Aug 27, 2014
Home| Tools| Events| Blogs| Discussions| Sign UpLogin


October 2010 Archive for Market Watch

RSS By: Alan Brugler, AgWeb.com

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

More Bread

Oct 29, 2010

 

Market Watch with Alan Brugler
October 29, 2010
More Bread
 
Wheat futures took over the bull leader position. Maybe the cotton and corn and soybean bulls were just tired! Anyway, KC futures were up 7.2% for the week and the CBT and MGE markets were close behind. Weekly export sales were supportive, with over half being spring wheat. The rally got its legs when USDA reported the poorest initial crop condition rating for winter wheat since the early 1990’s. This reinforced fears that the dry weather seen all fall in the central U.S. is hurting stands and could limit yield potential in 2011. However, our analysis shows a very weak correlation between fall condition ratings and subsequent spring yields. The key yield development period is after the crop greens up in the spring.
 
Corn recovered from its lower weekly close a week earlier, posting a 3.93% gain and taking away any arguments of a developing downtrend. Harvest is winding down in many areas, so supply is fading as an issue and demand rationing is getting more attention. There is great industry debate about what USDA will show for U.S. average corn yield in the November crop report. Harvest is just now hitting some of the best corn (relative to average yields) in the country, which could limit downward adjustments. On the other hand, some traders believe that Iowa’s yield may be as much as 5 bushels below the most recent USDA estimate. Corn use for ethanol continues to be strong, with average daily production over the past month at an all time high. Despite ethanol futures prices that are above gasoline, ethanol use remains strong and so are ethanol exports. There are at least temporary signs of price rationing in the livestock sector and the export sector.
 
Soybeans added another 2.2% to their multi-week rally, with similar 2.06% and 2.07% gains in the meal and oil. Weekly export sales were very strong for the week ending October 21, at 2.026 MMT. That’s 74.4 million bushels. To meet USDA’s forecast for the year, China needs to buy 38.8 million bushels per week somewhere in the world. With cheap basis new crop supplies now available, the U.S. is the source of choice for the next few months.
 
Cotton again set new modern era highs during the week, peaking at 130.50 on Tuesday before succumbing to profit taking and some mill resistance to paying these breathtakingly high prices. USDA’s smallish weekly export sales number for the week ending October 21 suggested that some resistance is being seen to prices over $1 per pound. December cotton options also expire in a couple weeks, and the market is volatile enough to make traders nervous about being in there without options protection. On Thursday, USDA announced that the Average World Price or AWP set an all time high of 119.30.


 

 
Commodity
 
 
 
 
Weekly
Weekly
Month
10/08/10
10/15/10
10/22/10
10/29/10
Change
% Change
Dec
Corn
$5.28
$5.63
$5.60
$5.82
0.22
3.93%
Dec
CBOT Wheat
$7.19
$7.05
$6.71
$7.17
0.47
6.93%
Dec
KCBT Wheat
$7.59
$7.45
$7.19
$7.71
0.52
7.23%
Dec
MGEX Wheat
$7.65
$7.54
$7.28
$7.77
0.49
6.66%
Nov
Soybeans
$11.35
$11.85
$12.00
$12.26
0.27
2.21%
Dec
Soybean Meal
$316.20
$328.20
$330.90
$337.70
6.80
2.06%
Dec
Soybean Oil
$46.62
$47.77
$48.30
$49.30
1.00
2.07%
Dec
Live Cattle
$98.88
$100.13
$101.70
$98.83
2.88
2.83%
Nov
Feeder Cattle
$107.65
$109.38
$112.55
$110.33
2.22
1.98%
Dec
Lean Hogs
$73.85
$68.90
$70.65
$66.20
4.45
6.30%
Dec
Cotton
$107.17
$109.87
$119.71
$125.26
5.55
4.64%
Dec
Oats
$3.69
$3.70
$3.57
$3.68
0.11
3.08%
Nov
Rice
$13.25
$13.59
$14.24
$14.43
0.19
1.33%

 
Cattle futures dropped back to about where they were 3 weeks earlier. The net loss for the week was 2.83%. Cash cattle trade broke out early in the week at $100, about $2 weaker than the prior week. Boxed beef prices were actually up 1% for the week on a Thursday/Thursday basis, but the expiration of the October futures contract, fund rolling out of the December and other mechanical issues limited the ability of futures to rally.
 
Hogs were the largest losers for the week, down 6.3%. Seasonal pressure on prices has developed as the fall hog run has expanded. Average carcass weights have risen, whether due to favorable weather, better quality feed, or producer attention on grain harvest at the expense of prompt marketing. Coupling the largest weekly slaughter of the year with higher average weights created a surplus of pork that needed to be moved and a backlog of hogs and products sufficiently large for packers to take down bids in a big way. On a Thursday/Thursday basis, the pork carcass cutout value was down more than $3.00.
 
Market Watch: The calendar turned to November, and market attention for the grains turns to the November 9 USDA crop report and accompanying WASDE estimates. November soybeans and November rice are into the delivery process. There are no major USDA reports expected this week, just the usual Crop Progress and Export Inspections reports on Monday and the Weekly Export Sales report on Thursday morning. It should also be noted that the Fed Open Market Committee will meet on Tuesday and Wednesday. Tuesday is also, of course, Election Day in the United States. The issue will be whether the Democratic party retains control of the House, the Senate or neither. Direct market impacts are extremely difficult to foresee, due to the long term nature of the political process.
 
Looking for professional help with your agricultural marketing decisions? Consider subscribing to our daily Ag Marketing Professional service or Special Research Reports. Call our office for details at 402-697-3623, or visit www.bruglermarketing.com. Ask also about our Harvest Special subscription price for Ag Marketing Professional, good only for those subscribing between November 1 and November 15 and only for AgWeb Market Watch readers. You must mention the keyword “MW2010”.
 
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 2010 Brugler Marketing & Management, LLC

Cotton Leads the Bulls, Feed Grains Take a Break

Oct 22, 2010

brulogomed

Market Watch with Alan Brugler
October 22, 2010
Cotton Leads The Bulls, Feed Grains Take a Break
 
Cotton futures were limit up again on Friday, as a hail storm raked the Lubbock, TX area. More than 90% of the Texas cotton crop has bolls open, but only 26% had been harvested as of Sunday. That means a lot of the crop is vulnerable to severe weather, and with the welcome rains came some unwelcome wind and hail. Actually, the rains weren’t welcomed by cotton producers, but did prove beneficial for winter wheat and pasture. This was just the latest in a rash of limit moves in cotton. World stocks are tight and the market is sensitive to changes in production anywhere in the system. Combined upland and pima export sales bookings were over 600,000 running bales in the weekly export sales report from USDA, another expression of the buying interest. The U.S. already has export commitments for 71% of the projected exports for the year.
 
 Soybeans were up 15 cents per bushel for the week, 1.22%.  Huge export demand continues, with weekly sales in excess of 2 MMT for the USDA reporting week ending October 14. Rising Chinese crush demand accounts for most of the growth, helped along by a persistent discount of U.S. beans to domestic Chinese futures. Even with import tariffs, VAT and ocean freight, US beans are still cheaper than what Chinese futures are signaling for 2011. Accumulated soybean exports since September 1 are 79% larger than last year at this time. Soy oil and meal were also up for the week, supporting crush margins.
 
Corn was down .53% for the week, ending a string of impressive weekly gains. It is still up 94 cents for the month to date, with a week to go. The rally lost steam because of evidence that price rationing might be kicking in. The USDA weekly export sales report was a mere 212,500 MT. While commitments for the marketing year are 13% ahead of last year, the sales pace has slowed down dramatically from the post-Russian embargo period. Most of the end users who were caught short appear to have at least some coverage in place. Rapid harvest progress has also stuffed the cash grain channels with corn.
 
Wheat futures were down at all three exchanges again this week, as was the case last week. Again, a small short covering rally was seen on Friday. Wheat weekly export sales for the prior week were improved, at 574,000 MT vs. trade expectations for 400-600,000 MT. A much more aggressive pace is needed to meet USDA’s forecast for the year. A rain front crossing the Plains and Midwest is improving soil moisture conditions for 2011 crop winter wheat, which also weighed on the market.


 

 
Commodity
 
 
 
 
Weekly
Weekly
Month
10/01/10
10/08/10
10/15/10
10/22/10
Change
% Change
Dec
Corn
$4.66
$5.28
$5.63
$5.60
0.03
0.53%
Dec
CBOT Wheat
$6.55
$7.19
$7.05
$6.71
0.34
4.79%
Dec
KCBT Wheat
$6.90
$7.59
$7.45
$7.19
0.26
3.49%
Dec
MGEX Wheat
$7.06
$7.65
$7.54
$7.28
0.26
3.42%
Nov
Soybeans
$10.57
$11.35
$11.85
$12.00
0.15
1.22%
Dec
Soybean Meal
$289.90
$316.20
$328.20
$330.90
2.70
0.82%
Dec
Soybean Oil
$43.83
$46.62
$47.77
$48.30
0.53
1.11%
Oct
Live Cattle
$95.95
$95.55
$98.15
$102.20
4.05
4.13%
Oct
Feeder Cattle
$111.80
$107.72
$108.75
$111.20
2.45
2.25%
Dec
Lean Hogs
$72.88
$73.85
$68.90
$70.65
1.75
2.54%
Dec
Cotton
$98.02
$107.17
$109.87
$119.71
9.84
8.96%
Dec
Oats
$3.33
$3.69
$3.70
$3.57
0.13
3.58%
Nov
Rice
$12.37
$13.25
$13.59
$14.24
0.65
4.75%

 
Cattle futures gained a hefty 4.1% for the week. Cash cattle traded at $102.50, a $4-5 jump from the previous week. That buying came early in the week, with packers in a hurry for some cattle. Wholesale prices rose throughout the week. Carcass weights are running close to year ago, but weekly export sales were 27,500 MT and the strongest in several years. That takes beef out of the cooler which the domestic market was assuming it could have. On a Thursday/Thursday basis, choice boxed beef was up $7.37, or 4.81%. Friday afternoon’s USDA Cattle on Feed report showed just a few more head in the feedlots than expected. Placements during September were 103.1% of year ago. Marketings were 102%, leaving total numbers at 102.9% of last year.
 
Hogs recovered on Friday, with diminished competition from beef. Bottom picking or at least short covering fueled a triple digit gain in futures on Friday to ensure the black ink. On a Thursday/Thursday basis, the pork carcass cutout was down $4.49, a more than 5.5% loss.  Friday afternoon’s Cold Storage report showed frozen pork supplies were 20% smaller than last year, but had grown 10% during September.
 
Market Watch: As we come into month end, asset allocation shifts become a bigger part of the futures landscape. Big gainers will be tend to be sold, and big loses have of late been attracting more buying interest. November grain options expired on Friday, leaving a few folks with some surprise positions to be dealt with at the beginning of the week. The main USDA reports for the week are Export Inspections and Crop Progress on Monday, and Export Sales on Thursday. Census Crush is due out on Thursday morning, along with Census Cotton Consumption. Friday will also be first notice day for November soybean deliveries.
 
Looking for professional help with your agricultural marketing decisions? Consider subscribing to our daily Ag Marketing Professional service or Special Research Reports. Call our office for details at 402-697-3623, or visit www.bruglermarketing.com.
 
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 2010 Brugler Marketing & Management, LLC

Black Ink for Corn and Beans

Oct 15, 2010

 brulogomed

Market Watch and Nov Soybean Tech Talk
October 15, 2010
Black Ink for Corn and Beans
 
Soybeans were up 50 cents per bushel for the week, 4.41%.  Doing the math, they are up $1.28/bushel in the past two weeks. That’s a big move by anyone’s definition. USDA’s tighter ending stocks forecast of 265 million bushels for next August prompted a gap higher open, and November futures posted new highs for the calendar year on Monday, Wednesday and Friday. Weekly export sales for last week were within the range of trade estimates at 1.109 MMT. Brazilian soybean planting is underway, with Mato Grosso delayed a little while producers waiting on the end of the dry season. Parana has more planted because it has received favorable rains earlier.
 
Corn was up 6.6% for the week, tacking 35 cents onto the 63 cent gain from the previous week. Nearly all of that gain came on Monday as the market followed through on the bullish USDA ending stocks estimate of 902 million bushels issued the previous Friday. Harvest is progressing rapidly, with more that 51% of the crop in the bin or a pile as of last Monday. Weather has been excellent for rapid harvest progress over most of the Corn Belt this past week. USDA reported disappointing weekly export sales numbers on Friday, with the actual figure at only 1.18 MMT of combined 2010 and 2011 sales. Wire service reports showed analysts looking for 1.5 MMT or more.
 
Wheat futures were down at all three exchanges this past week, despite a small rally on Friday. Spread activity favored corn and soybeans against wheat for much of the week, looking for a traditional post harvest rally in corn and beans that would outstrip any wheat gains. A few of those positions were unwound on Friday, with legitimate questions about whether that spread would work normally given the contra-seasonal rally in the corn and beans coming into harvest. Wheat weekly export sales for the prior week were only 377,000 MT vs. trade expectations for 500,000 MT or more. A much more aggressive pace is needed to meet USDA’s forecast for the year.
 
Cotton futures posted new a new all time high price of 119.80 in electronic trading on Thursday night. An automatic trading halt kicked in on the options market on Thursday after prices were trading double limit up. The overnight market traded those levels, and then major profit taking kicked in. Prices were limit down on Friday. The net change for the week was +2.52%.  Chinese cotton prices continued to soar, with the government there issuing a warning about excessive speculation.
 

 
Commodity
 
 
 
 
Weekly
Weekly
Month
09/24/10
10/01/10
10/08/10
10/15/10
Change
% Change
Dec
Corn
$5.22
$4.66
$5.28
$5.63
0.35
6.58%
Dec
CBOT Wheat
$7.20
$6.55
$7.19
$7.05
0.15
2.05%
Dec
KCBT Wheat
$7.58
$6.90
$7.59
$7.45
0.14
1.78%
Dec
MGEX Wheat
$7.63
$7.06
$7.65
$7.54
0.11
1.37%
Nov
Soybeans
$11.26
$10.57
$11.35
$11.85
0.50
4.41%
Dec
Soybean Meal
$317.00
$289.90
$316.20
$328.20
12.00
3.80%
Dec
Soybean Oil
$44.89
$43.83
$46.62
$47.77
1.15
2.47%
Oct
Live Cattle
$96.02
$95.95
$95.55
$98.15
2.60
2.72%
Oct
Feeder Cattle
$109.50
$111.80
$107.72
$108.75
1.03
0.96%
Dec
Lean Hogs
$76.45
$72.88
$73.85
$68.90
4.95
6.70%
Dec
Cotton
$99.93
$98.02
$107.17
$109.87
2.70
2.52%
Dec
Oats
$3.52
$3.33
$3.69
$3.70
0.01
0.34%
Nov
Rice
$12.36
$12.37
$13.25
$13.59
0.34
2.57%

 
Cattle futures gained 2.7% for the week, with the bulk of the advance on Friday. Cash cattle trade was active on Thursday at $96-97.00, with a few trades at $97.50. Futures had been at $96 and had to rally to reflect the higher cash trade during the October contract delivery process. Estimated slaughter for the week (including Saturday) was projected at 659,000 head. That would be 30,000 head larger than the same week in 2009, but down 5,000 head from the previous week. This is consistent with Brugler Marketing work which shows ready numbers in October that are above year ago, but dropping as the month goes on. November numbers should drop below year ago levels based on in weights and excellent fall weather. Boxed beef prices were up 1.9%-2.1% for the week to reflect the reduced supply.
 
Hogs were the major loser for the week, down $4.95 or 6.7%. The pork carcass value slid 3% for the week, with the ham quote down almost 11% in 5 trading days. Pork bellies were also down.  The slide in product value put pressure on packer bids, with packers also suggesting that they were running close to capacity and didn’t need more hogs for the current week. The weaker US dollar may be helping export interest, but Census pork export data is still running two months behind.
 
Market Watch: The market goes back to a normal week this week, if such a thing is possible. USDA will give us the typical weekly crop progress and export inspections reports on Monday. Monthly Milk Production is on Tuesday afternoon. Weekly Export Sales are on Thursday morning. The major USDA reports for the week will be issued on Friday afternoon, with USDA’s Cold Storage and Cattle on Feed reports. Friday will also mark the expiration of the November grain options.  
 
Looking for professional help with your agricultural marketing decisions? Consider subscribing to our daily Ag Marketing Professional service or Special Research Reports. Call our office for details at 402-697-3623, or visit www.bruglermarketing.com.
 
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 2010 Brugler Marketing & Management, LLC

The Sky's The Limit

Oct 08, 2010

brulogomed

Market Watch and Tech Talk
October 8, 2010
The Sky’s The Limit
 
Forget the midweek action. Forget the big volume and volatile trading on Friday’s that we talked about last week. This week, the big moves were courtesy of the USDA Crop Production and WASDE reports on Friday morning. There was almost no volume and no volatility. You can’t have much trading volume or price volatility when prices lock limit up on the open and stay there all day.
 
 Soybeans were up 78 cents per bushel for the week, a jump of 7.38%. That was backed up by a nearly 11% rise in soybean meal, which in turn was chasing corn values. Soybean oil was up more than 6% while on the short end of meal/oil spreads. USDA surprised the trade by cutting projected yield to 44.4 bushels per acre from 44.7 in the previous report. The integration of FSA data into the NASS survey system also resulted in a cut of 1.2 million soybean acres. The resulting drop of 75 million bushels of production was coupled with a forecast for an all time record high export program off 1.52 billion bushels. That drove projected ending stocks down to 265 million bushels after the market had become semi-comfortable with 350 million bushels. Given the pace of global demand growth, the market continues to need to buy acreage.
 
Corn was up a huge 13% for the week, 63 cents per bushel. Nearly half of that was due to the limit up 30 cent move on Friday. USDA surprised the trade with a 12.664 billion bushel production estimate for the U.S., coming on a reduced yield forecast of only 155.8 bushels per acre. A number of Midwest states saw their average yields cut by 9 to 14 bushels per acre in one swoop. The extra 300 million bushels of old crop carryover was promptly erased and USDA projected ending stocks of only 902 million bushels for next August. That is at or below the theoretical pipeline requirement needed to cover grain in transit and in short term storage at end users like ethanol plants and livestock operations.  Futures will go to expanded daily limits of 45 cents, beginning with the Sunday evening Globex trade.
 
Wheat ended up outgaining corn for the week, but wheat fundamentals didn’t appear to be in the driver’s seat. World ending stocks remain adequate, at a projected 174.66 MMT. However, USDA did hike projected world feed use another 2.27 MMT for 2010/11, emphasizing the link between feed wheat and corn prices. There were also concerns about dryness in Western Australia cutting into final yields there, and also hindering winter wheat planting in the Plains. USDA made no wheat production change other than those shown on September 30. It did cut projected new crop ending stocks to 853 million bushels. The trade had been calling for 873 million.
 
Cotton futures posted 15 year highs again this week. Speculative ownership interest is high, and mills are also scrambling to get inventory. USDA cut projected world cotton ending stocks to 44.66 million bales from the prior estimate of 45.44 million. No change was made in the “already tight” US ending stocks of 2.70 million bales. A minor upward revision in yield to 841 pounds from 839 pounds was offset by smaller beginning stocks of 2.95 million bales. The mid-point of the cash average price estimate for the year was increased another 3 cents per pound.
 
 

 
Commodity
 
 
 
 
Weekly
Weekly
Month
09/17/10
09/24/10
10/01/10
10/08/10
Change
% Change
Dec
Corn
$5.13
$5.22
$4.66
$5.28
0.63
13.42%
Dec
CBOT Wheat
$7.39
$7.20
$6.55
$7.19
0.64
9.81%
Dec
KCBT Wheat
$7.68
$7.58
$6.90
$7.59
0.69
9.97%
Dec
MGEX Wheat
$7.73
$7.63
$7.06
$7.65
0.59
8.29%
Nov
Soybeans
$10.69
$11.26
$10.57
$11.35
0.78
7.38%
Oct
Soybean Meal
$304.70
$313.20
$285.70
$317.00
31.30
10.96%
Oct
Soybean Oil
$41.91
$44.48
$43.49
$46.22
2.73
6.28%
Oct
Live Cattle
$99.40
$96.02
$95.95
$95.55
0.40
0.42%
Oct
Feeder Cattle
$111.85
$109.50
$111.80
$107.72
4.08
3.65%
Oct
Lean Hogs
$77.70
$79.02
$76.37
$74.52
1.85
2.42%
Dec
Cotton
$98.22
$99.93
$98.02
$107.17
9.15
9.33%
Dec
Oats
$3.56
$3.52
$3.33
$3.69
0.36
10.73%
Nov
Rice
$12.08
$12.36
$12.37
$13.25
0.88
7.11%

 
Cattle futures drifted .42% lower for the week, or 40 cents. Cash cattle traded at $95, down mostly $2 from the previous week. Wholesale prices were under pressure, losing 1.75%  on a Thursday/Thursday basis in the choice cutouts. Select was down 1.88%. Those drops translate to more than $2 per hundred pounds, and that put the cash cattle market on the defensive. USDA also raised projected 2010 beef production in the U.S. to 25.83 billion pounds in 2010. That was 125 million pounds more than the September figure.  Beef production YTD has been creeping up relative to last year, and is now at 99.8% of year ago.
 
Hogs were down for the week, losing 2.42%. On Friday morning, USDA reduced projected 2010 pork production by 65 million pounds, and also cut the outlook for 2011 by 165 million pounds. Pork production for the year to date is down 4.6% from last year, which had been supporting pork prices. However, the pork belly primal has plunged 47% in only 5 days (Thr-Thr) and that is putting serious pressure on what packers can pay for the hog. The cutout was down 8.9% for the week.
 
Looking for professional help with your agricultural marketing decisions? Consider subscribing to our daily Ag Marketing Professional service or Special Research Reports. Call our office for details at 402-697-3623, or visit www.bruglermarketing.com.
 
Market Watch:  Monday is a government holiday, but not a market holiday (Columbus Day in the U.S., Thanksgiving in Canada).  The regular Monday USDA reports will be delayed until Tuesday. NOPA will issue its September crush report on Thursday morning. Thursday will also be the last trading day for October hog futures, soybean meal and soybean oil. The weekly Export Sales report from USDA will be delayed until Friday.

Meltdown

Oct 01, 2010

 brulogomed

Market Watch and Tech Talk
October 1, 2010
Meltdown
 
As we said last week, forget the midweek action. Lately we’ve been seeing big volume and volatile trading on Friday’s. This week, it was a massive rush for the exits, with fund liquidation selling across a wide variety of commodity markets. The dollar index, which has been supportive for commodities, was still weak but it didn’t matter. As it was the first day of the new calendar quarter, the sell off can’t be dismissed as random. Somebody decided it was time to take some money out of their commodity investments, probably to put it back into equities.
 
Soybeans were more than 50 cents per bushel lower at one point on Friday, and settled 69 cents lower for the week. That was a 6.13% drop. Speculative liquidation was a major feature, with weakness in the products spiraling into the beans and vice versa. Chinese traders are on yet another government mandated week long holiday. Futures at Dalian won’t resume trading until October 7. A Memphis consulting firm put their crop projection at 3.42 billion bushels on a 44.7 bpa predicted U.S. average yield. USDA will release its updated estimate on Friday. The USDA soybean ending stocks were not a surprise, at 151 million bushels. Export sales continue to be excellent, with the weekly total at 1,737,600 MTs.
 
Corn was limit down on Friday. USDA provided the fuel for the initial break on Thursday, hiking old crop ending stocks by 322 million bushels from their September WASDE estimate in the September 30 Grain Stocks report. This is the final old crop number, and results in 322 million bushels being rolled forward into new crop as additional beginning stocks. Weekly export sales were also disappointing, showing the effects of price rationing.  For the week, prices were down a whopping 10.73%, winning the dubious prize for the worst performing ag commodity this week. A Memphis firm is predicting that USDA will cut the national average yield to 160.3 bushels on Friday. In the bearish environment we had on Friday that drop was seen as bearish because it resulted in a crop size projection that still had a “13” in front of it.
 
Wheat was in hot pursuit of corn as it ran down hill. Chicago futures were down 9.03% for the week. MPLS and KC were comparatively stronger with losses of 7.4% and 8.94% respectively. The futures rally failed to reach the August high, and failed to close chart gaps under that high. Technically, this is a failure and an invitation to try the short side. Fundamentally, USDA cut the 2010 U.S. wheat production estimate from the prior number, but showed larger than expected September 1 stocks of 2.458 billion bushels. That is the largest pile of wheat for that date since the mid-1980’s and the CCC loan and Reserve programs.  
 
Cotton futures posted 15 year highs on front month contracts during the week, and then sold off sharply. They were down 133 points for the week, which is pretty remarkable when there were two days with losses of more than 400 points included in that week. Weekly Export Sales were stronger than expected by the trade, fueling a Thursday rally.  USDA computed the average world price for cotton at 95.77 cents per pound. Because of that, a special cotton import quota (shipments INTO the U.S.) was once again opened under the Farm Bill provisions, for 69,377 bales.
 
Hogs were down $2.65 this week, a loss of 3.35%. Pork cutout values dropped, and cash hogs were right with them. Pork bellies reported under the voluntary system dropped $15.69/cwt. for the week. Carcass value was down 3.19% for the week on a Friday/Friday basis as the other cuts were not able to offset that lower reported bacon value. Pork production for the year to date is down 4.7%. Production for the week ending October 1 was 6.9% smaller than the same week in 2009, which in principle should be supportive to cutout values. Demand of course, is the other variable besides supply.
 
Below is a table showing the net weekly changes and 4 week history of selected agricultural futures:
 

 

 
Commodity
 
 
 
 
Weekly
Weekly
Month
09/10/10
09/17/10
09/24/10
10/01/10
Change
% Change
Dec
Corn
$4.78
$5.13
$5.22
$4.66
0.56
10.73%
Dec
CBOT Wheat
$7.37
$7.39
$7.20
$6.55
0.65
9.03%
Dec
KCBT Wheat
$7.59
$7.68
$7.58
$6.90
0.68
8.94%
Dec
MGEX Wheat
$7.57
$7.73
$7.63
$7.06
0.57
7.41%
Nov
Soybeans
$10.31
$10.69
$11.26
$10.57
0.69
6.13%
Oct
Soybean Meal
$291.25
$304.70
$313.20
$285.70
27.50
8.78%
Oct
Soybean Oil
$41.36
$41.91
$44.48
$43.49
0.99
2.23%
Oct
Live Cattle
$97.15
$99.40
$96.02
$95.95
0.07
0.07%
Oct
Feeder Cattle
$111.83
$111.85
$109.50
$111.80
2.30
2.10%
Oct
Lean Hogs
$77.25
$77.70
$79.02
$76.37
2.65
3.35%
Oct
Cotton
$90.87
$97.61
$101.30
$99.97
1.33
1.31%
Dec
Oats
$3.24
$3.56
$3.52
$3.33
0.19
5.33%
Nov
Rice
$11.79
$12.08
$12.36
$12.37
0.01
0.08%

 

 
Cattle futures were pressured by sliding wholesale beef demand. The cutout was down $3.24/hundred in the Choice on a Friday/Friday basis.  Estimated beef production for the week was down 0.9%. Production is down 0.3% for the year to date, a very modest drop. With beef exports up and imports down, the supply available to the consumer is a little tighter than the production number would indicate.  Estimated carcass weight is running about 20# per head lower than last year, but appears to be creeping up with milder fall weather. The large drop in feed costs this week should also eventually result in a little heavier cattle if it is a trend reversal and not just a corrective washout.
 
Looking for professional help with your agricultural marketing decisions? Consider subscribing to our daily Ag Marketing Professional service or Special Research Reports. Call our office for details at 402-697-3623, or visit www.bruglermarketing.com.
 
Market Watch:  The cattle market will start the week adjusting to any surprise positions inherited when the October options expired on Friday. Grain traders will be focused on the weekly crop condition ratings, since USDA will be out on Friday with its updated yield forecast as of October 1. The main grain reports for the week are on October 8, with USDA Crop Production and updated WASDE supply/demand estimates. While USDA” inkled” some of the numbers via the Grain Stocks and Small Grains reports, the yield and even the acreage estimates are up for grabs. Expect more volatility. October cotton futures will expire on Thursday, but that should be pretty much a non-issue because the open interest migrated to the December some time ago.
 
 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 2010 Brugler Marketing & Management, LLC
Log In or Sign Up to comment

COMMENTS

Hot Links & Cool Tools

    •  
    •  
    •  
    •  
    •  
    •  

facebook twitter youtube View More>>
 
 
 
 
The Home Page of Agriculture
© 2014 Farm Journal, Inc. All Rights Reserved|Web site design and development by AmericanEagle.com|Site Map|Privacy Policy|Terms & Conditions