Market Watch with Alan Brugler

May 17, 2013

Roll On, Big P

That’s P as in Planter. We finally got a break in the weather for a few days, with a huge jump in average daily temperatures. That was accompanied by wind in some areas, amplifying the soil drying effect. Producers put their new GPS equipped planters to work 18 hours a day or more in some cases, and got a lot of seed in the ground. USDA will tell us on Monday what the overall progress was, but it was clearly substantial. The advance would have been larger if not for widespread shower activity breaking out all over the eastern 2/3 of the country from Wednesday evening on. 

Corn futures rallied 17 cents per bushel this week, a 2.5% gain after losing 1.7% the previous week. Ethanol plant margins are positive, and weekly ethanol production responded with a jump in average daily production.  Old crop corn consumption is up accordingly. Imports were zero for the 5^th week of the past 6, and ethanol stocks were drawn down to a snug 16.4 million barrels. Export interest, on the other hand, is very weak. Foreign buyers have been soaking up the limited export corn available out of South Africa, and also buying much cheaper Brazilian corn which they hope gets shipped before they need it. US planting progress expanded greatly this week, with trade estimates of total plantings in the 60-75% range for the Monday USDA report. Upper Midwest planting activity was halted by rain on Friday, as were a number of producers in IL and IN. A Memphis based consulting firm reduced its projection of US corn plantings to 96.827 million, about 455,000 fewer than the USDA Planting Intentions report showed in March.

Soybeans gained 49 cents per bushels for the week after a 33 cent gain the previous week. Weekly export sales were in line with trade estimates, but soybean meal export activity continues strong and that means higher meal prices if crushers can’t find enough beans. The NOPA crush for April was smaller than had been expected, a little over 120 million bushels. If you don’t crush the beans, you don’t sell the meal.  Meal futures were up 4.3% for the week. Soybean planting activity is just getting rolling, since it usually follows corn planting. Argentine sources indicated that neither exporters nor domestic processors have been able to buy as many beans from the farmer as they did a year ago. This raised crop size questions, but may also be a function of high inflation rates in Argentina and the necessity to keep some physical commodity as an inflation hedge. It does imply reduced export availability for the time being.

Wheat futures were lower on all three exchanges. The focus was on large global production for 2013, and not on the smaller US HRW crop. It was sort of a "you have a problem but we don’t need you anyway" attitude. That said, US weekly export sales were a solid 540,000 MT for the week, so somebody needs US origin wheat. MPLS was the firmest market, as a small planting window opened and then closed as rain chased producers back out of the field. A Memphis based analysis firm projected on Friday that US spring wheat acreage would total 12.401 million acres, apparently little affected by the flooding and planting delays.

Cotton lost a minuscule 11 points for the week, with nearby futures continuing to hover around the 86 cents per pound mark. US export sales last week were stronger than some had expected at 142,800 RB. However, the stronger dollar is raising doubts about next week’s sales. The dollar reached heights not seen since 2010. Total US export commitments are now about 99% of the USDA forecast for the year. The marketing year ends July 31.

Cattle futures lost $1.05 per cwt this week. That caused a lot of head scratching, as wholesale beef prices set new record highs and futures were still more than $12 below their 2013 high of $132.95. June futures only need to respect cash market values when they are in deliveries, which don’t begin until mid-June. In the mean time, speculative sellers or others are free to assume that cash cattle prices and those wholesale prices will decline from current levels by June. Cash cattle trade was mostly $125-126.50 this week, well above the futures but at a discount to the beef. As mentioned, wholesale beef prices were record high, with choice gaining 2.2% for the week. Select was up 0.8%.  Beef production YTD is 1.2% smaller than last year. The USDA Cattle on Feed report on Friday afternoon showed stronger than expected demand for feeders (placements 115.1% of year ago) but as a result there were more cattle in the lot on May 1 than expected (96.6% of year ago).

Hog futures were up $1.03 for the week, hurt a little by a dive on Friday. The skyrocketing value of the US dollar index caused concern about pork exports, which in recent years have been more than 20% of total production. The pork carcass cutout gained $3.61/cwt or 4.02% for the week.  Rising prices for chicken provided support, along with reduced slaughter rates for hogs. Estimated weekly slaughter was 2.035 million head. Weekly pork production was down 2.2% from the prior week, and 4.2% smaller than the same week in 2012. Some producers appeared to be focused on planting rather than marketing hogs. Average carcass weights were estimated to be equal to year ago, so slaughter was also down 2.1% from the prior week. Pork production YTD is still 1% below last year at this time.

 Market Watch

Livestock traders will begin the week assessing how much further prices need to drop to reflect the USDA Cattle on Feed report from Friday afternoon.  The USDA monthly Cold Storage report will be released on Wednesday afternoon. Grain market participants will focus on the Crop Progress report on Monday at 3 pm CDT, with a glance at weekly Export Inspections on Monday and Export Sales on Thursday morning. Friday will mark the expiration of June serial options in the grains, and the start of a long 3-day weekend because of Memorial Day in the U.S. on May 27.

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.  Visit our web site at https://www.bruglermarketing.com or call 402-697-3623 for more information on our consulting and advisory services for farm family enterprises and agribusinesses.

Copyright 2013 Brugler Marketing & Management, LLC

Market Watch with Alan Brugler

May 10, 2013

The Coming Global Surplus

The main message from the USDA reports on Friday was abundance. Forecasts for feed grains  and oilseeds foresee significant expansion of global ending stocks surpluses if current weather forecasts prove accurate. That is a pretty big "if" as we learned in 2012, but it probably isn’t wise to bet the farm on yet another crop disaster. As they say "Hope makes a lousy marketing plan". USDA did confirm continued tightness in old crop corn and soybean inventories, but we’ll have to wait until the end of June to put a more precise point on that tightness. Cash basis levels are showing something, but there is debate in the industry whether it is farmer stubbornness, worry about new crop, or a futures market that has too steep of a discount to cash because the spec funds are all bailing out of commodities in order to chase a record high stock market. 

Corn futures gave back 12 cents this week, or 1.7% following a 8.6% gain the previous week.  Ethanol production slowed, and weekly net export sales weren’t very good either. Most of the market focus was on the Friday morning USDA reports. USDA made only a 2 mbu. change in the old crop ending stocks, cutting exports 50 million and raising industrial use by 48 million. The new crop balance sheet was friendlier than expected, as their spring weather model adjustment (which led them to an ill fated May rise in projected yield for 2012 in the May 2012 report) for 2013 rounded down the estimated average yield to 158 bpa. Ending stocks for August 2014 are seen at 2.004 billion bushels, with a cash average price mid-point of $4.70 per bushel.

Soybeans rallied 33 cents for the week, extending a gain of 24 cents from the previous week. These were in the May contract, which expires on Tuesday. May got a boost from a strong cash soybean market that paid as much as $1.50 per bushel over July futures to pry beans from producer hands in high demand processor areas. Soybean meal was the driver, up nearly 6% for the week as fears of cash meal shortages this summer boosted delivery values. The WASDE report on Friday left all old crop fundamentals UNCH. New crop was about as the trade had expected for ending stocks, at 265 million. The route to get there was a little surprising, with USDA projecting a record high 44.5 bushels per acre average yield and record production of 3.39 billion bushels. That was offset by expectations that very low prices ($10.50/bushel cash average midpoint) would allow the US to grow both exports and crush in 2014 despite South American competition. World competition is expected to be brutal if Mother Nature fails to intervene, with global ending stocks projected to balloon to 74.96 MMT on record US and South American production only partly absorbed by global crush growth.     

Wheat futures were higher in MPLS this week, but lost ground in Chicago and KC. Slow spring wheat planting was supportive to Minneapolis futures, encouraging users to stock up on the remaining old crop HRS supplies. USDA didn’t compute a by class production estimate for durum or spring wheat, but the combined total is 571 million bushels and durum is likely to only be 75 million bushels or so. Spring white should be around 39-40 million, leaving HRS around 455 million bushels. USDA left projected old crop wheat ending stocks UNCH at 731 million bushels. New crop stocks are seen shrinking to 670 million because of a 212 mbu drop in overall production that is only partly offset by reductions in exports (100 million) and feed use (70 million).  The average cash price is seen dropping to $6.80 from $7.80 in this soon to be concluded marketing year.

Cotton gained a modest 0.35% for the week in the July contract. May futures expired at midweek. Weekly cotton export sales continue to be stout when considering the multi-decade high in global surplus stocks. The key feature is the concentration of those stocks in China. Surplus stocks ex-China are a lot tighter. USDA on Friday lowered projected US ending stocks to 4.0 million bales, with US exports up 250,000 stat bales at 13.25 million bales. World cotton ending stocks are seen growing to 92.74 million bales from 84.78 million in the current market year.

Cattle futures lost 1.14% or $1.38 per cwt this week. That caused a lot of head scratching, as wholesale beef prices set record highs and futures were still more than $12 below their high of $132.95. June futures only need to respect cash market values when they are in deliveries, which don’t begin until mid-June. In the mean time, speculative sellers or others are free to assume that cash cattle prices and those wholesale prices will decline from current levels by June. Cash cattle trade was mostly $126-127 this week, well above the futures but at a discount to their value in the beef. As mentioned, wholesale beef prices were record high at $205.49 (Choice) on Thursday before backing off for the weekend. Choice was up 1.6% for the week. Select product was still about $5 off of its record high, but still up 0.6% for the week.

Hog futures were down 1.85% for the week. The pork carcass cutout gained $2.69/cwt or 3.00% for the week.  Weekly pork production was down 1% from the prior week, and 0.8% smaller than the same week in 2012. Some producers appeared to be focused on planting rather than marketing hogs. Average carcass weights were estimated to be equal to year ago, so slaughter was also down 1% from the prior week. USDA reported weekly pork export sales of only 9,600 MT. That was larger, but the new reporting system is clearly missing some transactions that are typically reported in the monthly Census report.  

 Market Watch

Now that the smoke has cleared from the May USDA reports, the focus goes back to planting progress, crop condition ratings and exports. USDA will have the usual Export Inspections and Crop Progress reports on Monday, and Export Sales on Thursday morning. Tuesday will mark the last trading day for May hog futures. Wednesday will feature the weekly EIA ethanol production and stocks reports. The big monthly USDA report for this week is the Cattle on Feed report scheduled for Friday afternoon.

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.  Visit our web site at https://www.bruglermarketing.com or call 402-697-3623 for more information on our consulting and advisory services for farm family enterprises and agribusinesses.

Copyright 2013 Brugler Marketing & Management, LLC

Market Watch with Alan Brugler

May 3, 2013

May Showers Bring May Showers?

The usual pattern would be "April showers bring May flowers" and "May showers bring big yields". This year it seems like May showers just bring more May showers, and in some cases snow drifts. It was snowing in the center of the Corn Belt this morning, while areas further west were melting off some white stuff received mid-week. The US weather pattern is expected to turn a little drier, particularly in the western Corn Belt. The east got a few nice days, with more in the forecast. Temperature forecasts continue to call for below normal readings into mid-May, which should keep some weather premium in the corn and wheat markets. 

Corn futures rallied 56 cents, or 8.5% on the week. Ethanol production rose to an average 853K bpd last week. This is up 21K from last week and above the 4-week average of 824.5K. Ethanol stocks dropped to 17.036 million barrels. Exports sales were strong at 985,300 MT. Cold and wet weather still kept most of the planters out of the fields, with USDA showing only 5% of the crop in the 18 major states planted as of April 28.  Estimates for this week are in the 15% range. The CFTC Disag report shows managed money added to their net long position by 33,258 contracts to be net long 45,497 contracts. 

Soybeans ended the week 24 cents higher, after another choppy week of trading.  May futures rallied more than 41 cents on Monday, then surged higher on Tuesday before closing about 2 cents lower on the day.  Wednesday posted a 28¾ cent loss, but futures rallied on Thursday, and again on Friday to maintain a solid gain for the week. US export sales last week showed a net reduction of 109,800 MT for 2012/13 due to cancellations, and large weekly sales of 1.341 MMT MT for the 2013/14 marketing year.  US export commitments are now 99% of the revised USDA expectation for the 2012/13 marketing year.  The CFTC Disag report shows managed money added to their net long position by 17,605 contracts to be net long 91,310 contracts.   

Chicago wheat futures gained 3.17%, KC wheat gained 4.56%, and in Minneapolis wheat futures were up 5.75% on the week.  The Brugler500 index for Winter Wheat condition dropped from 298 to 293 on a 500 point scale. The HRW rating declined again on freeze damage. The SRW rating held steady. The Wheat Quality Tour projected Kansas production at 313.1 million bushels on a 41.4 bpa yield. Oklahoma is seen around 85 million bushels on a 25 bushel average yield. On Friday, a Memphis based consulting firm estimated the US winter wheat crop at 1.529 billion bushels, with HRW production at 798 million bushels. US weekly export sales were a stronger than expected 716,455 MT. This brought total export commitments to 95% of the USDA projection vs. the 5-year average of 100%. The CFTC Disag report shows managed money cut their net short position in Chicago wheat by 15,091 contracts to be net short 5,779 contracts.  In KC wheat, the managed money accounts added 8,326 contracts to be net long 12,631 contracts. 

Cotton was very choppy this week, with May futures posting a net change of 2.6% for the week after another strong week of export sales.  US weekly upland cotton sales were reported at 314,369 RB for old crop and 87,516 RB of new crop sales yesterday. This was the largest weekly old crop sales total since January. The ICAC expects global cotton ending stocks to hit 17.9 MMT at the end of the 2012/13 season, and to rise to 18.25 MMT in 2013/14. The CFTC commitment of traders report shows managed money net long 48,594 contracts after a reduction of 1,357 contracts this week.

Cattle futures were slightly lower for the week, losing 58 cents or 0.48%.  Boxed beef prices were strong, with the Choice boxed beef quote setting a new all time high on Thursday at $200.58.   That boosted cash cattle prices, with some $131 trades reported.  June futures don’t have to respect the cash market until we get into June, and continue to have a pessimistic view of prices 30 or 45 days from now. Choice boxed beef gained another $1.10 on Friday, capping an $8.79 rally from last Friday, and posting another new high at $201.68.  The weekly slaughter numbers this week were 1,000 head smaller than last week, and 3,000 head smaller than the same period last year.  Beef export sales for the week ending April 25 totaled 14,300 MT, vs. 15,854 MT the previous week. Those sales typically rise between now and mid-summer.  The CFTC Disag report shows managed money added 1,846 contracts to their net long position as of Tuesday to now be net long 25,043 contracts.

Hog futures were off 35 cents this week, losing 0.39%.  The CFTC report, which runs Tues to Tues, shows managed money added to their net long position with a net increase of 10,005 contracts.  The pork carcass cutout lost $0.53 or 0.60% for the week.  The estimated weekly slaughter is 2.098 million head including Saturdays projected kill, which is 50,000 head less than last week, but 19,000 head more than the same period last year. USDA reported weekly pork export sales of only 7,989 MT. Either the new reporting system is missing some transactions or export sales are really poor vs. year ago.

 Market Watch

The march toward the May 10 USDA crop reports begins. USDA will have no survey based production info in this report, but the WASDE folks will put out their first world S&D estimates for 2013/14. That alone makes the report day significant. The other USDA reports for the week that will get attention are the crop progress report on Monday night, and the weekly Export Sales report on Thursday morning.  May cotton futures expire on Wednesday.

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.  Visit our web site at https://www.bruglermarketing.com or call 402-697-3623 for more information on our consulting and advisory services for farm family enterprises and agribusinesses.

Copyright 2013 Brugler Marketing & Management, LLC

Market Watch Alan Brugler

April 26, 2013

Spring Finally At Hand, Locally

The weather has turned warmer, with more "normal" and even some "above normal" readings. The US weather pattern has also turned a little drier, particularly in the western Corn Belt. The combination means that a few more planters are out of the shed, and a many more farmers are anxious for the soil dry down that will allow them to get into the field.       

Corn futures for the May contract lost 8 cents, or 1.23% on the week. Ethanol production rose to an average 853K bpd last week. This is up 21K from last week and above the 4-week average of 824.5K. Ethanol stocks increased by 85K barrels to 17.692 million barrels. Stocks remain well below a year ago when over 21 million barrels were in storage. Exports sales were strong at 335,900 MT. Private exporters also reported a 240,000 MT new crop sale to China along with a 300,000 MT sale to an unknown. The new marketing year begins September 1. Cold and wet weather still kept most of the planters out of the fields, with USDA showing only 4% of the crop in the 18 major states planted as of April 21.  The CFTC Disag report shows managed money cut their net long position by 40,149 contracts to be net long 12,239 contracts.  This is the least-long managed money position reported since April 27, 2010.

Soybeans ended the week 2 cents higher, after a choppy week of trading.  May futures lost 15 cents on Wednesday, and then rallied back 19 cents on Thursday. US export sales last week showed a net reduction of 206,300 MT for 2012/13 due to a Chinese cancellation, and sales of 628,480 MT for the 2013/14 marketing year.  US export commitments are now 99.15% of the revised USDA expectation for the year. There are still concerns about cancellations this summer if exporters are double bought and the South American beans they have purchased are finally delivered.  Projected Chinese imports for 12/13 were lowered 2 MMT to 61 MMT. There is some trade talk that the number might be lowered to 59 MMT eventually, based on slow 1Q imports and the avian flu (H7N9) virus control efforts likely limiting second quarter demand. The net position of managed money was near unchanged as of last Tuesday. They are currently net long 73,705 contracts, down 864 from the previous report.

Wheat futures lost 2.86% in Chicago, and 1.76% on the Minneapolis exchange, but KC wheat gained 1.34% this week. The Brugler500 index for Winter Wheat condition dropped from 298 to 293 on a 500 point scale. The HRW rating declined again on freeze damage. The SRW rating held steady. Some areas actually got too much rain, with reports of localized ponding in some wheat fields of Ohio.  Managed money accounts increased their net long position in KC wheat by 1,756 contracts, and decreased their net short position in Chicago wheat by 6,308 contracts; indicating a friendlier attitude for both classes.  

Cotton was down 128 points on the week, losing 1.53%.  Global cotton consumption is expected to increase by 4% in 2012/13.  Global stocks are expected to shrink 10% due in part to China holding 55% of the world supply.  Export sales continue to be the bright spot in the domestic cotton market, with a combined 266,700 RB reported for the week.  Overall commitments stand at 96% of the USDA estimate for the marketing year.  The five year average pace is 98% for this date.  The CFTC commitment of traders report showed managed money decreased their net long position in cotton by nearly 1%.  

Cattle futures were up 1.19% for the week, gaining $1.50.  Boxed beef was also higher this week.  Choice gained $2.79 and Select was up $.80 from Friday to Friday.  This brought the spread to $8.46, which is $1.99 wider than it was last Friday. Cash cattle trade showed some slight improvement from last week with some cash cattle changing hands late Thursday with sales at $1.28 in Iowa on a live basis. Sales took place at $2.03 on a dressed basis which is slightly higher than reports last week of $2.02.  Texas also had sales at $1.28, which is up $2 from last week.  The weekly slaughter numbers this week were 10,000 head larger than last week, and the same period last year.  This week’s figure is 625,000 head including the Saturday estimate. Beef export sales for the week totaled 15,854 MT.

Hog futures were $2.33 higher this week, gaining 2.58%. The CFTC report, which runs Tues to Tues, shows managed money added to their net long position with an increase of 488 contracts.The pork carcass cutout gained $3.81 or 4.54% for the week.  The overall cutout was well supported with the Loins and Butts cuts both gaining more than 4%, and Pics were up 5.85% while the Hams cut gained 6.31%. The estimated weekly slaughter is 2.148 million head including Saturdays projected kill. Hog slaughter is now running 0.3% behind a year ago.  USDA reported weekly pork export sales of 12,184 MT which up from the prior week when they were put at 8,324 MT.

Market Watch

Grain futures will start the week reacting to the loss of "coverage" of May futures, as the May options expired on Friday. Some folks have "surprise" positions to be adjusted on Monday. The traders will be very interested in the weekly USDA Crop Progress report on Monday afternoon, expecting it to show corn and spring wheat planting progress that is still well behind the normal pace. Winter wheat ratings are also expected to be down again because of further freeze damage.  The USDA Export Inspections (Monday) and Export Sales (Thursday) will also be key gauges of disappearance. April live cattle futures will expire on Tuesday. May cattle options will expire on Friday. Not to be overlooked, the Fed will be meeting on Tuesday and Wednesday.

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.  Visit our web site at https://www.bruglermarketing.com or call 402-697-3623 for more information on our consulting and advisory services for farm family enterprises and agribusinesses.

Copyright 2013 Brugler Marketing & Management, LLC

Market Watch with Alan Brugler

April 19, 2013

A Cold and Wet Weather Picture

There is still drought talk around (central NE has seen less than 3" of moisture January 1), but most of the market has switched to concerns about planting delays because of heavy rains. The map below shows the 7 day accumulations, with totals of 4 to 5 inches in parts of IA, MO, IL, IN and MI. In most cases it will take a week to 10 days of warm and drier weather to get back into those fields. Flooding was expected on the Mississippi River over the weekend, interfering with barge movement. In many Corn Belt locations, soil temps are still too cold for corn seed to germinate. Not to be overlooked, there is also snow cover of as much as 20" in Minnesota and the Dakotas. The NWS 8-14 day forecast does show a somewhat warmer and drier pattern from April 27-May 3, particularly in the Western Corn Belt.

Weekly Overview

Corn futures for the May contract lost 7 cents per bushel this week after gaining 30 the previous week. Weekly US production of ethanol was 832K barrels/day. That was the second largest grind since January, but use outstripped production. EIA ethanol stocks declined by 281K barrels (ending @17.507 M barrels). There were no imports of ethanol last week for the second week in a row. Cold wet weather kept most of the planters out of the fields, with USDA showing 2% of the crop planted vs. the 7% average for this week and 16% last year.

Soybeans rallied another 1% this week, adding to a 3.8% advance the previous week. May futures were up 15 cents. Total export sales for last week totaled 566,800 MT. This brought the total export commitments to 99.7% of the USDA forecast for this marketing year vs. the 5-year average of 93%. Total soybean meal export commitments stand at 99% vs. the 5-year average of 80%. Bean oil commits are 80% vs. the 5-year average of 78%. There are still concerns about cancellations this summer if exporters are double bought and the South American beans they have purchased are finally delivered.  Projected Chinese imports for 12/13 were lowered 2 MMT to 61 MMT in the USDA report, and are now expected to decline further due to H7N9 flu issues and resulting losses of live chicken demand.

Wheat futures lost 0.77% in Chicago and 0.86% in KC this week. MPLS was 18 cents or 2.23% because of the planting delays for spring wheat. The Brugler500 index for Winter Wheat condition declined to 298 from 299 the previous week. The HRW rating declined again this week because of freeze damage. The SRW rating improved again this past week, thanks to rainfall filling in needy areas. Some areas actually got too much rain, with reports of localized ponding in some wheat fields in Ohio. The USDA reported 1.674 MMT in weekly export sales of both new crop and old crop. HRW sales were 372,575 MT. SRW sales were 991,226 MT, with most of that new crop and including a big sale to China. HRS totaled 164,529 MT. Total wheat export commitments stand at 94% of the USDA’s projected amount vs. the 5-year average of 101%.

Cotton was down 1.8% this week. Cotton export sales continue to move right along, with the USDA Export Sales report showing net weekly sales of 247,200 RB for Upland and 15,000 of Pima. Total export commitments stand at 94% of the USDA projection vs. the 5-year average of 97%. Planting is just getting underway.

Cattle futures were 50 cents higher this week.  Boxed beef was mixed for the week; Choice boxes gained 58 cents per cwt, while Select fell back 51 cents. Cash cattle trade was mostly $1-2 lower than last week, with Nebraska showing $200-202 on Friday and Colorado mostly $126-126.50. The weekly slaughter was 1.5% larger than last week and 2.7% larger than a year ago. A glance at the COF report shows the reason, with cattle backed up from March into April. Beef production for the year to date is still down 1.5%. Beef export sales for the week totaled 16,809 MT, a > 60% improvement from last week. The Friday evening USDA Cattle on Feed report showed much larger placement activity in March than had been expected by the trade. Placements were 105.97% of year ago. March marketings were also lighter than expected at 92.3% of last year. The combination left April 1 On Feed numbers at 95.0% of year ago.

Hog futures finished Friday with a weekly gain of 30 cents per cwt in the June futures. The pork carcass cutout gained 3.34% for the week, or $2.71/cwt. Ham prices rose 8.1% in a week, but all the cuts were higher. The estimated weekly slaughter was 2.139 million head, up 2.7% from the same week in 2012.  Hog slaughter YTD (Year to Date) is now running 0.5% behind a year ago. Pork production YTD is down 1.1% because carcass weights continue to run 2 pounds lighter than last year at this time. USDA reported weekly pork export sales of 8,324 MT, down from 13,278 MT the previous week and 48,355 MT three weeks ago.

Market Watch

Cattle traders will start the week reacting to the fundamentally bearish USDA Cattle on Feed report from Friday. Both cattle and hog producers will need to at least glance at the Cold Storage report numbers on Monday afternoon, due to market expectations that the pork numbers in particular could be at near record levels. Grain folks will be interested in the export numbers from the Inspections report on Monday and the Weekly Sales report on Thursday. They will also look hard at the USDA Crop Progress report on Monday evening. That report is expected to show ongoing delays in corn and spring wheat planting vs. the average pace.  April feeder cattle futures expire on Thursday.  The May grain options will expire on Friday the 26^th.

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.  Visit our web site at https://www.bruglermarketing.com or call 402-697-3623 for more information on our consulting and advisory services for farm family enterprises and agribusinesses.

Copyright 2013 Brugler Marketing & Management, LLC