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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.

Veterans Day

Nov 11, 2011

Brugler

Market Watch w/Alan Brugler

November 11, 2011

Veterans Day

 

There is an old joke, that someone is from the federal government and they are here to help you. On Friday, the federal government and the banks were closed for Veteran’s Day, leaving the markets to their own devices. With little evidence that oversight by four (4!) federal agencies helped keep the customer’s money safe at MF Global; you can forgive traders for being skeptical about federal assistance. After all, any money or resources the federal government gives you were taken from another taxpayer like you or even worse borrowed from the Chinese or Japanese. One thing the federal government is charged with is the common defense, and it is appropriate to take this moment to thank all who have served in the armed forces in the past 250 years or so. With a few exceptions like the al Qaeda attacks, Japanese balloon bombs (look it up, one of them hit Omaha), Pearl Harbor, etc, forces hostile to the United States have not been able to act out that hostility on US soil. That is a remarkable record in world events and our veterans deserve the credit.

The corn bulls’ winning streak ended this week. Price were down 2.63%, or 17 cents per bushel. Weak export sales got a lot of the blame, although USDA also saw fit to trim projected feed & residual use another 100 million bushels. Ethanol stocks are the tightest of the calendar year, with a combination of exports and domestic use sucking up everything being produced. While US whole corn exports are down, about 279 million bushels left the country as ethanol in the last marketing year, and the largest quantities of meat exports since before BSE meant additional corn left in refrigerated containers. Value added exports are good for jobs, so this is a trend we hope can be continued.

 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

10/21/11

10/28/11

11/04/11

11/11/11

Change

% Change

Dec

Corn

6.4925

6.55

6.5575

6.385

0.1725

2.63%

Dec

CBOT Wheat

6.32

6.445

6.3675

6.1675

0.2000

3.14%

Dec

KCBT Wheat

7.23

7.38

7.18

7.04

0.1400

1.95%

Dec

MGEX Wheat

9.1925

9.205

9.2375

9.3425

0.1050

1.14%

Nov

Soybeans

12.1225

12.17

12.125

11.66

0.4650

3.84%

Dec

Soybean Meal

316.5

317.5

315.4

299.5

15.9000

5.04%

Dec

Soybean Oil

51.25

51.77

51.87

50.98

0.8900

1.72%

Dec

Live Cattle

122.15

119.05

124.5

120.55

3.9500

3.17%

Nov

Feeder Cattle

142.725

141.1

142.575

142.15

0.4250

0.30%

Dec

Lean Hogs

89.65

86.675

86.85

86.45

0.4000

0.46%

Dec

Cotton

97.1

104.37

98.54

99.24

0.7000

0.71%

Dec

Oats

3.37

3.3625

3.29

3.215

0.0750

2.28%

Nov

Rice

16.405

16.74

15.895

15.005

0.8900

5.60%

 

The wheat complex had a split personality. MPLS futures were up 10 ½ cents for the week, with USDA confirming tighter spring wheat stocks and a little bit of a short squeeze attempt in the December contract. The other two markets were down by 2-3%, with rains aiding winter wheat crop development in the Plains and SRW continuing to struggle to get export market share. Egypt again took advantage of a futures price break. They again bought wheat from the Ukraine and Russia at prices higher than the previous purchase but well below what the US could offer. World wheat ending stocks are stubbornly over 202 MMT despite the largest projected wheat feed use since 1990.

Soybeans lost 3.8% for the week, with soybean meal down more than 5% as it competes with cheaper corn, wheat and DDGS. Soybean oil was down 1.7% and also trimmed product value. USDA hiked projected South American production by 500,000 MT, and boosted projected world stocks by a similar number. Soy oil use is strong, thanks to profitable biodiesel margins, and Malaysian palm oil stocks for October were smaller than the trade had anticipated. Soybean weekly export sales were a bright spot, exceeding trade expectations of 660 thousand tonnes. There were rumors of Chinese soybean purchases to fill their reserve stocks on Friday.

Cotton was up 0.7% for the week, thanks to a more than 300 point pop on Thursday after the USDA weekly export sales report and a weaker US dollar combined to make traders more optimistic. Weekly export sales were the largest in quite a while. They were 998,000 RB for 2011/12 delivery and 24,900 MT for 2012/13 delivery. Net Pima sales were 1,900 for 2011/12 delivery.  The term brittle cotton made the national media, short hand for drought stressed cotton out of Texas that some world buyers are trying to avoid.

Lean Hog futures were down a modest 40 cents for the week, thanks to a nice short covering rally ahead of the weekend.  The pork carcass cutout value was the lowest since June on Thursday, and that hurt cash hog prices as it ate into packer margins. It lost 3.6% for the week on a Thursday/Thursday basis. Pork belly quotes were down 8%. Cash hogs followed the cutout value lower. Futures were already expecting a lower cash hog trade, and thus didn’t have to drop as sharply but merely wait for cash to catch up.

Cattle futures were down 3.17% this week, with the down all occurring at the end of the week. Futures actually posted new all time highs a week ago, and cash trade hit new highs on Thursday at $202 in the north and $125-126 elsewhere. That didn’t stop the CME from dropping all week. December futures may be looking ahead to Thanksgiving and then the delivery period. Beef production is still depressed, down 3.6% this week vs. last week and down 5.4% vs. the same week in 2010. Those numbers are expected to turn higher as we get into late November and December, building into a late winter or spring peak as all of the light cattle placed in the lots are finished.

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: Cotton traders will start the week adjusting to life without December futures options, which were exercised or expired on Friday. That can add to volatility. FND is November 23 for December futures deliveries. NOPA will release their October crush report on Monday. This has taken on additional importance since the Census Bureau quit tallying crush data in a budget cutting measure. USDA will have the usual Export Inspections report on Monday and Export Sales on Thursday. CFTC data will be released on Monday, delayed by the Veterans Day holiday on the 11th when government offices were closed. The main USDA report for the week will be the Cattle on Feed report, scheduled for the 18th. November feeder cattle futures (and options) expire early this month, on Thursday the 17th.

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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