totaled 249,000 RB of all classes and years. That was down a little from the 271,800 RB the preceding week. Export commitments as a % of total exports (for upland cotton) are now at 76%, which compares to 77% for this point last year, and lagging the 5 year average of 79%.    The CFTC weekly commitment of traders report showed managed money accounts reduced their net short position by 16,086 contracts, bringing their total net short position to 56,842 contracts.

 

Cattle futures surged to new all time highs, gaining 2.67% this week. Feeders were down $1, or 0.6%. Cash cattle traded consistently at $144, up $12 per hundred from where they were in December.  Weekly slaughter was down 1.5% from the same week in 2012. Year to date beef production is down 12%, partially due to a fewer number of slaughter days.  Estimated carcass weights are running 5 to 6 lbs. above year ago but are coming down as packers pull ahead greener cattle to offset lower ready numbers. Wholesale beef prices were up a whopping $16.74/cwt this week, a 7.4% advance for Choice that was aided a little by a change in the USDA calculation method, but mostly due to tight supplies and retail price increases. Select was up an even more impressive 8.4%. The CFTC commitment of traders report showed managed money accounts getting longer, adding 13,822 contracts to their net long position.  The current managed money net position is now 118,856 contracts (largest reported since Oct 26, 2010 when it was 122,077 contracts)

 

Hog futures were up 0.41% for the week, finally getting a little assist from skyrocketing  beef prices. Pork production this week was 5.0% larger than the same week in 2013. Estimated slaughter totaled 2.263 million head, up 2.6% from last year. Estimated carcass weights have ballooned to 213 pounds as packers are looking for tonnage. Most of the really big hogs have been packer owned and destined for boning operations. The pork carcass cutout value was up $3.46 or 4.1%% this week, with pork bellies the strongest component. USDA reported weekly pork export sales were a slow.......this week.

 

 Market Watch

 

This will be a short trading week, as the markets are closed on Monday for the ML King holiday. We’ll get the regular Export Inspections on Tuesday and weekly Export Sales on Friday morning because of the holiday delay. USDA will issue the monthly Cold Storage report on Wednesday afternoon, and the monthly Cattle on Feed is scheduled for Friday. There will be keen interest in the latter, due to the record high beef prices. February grain and oilseed options will expire on Friday as well.

 

 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.


 

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