Sep 23, 2014
Home| Tools| Events| Blogs| Discussions Sign UpLogin

Market Watch

RSS By: Alan Brugler,

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

Waiting for Spring

Feb 10, 2012


Market Watch with Alan Brugler

February 10, 2012

Waiting For Spring

USDA made a few changes in the February reports, but not much that was a surprise to the trade. Now we’re mostly hanging around waiting to see what USDA rolls out for 10-year projections and 2012 production and S&D balances at the Outlook Forum. The former were done late in 2011 as part of the budget process, and the latter are "armchair" estimates, but it gives the market something to chew on. Producers are also keeping an eye on the guarantee prices for corn, soybeans and spring wheat, which are determined based on February average futures prices. We know that the fall prices for wheat were high enough to attract more winter wheat acreage than is really needed in 2012. The question is whether the same thing can happen in the other crops, and where the constraints are in the acreage pool.

Corn futures lost 13 cents per bushel this past week, nearly all of it after the USDA reports came out on Thursday morning. USDA dropped projected ending stocks to 801 million bushels, and cut the stocks/use ratio to the tightest since 1995/96. They also trimmed projected Argentine production because of the drought back in December and January, and reduced projected world corn ending stocks. It all sounds bullish, but it was also all widely anticipated ahead of the report. There was no fresh bullish input, while the weekly export sales report was bearish and Greeks were again rioting in the streets. Some in the trade have also convinced themselves that USDA will issue a very bearish 10 year outlook ahead of the annual Ag Outlook Forum in D.C on February 23-24.

The wheat complex saw all three exchanges lower, with Chicago dropping 4.6% for the week and KC down 5.6%. Minneapolis saw a smaller decline of 2.9%. The bearish factor for the week was yet another monthly increase in projected world wheat ending stocks, this time to 213.10 MMT from 201.02 MMT last month. USDA continues to find more production for both 2010 and 2011, and in this case even trimmed back projected total use. The US numbers were tweaked in a bullish direction, with ending stocks cut to 845 million bushels and the average annual cash price a dime higher.  That wasn’t enough to offset the bearish implications of the world numbers.
















% Change










CBOT Wheat








KCBT Wheat








MGEX Wheat
















Soybean Meal








Soybean Oil








Live Cattle








Feeder Cattle








Lean Hogs
































Soybeans held up well compared to the feed grains. Prices were down 4 cents, after gaining 14 cents the week before. Soybean meal was down 2.6% in sympathy with the feed grains, while soy oil rallied 1.7%.  Weekly soybean export sales were again below trade estimates. As we had anticipated in last week’s Market Watch, USDA cut projected Argentine and Brazilian production for 2012 by less than the average trade estimates. Brazilian production was trimmed to 72 MMT, and Argentina was cut to 48 MMT. USDA chose not to go as low as the Brazilian government (CONAB) due to current rains that could stabilize yields or even add some bushels between now and final.

Cotton futures lost nearly 6% for the week, with a dead cat bounce on Friday. USDA’s upward revision in projected cotton ending stocks just added another drip to the torture. In a series of monthly WASDE reports, ending stocks have gradually grown from 2.6 million bales last year to 3.8 million for next August. USDA noted slower domestic mill use and made no change to exports. Export sales were net positive for the week (not always the case), and total commitments are now at 100% of the USDA Upland export forecast for the year. They typically need to go to 104-105% to account for sales that get bumped to the following year, but the picture is one of meeting the USDA numbers if we just keep shipping what is already sold.

Cattle futures posted a tiny gain of 33 cents for the week, backing into it by losing $1.22 on Friday. Cash cattle trade confirmations were still hard to come by in the southern Plains. Cash cattle trade was down $1 in Nebraska on Friday. The wholesale market was higher for the week, with choice boxes up 1.9% and select up 2.1%. Weekly beef production was up an estimated 1.9% from the previous week, but still down 5.2% for the year to date.  

Lean Hog futures were down 67 cents this past week, almost erasing the 85 cents for the week before. Ham prices dropped $2.95 from Friday/Friday, erasing their gain from the previous week. The pork carcass cutout value moved up a whole 4 cents for the week. Pork production year to date is up 0.6% from last year. Production this past week was 0.6% below the prior week.

Market Watch: The cotton market starts the week learning to live without the buffering impact of the March options, which expired on the 10th.  Hog producers and traders will see the expiration of the February contract on Tuesday. NOPA is also expected to put out a Valentine for the soybean market with their monthly crush report. Analysts need the love from NOPA, since Census no longer publishes monthly government data on soybean crush. Other than that we have the usual USDA export inspections report on Monday and the weekly Export Sales data on Thursday 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 2012 Brugler Marketing & Management, LLC

Log In or Sign Up to comment


No comments have been posted, be the first one to comment.
The Home Page of Agriculture
© 2014 Farm Journal, Inc. All Rights Reserved|Web site design and development by|Site Map|Privacy Policy|Terms & Conditions