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RSS By: Alan Brugler, AgWeb.com

Alan Brugler is the President of Brugler Marketing & Management, and the primary analyst and advisor.

Things Have Changed

Sep 09, 2011

Brugler

Market Watch with Alan Brugler

September 9, 2011

Things Have Changed

 

Ten-year retrospectives are in vogue this weekend, as it is the 10th anniversary of the 9/11/01 terrorist attacks on the United States. The TV versions look at how people pulled together, how they were changed, and how the world has changed. The commodity markets have changed as well. Gold futures on 9/11/01 closed at $275.60. On 9/9/11 they were $1,856.40. That is a 673% rise. Nearby corn futures were $2.14¼. This Friday they were $7.26, a 338% increase. The Dow Jones Industrial Average was at 9605.51 on 9/10/01 and 10992.13 on 9/9/11. That return is an anemic 14.4% (excluding dividends), but is a positive number when the avowed goal of bin Laden and his associates was to destroy the American financial system.

 

Corn closed 24¼ cents lower for the week. Most of the week was again spent trading yield estimates, with weather firm CROPCAST taking the cake for lowest published number ahead of the USDA report. The demand side is another story. Field reports were the typical "above expected" and "below expected" without defining whether "expected" was better than last year or just better than earlier gloom-and-doom ideas. Domestic feed use is assumed to be slipping. USDA weekly export sales were also unexciting at 820,600 MT, on the lower end of trade ideas. With the outside markets under serious "get me out" pressure on Friday because of perceived European economic weakness, it was tough to get the bulls interested in committing more money to the long side of corn.

 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

08/19/11

08/26/11

09/02/11

09/09/11

Change

% Change

Sep

Corn

$7.11

7.525

7.5025

7.26

0.2425

3.23%

Sep

CBOT Wheat

$7.31

7.6225

7.3

7.01

0.2900

3.97%

Sep

KCBT Wheat

$8.19

8.6325

8.58

8.1025

0.4775

5.57%

Sep

MGEX Wheat

$9.45

9.5625

9.8425

9.4575

0.3850

3.91%

Sep

Soybeans

$13.60

14.1475

14.365

14.165

0.2000

1.39%

Sep

Soybean Meal

$354.10

376

377.8

368.7

9.1000

2.41%

Sep

Soybean Oil

$55.39

56.6

57.74

58.2

0.4600

0.80%

Oct

Live Cattle

$115.50

115.2

114.8

118.45

3.6500

3.18%

Sep

Feeder Cattle

$133.80

132.6

132.65

133.225

0.5750

0.43%

Oct

Lean Hogs

$88.38

87.1

85.8

87.25

1.4500

1.69%

Oct

Cotton

$106.76

103.92

106.59

110.3

3.7100

3.48%

Sep

Oats

$3.49

3.79

3.69

3.4825

0.2075

5.62%

Sep

Rice

$16.75

16.99

17.96

18.06

0.1000

0.56%

 

Wheat futures were lower at all three exchanges this week, with KC sinking a huge 5.6%. Wheat had to deal with a cocktail of bearish notions, including but not limited to: approval of Indian wheat exports, lower Russian prices in the latest Egyptian tender, a strengthening US dollar and spotty improvements in rainfall that could encourage winter wheat planting. The strengthening of La Niña weather conditions was a modest bullish support for winter wheat, as it suggests no definite end to the southern drought pattern. However, producers are expected to dust in the wheat, given higher crop insurance guarantee levels and a need for cash flow.

 

Soybeans were down 1.4% for the week, erasing all but 2 cents of the prior week advance. Soybean meal prices fell 2.4% and put a lot of pressure on crush margins. Weak basis suggests there is just too much meal around. Declining chick placements and abundant DDG supplies are working against higher meal prices at the present time. Projected soybean ending stocks are dropping with the production ideas, with the main question being whether USDA will go along with the private cuts in expectations. Actually, the average trade guess for 2012 ending stocks is only 3 million bushels smaller than last month, as we’re already down at or near pipeline levels. Chinese soy oil futures prices are the highest in quite some time. They are buying beans, but a lot of them are still coming out of South America due to an overhang from last year’s crop.  


Cotton was the big bull leader this week, up 3.48%. The market had been showing technical buy signals for a couple weeks, but lacked a fundamental trigger. Flooding in Pakistan threatened to take out some production there. Some cotton was lost due to Hurricane Irene, and more to Tropical Storm Lee. Tropical Storm Nate was expected to make hurricane status but drive into Mexico. Weekly cotton export sales are still only a shadow of their former selves. USDA reported the weekly export sales through Sept. 1 were a tepid 46,700 RB.

 

Cattle futures were up a nifty 3.18% for the week. Choice boxed beef was down to $0.63 for the week on a Friday/Friday basis. That is a 0.3% loss. Select beef was down 2.2%. Beef production was down an estimated 12.7% for the week due to Labor Day, and down 1.9% from the same holiday week in 2010. The reduced supply may have helped support beef prices at the end of the week. Cash cattle jumped as much as $5 versus the prior week, with nearly all of that activity on Friday. Estimated carcass weights are now thought to be running 8 lb. below last year.

 

Lean hog futures were up 1.69% for the week, countering last week’s losses. Pork production was down 5.7% for the week, but 2.8% larger than Labor Day week in 2010. Production YTD is still up about 0.8%. Estimated hog carcass weights have dropped to 199 lb. after having been at 206 and higher last spring. Pork carcass cutout values steadied, losing 37 cents for the week. That is 0.39% on a Friday/Friday basis.

 

Looking to enhance your existing Ag Marketing Professional subscription? Add free futures market quotes sent to your cell phone via our Market Monitor service. Or "push" the daily recommendations out to your phone as they happen with Market Messenger 2. Call-in consulting service with Alan is also available for a limited number of new customers in our Ag Marketing Professional Premium package. Call our office for details on either service at 402-289-2330. 


Market Watch: The main event this coming week will happen on Monday morning, with the release of the USDA Crop Production report on Sept. 12. Coinciding as it does with the full moon, all kinds of irrational exuberance will be possible! The WASDE supply/demand estimates will also get some attention, particularly ending stocks estimates and the resulting stocks/use ratios. The Export Inspections report will likely be ignored. By Monday afternoon, traders might want to take a glance at the weekly crop progress and crop condition ratings so they can decide whether they want to second-guess the USDA October crop report.

 

The NOPA monthly crush report is scheduled for Wednesday morning. This private report takes on added significance following the termination of the monthly Census Crush reports. Wednesday will also be the last trading day for September grain options. The USDA weekly Export Sales report will be back to its usual Thursday morning slot. A huge selection of financial market options will expire on Friday the 16th.

 

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 2011 Brugler Marketing & Management, LLC

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