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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.

Uniform Opinion

Feb 17, 2012

Brugler

Market Watch with Alan Brugler

February 17, 2012

Uniform Opinion

 

It is pretty rare to see all of the commodities we track higher in the same week. Particularly rare when inflation is supposed to be pretty tame. However, that is the case this week. The dollar wasn’t even weaker, advancing 1% on the week. Admittedly the USD was down on Thursday and Friday ahead of a three day weekend. Demand is seen as picking up a little globally, and there are just enough weather concerns in South America and the Northern Hemisphere to keep buyers on their toes. 

Corn futures regained 10 of the 13 cents per bushel lost the previous week. The USDA 10 year forecast was bearish as expected, with 94 million acres planted and a 164 bushel per acre yield. However, those numbers are expected to be modified by the Chief Economist at this week’s Outlook Forum in Washington. Weekly export sales topped a million metric tonnes, exceeding trade expectations. Shipments were also strong.  South American production estimates continue to run below the most recent USDA numbers, leading to ideas that USDA may be more aggressive in projecting 2012/13 export sales out of the US.

 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

01/27/12

02/03/12

02/10/12

02/17/12

Change

% Change

Mar

Corn

$6.42

$6.45

$6.32

$6.42

$0.10

1.58%

Mar

CBOT Wheat

$6.47

$6.61

$6.30

$6.44

$0.14

2.22%

Mar

KCBT Wheat

$7.00

$7.13

$6.73

$6.90

$0.16

2.45%

Mar

MGEX Wheat

$8.26

$8.39

$8.14

$8.22

$0.08

0.98%

Mar

Soybeans

$12.19

$12.33

$12.29

$12.68

$0.39

3.13%

Mar

Soybean Meal

$322.20

$328.60

$320.00

$332.50

$12.50

3.91%

Mar

Soybean Oil

$51.59

$51.65

$52.53

$53.40

$0.87

1.66%

Feb

Live Cattle

$124.70

$123.63

$123.95

$128.60

$4.65

3.75%

Mar

Feeder Cattle

$154.60

$154.30

$154.15

$158.42

$4.27

2.77%

Apr

Lean Hogs

$87.33

$88.75

$88.58

$90.38

$1.80

2.03%

Mar

Cotton

$96.00

$96.34

$90.61

$91.45

$0.84

0.93%

Mar

Oats

$2.99

$3.14

$3.18

$3.24

$0.06

1.81%

Mar

Rice

$14.64

$13.88

$13.72

$14.14

$0.42

3.06%

 

 The wheat complex saw all three exchanges higher, with Minneapolis lagging the gains in the other two. KC led with a 2.45% gain for the week. There were several bullish themes for the week, mostly export related. The US captured Egyptian business in two separate tenders for the first time this year. South Korea also bought milling wheat. There were again noises out of Ukraine about slowing old crop exports due to concerns about a shortfall in 2012 production. Weather and rail car logistics also appeared to be putting a kink in Russian export shipments, leaving room for other origins to sell. Saudi Arabia is tendering for 330,000MT of hard wheat for May-June shipment.

Soybeans popped 3.13% for the week, aided by a nearly 4% increase in soybean meal. Soy oil was up 1.66%. Weekly USDA export sales were still slow at 614,700 MT with shipments at 1.0 MMT.  Trade estimated sales were from 600 to 750 thousand MT. However, China signed some long term commitments for more than 8 MMT, with an additional announcement expected heading into the weekend. South American weather also continues to be an issue, with more firms lowering projected Brazilian production into the 69 MMT range because of poor yields in Parana and ongoing dryness in the less developed Rio Grande do Sul crop.

Cotton futures reversed the prior week slide, closing 0.93% higher on Friday night. Weekly export sales were up significantly from the four week average at 101,400 RB for 2011/12 with sales of 65,200 RB for 2012/13 delivery for upland cotton. Net Pima sales were 6,600 RB. Total commitments are now 101% of the USDA projection for the year. They’ll likely have to get to 106-107% to allow for unshipped sales that will be carried over on August 31.

Cattle futures jumped 3.75% for the week. Cash cattle trade confirmations were still hard to come by in the southern Plains on Friday afternoon, but a few popped up at $128. If widespread, that will justify the futures move this week and probably lift asking prices to $130 for this coming week. The wholesale market was much stronger, with choice boxed beef up 2.1% for the week on a Thursday/Thursday basis. The select product was up 1.8%. Thus, we conclude that packers had more spending money available. Weekly beef production was down an estimated 4.1% from 2011, and year to date (YTD) production is down 5%. That also does quite a bit to keep prices firm. Estimated carcass weights are believed to be creeping up, possibly 13 pounds higher than a year ago.

Lean Hog futures were up 2%, drafting the speeding cattle futures market around the February calendar. Pork production for the week was estimated at 447.3 million pounds, up 2.7% from the same week in 2011. YTD production is up 0.8%. Hog carcass weights are believed to match last year at 278 pounds live and 208 pounds dressed weight. The pork carcass cutout value was up $1.50 on a Thursday/Thursday basis.

Market Watch: Trading won’t begin until Tuesday in the US, with President’s Day being observed on Monday. Globex trade will resume on Monday evening. USDA Export Inspections will be delayed until Tuesday because of the holiday, and the weekly Export Sales report will be delayed until Friday. USDA will issue the monthly and annual Cold Storage reports on Wednesday. The monthly Cattle on Feed report will be out Friday after the close of the markets. Thursday marks FND (First Notice Day) for March cotton futures deliveries. The March grain and energy options will expire on Friday.

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 more information on our individualized subscription and consulting services for leading agricultural producers and businesses.

 

 Copyright 2012 Brugler Marketing & Management, LLC

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