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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.

Still Going Strong

Sep 03, 2010

 brulogomed

Market Watch with Alan Brugler
September 3, 2010
Still Going Strong
 
Corn futures broke through their old high from last December, totally erasing the bearish impact of the January crop reports and looking ahead to tighter stocks in the year ahead. Private yield estimates and production estimates for September are almost universally smaller than USDA’s August total. Informa’s 164.8 bpa estimate was not a bearish influence on Friday, as they suggested that the final number would be a lot lower. Corn gained 29 cents/bushel for the week, up 6.83%. Export sales are also running ahead of trade expectations. Shipping logistics are a concern due to the strong export interest. Rail freight rates have gone up sharply.
 
Wheat gapped higher on Friday. USDA reported strong weekly export sales on Thursday, above the trade average guess. There were additional sales reported under the daily reporting system. Russia indicated that the export ban was likely to be extended until the fall of 2011 after new crop supplies were assured. That drove those who have been hoping for deferred shipment of August orders to go to other sources. Chicago futures were up 6.9% for the week. MPLS dragged at 4.95% because it is still in the middle of harvest, but it did get a lift from poor weather in Canada and a sale to Germany.
 
Soybeans posted double digit gains on Friday, but managed only an 8 cent advance for the week. Informa projected an increase in USDA yield to 44.1 bushels per acre vs. the 44.0 figure in August. That was pretty much ignored by the trade. Soy oil and meal posted fractional gains to support the beans, but the rally is undoubtedly stimulating additional South American plantings this fall, and likely discouraging livestock feed use.
 
Below is a table showing the net weekly changes and 4 week history of selected agricultural futures:
 

 
Commodity
 
 
 
 
Weekly
Weekly
Month
08/13/10
08/20/10
08/27/10
09/03/10
Change
% Change
Sep
Corn
$4.12
$4.21
$4.21
$4.50
0.29
6.83%
Sep
CBOT Wheat
$7.03
$6.79
$6.63
$7.08
0.46
6.91%
Sep
KCBT Wheat
$7.24
$7.06
$7.00
$7.44
0.43
6.18%
Sep
MGEX Wheat
$7.15
$7.00
$7.07
$7.42
0.35
4.95%
Sep
Soybeans
$10.44
$10.09
$10.22
$10.30
0.08
0.76%
Sep
Soybean Meal
$302.70
$300.80
$307.80
$308.20
0.40
0.13%
Sep
Soybean Oil
$42.52
$39.52
$40.20
$40.32
0.12
0.30%
Oct
Live Cattle
$95.08
$99.25
$98.10
$94.45
3.65
3.72%
Sep
Feeder Cattle
$111.30
$116.65
$116.27
$114.17
2.10
1.81%
Oct
Lean Hogs
$74.65
$77.20
$74.82
$77.20
2.38
3.18%
Oct
Cotton
$87.49
$87.15
$89.03
$90.95
1.92
2.16%
Sep
Oats
$2.74
$2.72
$2.66
$2.83
0.18
6.59%
Sep
Rice
$11.00
$10.91
$11.22
$11.51
0.29
2.59%

 
 
 
Cotton futures posted the highest prices since 2008 on their daily charts, and the highest prices since October 1995 on the front month continuation charts. Net gain for the week was 2.16%. The U.S. crop is still looking to be a big one, but the balance sheets show most of it being used or more accurately shipped out of the country. Pakistan’s flooding was partially picked up in the August USDA report, but traders are anticipating further tightness in the world ending stocks.
 
Hogs jumped 3.18% for the week. The quotes for pork loins were sharply lower early in the week, as the trade got past the Labor Day pipeline filling. However, that cut, and most others, was firmer later in the week. With the carcass value holding above $92, it is very difficult to argue that October hogs should be $77, and futures rallied to narrow the spread a little bit. Pork production YTD is down 4.4%, and estimated production this past week was up only 0.2% from the prior week. It was down 7% vs. the prior year.
 
Cattle futures were the sole red number for the week, down 3.72%. Beef production YTD is down ½%. Prices got support from the macro economy, where numbers were “less bad” than the gloom and doom crowd had expected. Carcass weights are still running about 10-12 pounds below year ago. Weekly export sales were still running ahead of their 4 week average, with South Korea in particular much better than a year ago. The bear story came from a drop of .8-.9% in the wholesale prices, and a corresponding drop in the cash cattle market.
 
Looking for professional help with your 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.
 
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 Market Watch:  We’ll start the trading week on Monday evening with Globex, with U.S. markets closed on Monday for the Labor Day holiday. The regular Monday USDA reports will be delayed until Tuesday, including Export Inspections and Crop Progress. The main issue for the market will be the USDA reports on Friday morning, including Crop Production and WASDE supply/demand. Weekly export sales data will also be delayed until Friday morning.
 
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. Call 402-697-3623 for information on our individualized subscription and consulting services.
 
   Copyright 2010 Brugler Marketing & Management, LLC
 
 
 
 
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