Jul 13, 2014
Home| Tools| Events| Blogs| Discussions| Sign UpLogin


December 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.

All Time Highs

Dec 31, 2010

 

brulogomed
 
Market Watch with Alan Brugler
December 31, 2010
All Time Highs
 
Agricultural producers will hate to see 2010 leave. It was a year that saw new all time high prices paid for cotton and cattle, and saw grain prices rallying back toward 2008 highs that some had assumed would not be seen again in their lifetime. If you were an end user, and a hedger, you made great money. If you didn’t use price risk management tools you saw margins shrink as your input costs went up faster than your selling prices. USDA does see farm income (which is a composite of grain and livestock and other products) up sharply for the year.
 
How did things compare to other investment alternatives? As of midday on Friday, General Electric stock was up 18.4% for the year using the first trade of the year as the base. Citigroup bank stock was up 41.2%. Not too shabby! However, the CORN exchange traded fund was up 52% from its inception in June, and front month corn futures were up 48.5% for the year as a whole. From the June low they were up more than $3 per bushel. Cotton was up ~91.7% for the year (not settled yet on Friday). Tech stocks like Intel saw almost zero gain for the year.
 
The soybean complex was up again, with nearby bean futures up another 44 cents for the week, a 3.28% gain. Meal and oil futures were each up more than 2% as well to support the bean value. There are a number of variables at work in soybeans, including expanding biodiesel use requirements in South America, Indonesia and the U.S., coupled with concerns about dryness in Argentina during planting and real concerns about getting adequate acreage in 2011. Speculative and investment money continues to flow into the complex to get a piece of the action. Price does make an excellent fertilizer, with the Buenos Aires exchange estimating that the sunflower crop in Argentina will be more than 25% larger this year.
 
Corn prices were up 2.44% for the week, posting the highest front month close since July 2008. The pace of ethanol use continues at a 5 billion bushel clip. That means DDG production is also at record levels and helping to offset the tightening corn supplies to a degree. The USDA Hogs & Pigs report on Monday confirmed a slowdown in farrowing intentions for 2011 that could nick corn feed use. Feeder cattle numbers are also down, and broiler egg sets are slowing on a year/year comparison. The biggest question is whether corn export sales will slow down as South American supplies become available in April and May. Argentine corn planting is about 85% done. Early growth is being affected by high temps and spotty rainfall there, but the crop isn’t far enough along to see pollination issues.
 
Wheat futures edged higher at all three exchanges. MPLS was up the most at 1.53% for the week and up 50 cents per bushel in three weeks. The B.A. Exchange raised projected Argentine wheat production to 14.5 MMT. Wheat harvest in Australia is about 75% done. Australian wheat production is estimated by a private firm at 24.4 MMT due to weather losses. The official ABARE forecast is still above 26 MMT. The actual USDA weekly export sales number for the week was 438,500 MT, below the low end of expectations.
 
Cattle futures set new all time highs on Friday, with December expiring at $107.90. Front month futures were up 3.75% for the week. The high for the April 2012 futures was $113.80! Wholesale prices jumped sharply, with Choice boxes up 2.69% on a Thursday/Thursday basis. Select beef was up almost 3%. Some of the strength is coming from the beef export business. USDA reported weekly sales of 17,700 MT in the most recent report. That’s 3,000 to 5,000 MT more than in most recent weeks.
 
Here are the Friday night closes for the past four weeks, along with the net change for this week vs. the previous week:
 

 

Commodity
 
 
 
 
Weekly
Weekly
12/10/10
12/17/10
12/23/10
12/31/10
Change
% Change
Corn
$5.74
$5.97
$6.14
$6.29
0.15
2.44%
CBOT Wheat
$7.76
$7.57
$7.83
$7.94
0.11
1.44%
KCBT Wheat
$8.22
$8.12
$8.45
$8.51
0.06
0.71%
MGEX Wheat
$8.32
$8.12
$8.68
$8.82
0.13
1.53%
Soybeans
$12.73
$12.99
$13.50
$13.94
0.44
3.28%
Soybean Meal
$339.10
$347.80
$360.00
$370.30
10.30
2.86%
Soybean Oil
$53.79
$54.13
$56.59
$57.74
1.15
2.03%
Live Cattle
$100.95
$102.18
$104.00
$107.90
3.90
3.75%
Feeder Cattle
$118.18
$119.03
$121.45
$121.88
0.42
0.35%
Lean Hogs
$75.15
$75.95
$78.73
$79.75
1.03
1.30%
Cotton
$136.97
$150.12
$148.12
 
148.12
100.00%
Oats
$3.85
$3.87
$3.94
$3.94
0.00
0.13%
Rice
$13.93
$13.70
$13.40
$14.00
0.60
4.48%

 

 
Hogs rallied 1.3% for the week, as cash hog prices in the Midwest surged more than $4 at midweek. The pork cutout value was down 4 cents for the week, on a Thursday/Thursday basis. Loins and bellies were firmer for the week, but the other primal cuts were under pressure.  Heavy snow interfered with hog movement, and multiple holidays interfered with line schedules to process those hogs.
 
Cotton futures were down 331 points for the week, the sole loser in the table. That was in the front month futures. December 2011, on the other hand, posted new life of contract highs of $101.20 on Friday in an attempt to hold onto an expected expansion in US plantings for 2011. Weekly export sales were over 277,700 running bales. The surprise was that China wasn’t buying much. Mills there report that they need to obtain access to new export quotas expected to be announced in January.
 
Market Watch:  A few markets will be closed on Monday, including the UK and China’s Dalian futures exchange. US markets will have normal hours, as the New Year’s holiday fell on a Saturday. January futures are in deliveries now, with substantial numbers put out vs. soy oil on FND. This week has a fairly quiet USDA news line up, mostly routine reports like Export Inspections and Export Sales. It will be the calm before the storm, with a raft of USDA reports to be released on January 12.
 
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

Big Stories of 2010

Dec 30, 2010

 

brulogomed

There are a raft of year end stories in circulation, focused on the percentage gains for commodities like cotton during the year, and/or the likely asset allocation adjustments driven by those gains in 2011. While we are very willing to acknowledge that markets are mean reverting in the long term, prices tending to return to their average, the market can remain illogical for far longer than you can remain solvent. Things will change.

So what can change in 2011? Here are a few thoughts:

1) Inflation picks up. Commodity prices rise because the global economy is improving and creating more demand for a relatively finite supply of goods. It takes a couple years to ramp up beef production, and the precious and industrial metals are similar.

2) Interest rates rise. Loan demand typically picks up as the economy improves. Throw inflation on top of it and interest rates will tend to rise. Particularly in the long end. Fed easing via the QE2 program is a wildcard, but thus far hasn't had much effect in dropping rates.

3) The US dollar reverses and heads lower. The mammoth federal deficits and a negative balance of trade will tend to weigh on the dollar over time. For now, it is firmer because in the land of the blind the one eyed man is king.

4) Global soybean demand slows down. The huge expansion of Chinese crush demand was one of the major stories for 2010, as a recovery in their hog numbers and rising food prices in general fueled heavy crush activity. China grows only about 16 MMT of beans per year, and imported 54 MMT or so in 2010 to supplement them.  However, those on fixed incomes can't keep up in an inflationary environment and that creates social problems. China is actively trying to slow down domestic demand and prices. Fixed prices on vegetable oils are squeezing crush margins, and there are reports of imported beans being dumped into the market at a loss because it is not economic to crush them. Most of the "tight" scenarios for global plantings in 2011 assume that Chinese import demand continues to grow. If it does not, beans could give up some needed acreage to other crops.

5) La Nina lingers. The La Nina weather pattern has hurt Australian wheat production, and is threatening yields in the recently planted Argentine corn and soybean crops. The pattern is expected to weaken by summer, but dryness in the southern US is typically extended into March or April in La Nina years. That could aggravate the current drought conditions. The risk is that the drought expands or migrates into the main Corn Belt growing areas during the summer.

6) Spec fund and index fund investments shift. As was the case in 2007 and 2008, rising commitments to the commodity markets are boosting prices as they swamp the commercial sellers.  If they funds stay put, or add to positions, a return to 2008 type grain prices is a possibility. On the other hand, if equity markets become more attractive (they typically gain in the 3rd year of a presidential term) they may siphon money away from commodities and starve the markets. CFTC is also preparing to implement position limits, with unpredictable effects on prices.

There are other things that could effect the markets, and it is the one you don't see coming that can kill you. These are just a few of the themes we have been watching, and will continue to watch as the calendar turns to 2011.

 

Across the Board

Dec 23, 2010

 

brulogomed

Market Watch

December 23, 2010

Across the Board

Ag commodities were up across the board this week with only a few that were lower. Energies were higher and stock market indices finished higher for the week as well. Soybeans, soymeal and soyoil were pushing the cart today with corn following suit and the rest of the ag sector not doing much aside from cotton which tanked to limit down on the front month.

 The soybean complex was up 3.91% for the week.  Meal was up 3.51% for the week, and soy oil was up 4.54% after the green light from the passing of last week’s tax bill. The bureau of meteorology stated that the La Niña pattern has peaked out and there will be a gradual return to more normal precipitation. Weather concerns in Argentina earlier in the week boosted soybeans and that rally continued through the week with extreme estimates of revisions lower in Argentine production. Export sales were much better than last week at 827,810 MT and in line with trade estimates. The November U.S. Census Bureau oil mill reported the soybean crush at 154,993,717 bushels yielding 11.43 lbs of oil per bushel at 1.771 billion pounds which was in line with estimates.

Corn prices were up 2.93%, the highest intraday close since July 2008 on the continuous front month futures chart. That was just a few weeks after the $7.65 lifetime high in June of 2008. Prices closed solidly above the 61.8 Fibonacci level on the weekly continuation chart.  Corn strength is fueled literally by demand for ethanol and DDGS.  Poor quality wheat in Australia could compete as feed against DDGS to China. Total DDGS exports are expected to reach 9 MMT in 2010. Ethanol stocks built up slightly in the most recent reporting week, but the corn grind continues at a 4.9-5.0 billion bushel annual pace. Feed and export use are likely slowing at the margin, but feed use is a residual number and USDA will have a better handle on it after it sees all of the Grain Stocks numbers. Corn exports as of December 16th were 18 percent above the previous four week average.

Wheat futures shone bright against the other grains closing 3.47%, 4.10% and 6.96% higher on the CBOT, KCBT and MGEX for the week. Wheat finished mixed the last trading day of the week on less than expected export sales. Sales for 2010/11 and 2011/12 were a combined total of 597,011 MT. Global demand is good with several announcements during the week for tenders or sales. Private exporters announced the sale of 100,000 MT of HRW wheat to Iraq this morning. World wheat feeding is expected to top 2009/10 by nearly 7.4 MMT in 2010/11 and stock draw down is expected to exceed buildup with global crop problems already an issue for 2011/12.

Cattle futures were up 1.79% for the week, adding on to last weeks gains. The CME feeder cattle index is at its highest level in 4 years as the demand for cattle and lower supplies has pulled slaughter ahead, speeding up the cycle and thus creating more demand for feeder cattle. Feeder cattle were up another 2.04%. Choice boxed beef was $2.23 or 1.38% lower from Thursday to Thursday and Select was $.33 or .22% higher. Cash cattle in TX/OK and KS mostly sold for $104 yesterday. NE cattle sold for mostly $103 in the live and $161 to $164 in the dressed. Beef export demand has been strong with buyers shifting to the New Year. Export sales for 2010 were a negative 7,800 MT as an adjustment and export sales for 2011 were 10,400 MT, netting out to a small sum.

Here are the Thursday night closes for this holiday week and the Friday night closes for the previous three weeks, along with the net change for this week vs. the previous week:

 

Commodity

 

 

 

 

Weekly

Weekly

Month

12/03/10

12/10/10

12/17/10

12/23/10

Change

% Change

Mar

Corn

$5.74

$5.74

$5.97

$6.14

0.18

2.93%

Mar

CBOT Wheat

$7.79

$7.76

$7.57

$7.83

0.26

3.47%

Mar

KCBT Wheat

$8.12

$8.22

$8.12

$8.45

0.33

4.10%

Mar

MGEX Wheat

$8.22

$8.32

$8.12

$8.68

0.57

6.96%

Jan

Soybeans

$13.00

$12.73

$12.99

$13.50

0.51

3.91%

Jan

Soybean Meal

$350.10

$339.10

$347.80

$360.00

12.20

3.51%

Jan

Soybean Oil

$53.08

$53.79

$54.13

$56.59

2.46

4.54%

Dec

Live Cattle

$103.18

$100.95

$102.18

$104.00

1.83

1.79%

Jan

Feeder Cattle

$118.68

$118.18

$119.03

$121.45

2.43

2.04%

Feb

Lean Hogs

$76.58

$75.15

$75.95

$78.73

2.77

3.65%

Mar

Cotton

$132.34

$136.97

$150.12

$148.12

2.00

1.33%

Mar

Oats

$3.67

$3.85

$3.87

$3.94

0.07

1.81%

Jan

Rice

$14.67

$13.93

$13.70

$13.40

0.30

2.19%

Hogs had a 3.65% gain for the week. The pork carcass cutout value was up $.43 on Thursday. On a Thursday/Thursday basis, the carcass price was down 2.08%. The monthly cold storage report showed total pork in storage at 469,421,000 pounds as of November 30th, down 2.6 from a month ago and 2.8 percent from a year ago. Pork in storage as of the same date in 2009 was 482,816,000 pounds. Cash hogs were higher today with the ECB up $2.19.

Cotton futures were 1.33% lower for the week on exhaustion. Cotton closed limit down today on the front month with Dec ’11 actually making slight gains. Cotton has been limit up or down for most of the sessions lately making it a tricky market to participate in because there are limited opportunities to get in or out. Cotton actually went positive earlier in the day. Options trade was halted again today on account of double limit trade on a synthetic basis. India announced earlier in the week they are going to allow the estimated unshipped 2.5 million bales to be exported even though they were not in the original deadline. Export sales came in today at a healthy combined old and new crop sum of 405,400 RB.

Market Watch:  The quarterly Hog and Pig report will be out Monday at 2 P.M. Central time. Analysts average estimate for December 1 All Hogs is 99.4 per cent, Kept for Breeding is 99.2 percent and Kept for Marketing is 99.4%. The other usual reports will come out next week with some reports out Monday that were postponed like the CFTC disaggregated futures and options report as well as the meat production report.

LoThere 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

BioFuels Boost

Dec 17, 2010

 brulogomed

Market Watch with Alan Brugler
December 17, 2010
Biofuels Boost
 
The grain markets saw a double boost this week. First, the extension of the Bush era tax cuts was enacted into law on Friday. That bill included both an extension of the current ethanol blend credits and restoration of the expired blend credit for biodiesel made from virgin vegetable oils. Those credits will allow the industry to produce the full RFS2 mandated quantities of ethanol and biodiesel. The second boost came from a private consulting firm that on Friday lowered its projected 2011 corn acreage to 90.755 million based on farmer surveys. Their soybean acreage was also only 77.565 million acres and seen as less than current demand would suggest is needed.
 
The soybean complex was up 26 cents for the week. Meal was up 2.6% for the week, and soy oil was up 0.63%. The bean oil rally was somewhat muted, given the passage (and Friday signing) of the tax cut extension bill which included resumption of the biodiesel blend credit for 2010 and 2011. That won’t do much if anything to boost 2010 production, but should boost 2011 soy oil use for biodiesel as it puts margins back in the black by 50-60 cents for most plants. The problem is that a lot of them are in mothballs and need to call back employees, book contracts, and do other things to restart. As the plants start up, it should reduce prices for diesel fuel, or at least hold down price increases by creating additional supplies of fuel. Soybean gains were held back by a drop in soybean weekly export sales reported by USDA and concerns that Chinese demand might be slowing due to the government efforts to slow food price inflation.
 
Corn prices were up 3.87%, posting the highest close since August 2008 on the continuous front month futures chart. Still, that makes the 4th week in a row with a higher close.  The acreage battle of 2011 is still brewing, and the old crop situation still looks tight. Ethanol stocks built up slightly in the most recent reporting week, but the corn grind continues at a 4.9-5.0 billion bushel annual pace. Feed and export use are likely slowing at the margin, but feed use is a residual number and USDA will have a better handle on it after it sees all of the Grain Stocks numbers.  
 
Wheat futures were lower at all three exchanges this past week. Much of the selling pressure came on unwinding of wheat/corn spreads. Egypt bought US wheat, as did Jordan, but the price had also risen to the highest level since 2008. The market was perhaps due for a pull back. Australia got a break in the weather and began seeing larger volumes of wheat arriving at the elevators.
 
Cattle futures were up 1.2% for the week, offsetting the 2.16% they dropped a week earlier. Estimated beef production for the week slowed by 2.2% from the previous week, but was 5.6% larger than the same week a year ago. Beef production YTD is up 0.9% for the year. Friday’s Cattle on Feed report showed November placements were 106.2% of last year, and marketings were 108.5% of last November. The net result was December 1 numbers on feed that were 102.9% of last year.
 

 

 
Commodity
 
 
 
 
Weekly
Weekly
Month
11/26/10
12/03/10
12/10/10
12/17/10
Change
% Change
Mar
Corn
$5.53
$5.74
$5.74
$5.97
0.22
3.87%
Mar
CBOT Wheat
$6.87
$7.79
$7.76
$7.57
0.19
2.42%
Mar
KCBT Wheat
$7.21
$8.12
$8.22
$8.12
0.11
1.28%
Mar
MGEX Wheat
$7.37
$8.22
$8.32
$8.12
0.20
2.43%
Jan
Soybeans
$12.39
$13.00
$12.73
$12.99
0.26
2.02%
Jan
Soybean Meal
$336.80
$350.10
$339.10
$347.80
8.70
2.57%
Jan
Soybean Oil
$49.90
$53.08
$53.79
$54.13
0.34
0.63%
Dec
Live Cattle
$102.23
$103.18
$100.95
$102.18
1.22
1.21%
Jan
Feeder Cattle
$118.75
$118.68
$118.18
$119.03
0.85
0.72%
Feb
Lean Hogs
$77.15
$76.58
$75.15
$75.95
0.80
1.06%
Mar
Cotton
$111.76
$132.34
$136.97
$150.12
13.15
9.60%
Mar
Oats
$3.56
$3.67
$3.85
$3.87
0.02
0.39%
Jan
Rice
$13.41
$14.67
$13.93
$13.70
0.23
1.65%

 

 
Hogs had a 1.06% gain for the week, as February became the lead contract. The pork carcass cutout value was down 85 cents on Friday, giving back much of what it had gained on Thursday. Estimated pork production for the week was up 4.7% for the week, but still down 3.1% for the year. On a Thursday/Thursday basis, pork prices were up 1%.
 
Cotton futures continued to rally and were up another 9.6% for the week to lead all of the agricultural markets. They are also the biggest % gainer for the year, with two weeks to go. Weekly export sales are showing some signs of slowing down, due no doubt to the higher world prices. Chinese futures have also backed off from their November highs due to the anti-inflation efforts of the Chinese government. Chinese yarn production has still been larger than in 2009, however, using more cotton.
 
Market Watch:  Trading volume is thin, which can make for erratic price moves. It will become even thinner as vacations kick in and traders extend the Christmas break. The market is closed on Friday to begin the Christmas holiday weekend. Thursday is expected to feature Census Crush and Cotton Consumption reports, as well as USDA Weekly Export Sales. Thursday will also be the last trading day for January options on grains, oilseeds and interest rate instruments. Cattle traders will begin the week reacting to the Cattle on Feed report.  Meat traders will also get to chew on the USDA Cold Storage report, scheduled to be released on Wednesday 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. Call 402-697-3623 for information on our individualized subscription and consulting services such as Ag Marketing Professional and Special Research Reports.
 
 Copyright 2010 Brugler Marketing & Management, LLC
 
 

Limited Reaction

Dec 10, 2010

 brulogomed

 
Market Watch with Alan Brugler
December 10, 2010
Limited Reaction
 
USDA released its monthly WASDE estimates on Friday morning. Unless several recent reports, these generated little market reaction. That’s mostly because USDA made few changes in the domestic estimates, and most of the numbers were close to the pre-report expectations circulating in the trade.
 
The soybean complex was mixed for the week. Soybeans and soybean meal were lower on the week, while soy oil gained ground. Weekly export inspections and export sales of soybeans were both slower, and the US dollar was firmer. Those put a wet blanket on bullish bean expectations. Speaking of wet blankets, China was also expected to take additional banking steps to slow down inflation of commodity prices over the weekend. USDA raised projected US export sales by another 20 million bushels, due mostly to the aggressive pace of Chinese buying, and cut the expected August carryover to 165 million bushels. That’s just barely above the 151 million bushels from the previous year.
 
Corn prices were just barely positive for the week, up 0.22%. Still, that makes the 3rd week in a row with a higher close.  The acreage battle of 2011 is still simmering, and the old crop situation still looks tight. On Friday morning, USDA raised projected corn ending stocks by 5 million bushels, due to additional imports from Canada. They almost never change the feed & residual category in December, preferring to wait for the Grain Stocks report. This year was no exception. Ethanol and exports were also left at previously predicted levels.  
 
Wheat futures posted double digit gains for the week in MPLS and KC, but Chicago futures ended the week 2 cents lower after posting the biggest percentage gain in the prior week. Egypt bought Argentine and French wheat this week, but none from the U.S. Continued wet weather played havoc with the mature Australian wheat crop and threatened to turn several million tonnes of the production there into feed quality wheat rather than export quality milling wheat.  That’s the reason for the firmness in the KC and MPLS markets. The world needs the more expensive milling quality wheat. USDA did boost their projection for U.S. ending stocks by 10 million bushels due to higher flour extraction rates. The world ending stocks were also increased due to higher production estimates for Australia, Canada, Brazil and others.
 
Cattle futures dropped 2.16% for the week. Feedlots started the week with high expectations, and asking prices around $105-106. However, the wholesale market did a round trip. Boxed beef was up, and then came back down by the end of the week. Choice boxes were only 7 cents higher on Thursday night than they had been the previous Thursday. With the fading beef prices as leverage, cash cattle traded at only $101. That left futures too high during December deliveries, and the market pulled back. Weekly beef export sales were also smaller than in recent weeks, raising concerns about where demand was going to come from as marketings pick up in December.
 

 
Commodity
 
 
 
 
Weekly
Weekly
Month
11/19/10
11/26/10
12/03/10
12/10/10
Change
% Change
Dec
Corn
$5.21
$5.38
$5.59
$5.60
0.01
0.22%
Dec
CBOT Wheat
$6.45
$6.48
$7.38
$7.36
0.02
0.34%
Dec
KCBT Wheat
$7.10
$7.21
$8.12
$8.22
0.11
1.29%
Dec
MGEX Wheat
$7.26
$7.34
$8.17
$8.54
0.37
4.53%
Jan
Soybeans
$12.02
$12.39
$13.00
$12.73
0.27
2.10%
Dec
Soybean Meal
$325.80
$336.80
$350.10
$339.10
11.00
3.14%
Dec
Soybean Oil
$48.96
$49.90
$53.08
$53.79
0.71
1.34%
Dec
Live Cattle
$101.45
$102.23
$103.18
$100.95
2.22
2.16%
Jan
Feeder Cattle
$117.40
$118.75
$118.68
$118.18
0.50
0.42%
Dec
Lean Hogs
$69.13
$70.35
$69.28
$69.45
0.17
0.25%
Mar
Cotton
$123.15
$112.11
$132.34
$136.97
4.63
3.50%
Dec
Oats
$3.53
$3.44
$3.67
$4.00
0.33
8.99%
Jan
Rice
$13.90
$13.41
$14.67
$13.93
0.74
5.08%

  
Hogs managed a 17 cent gain for the week.  The pork cutout value was up a modest 64 cents for the week, about 0.82%. Hog futures were up 0.25%. Futures were still maintaining a premium to the CME Lean Hog Index, but need to sync up with the index because December expires this week and is settled against the index. That convergence kept a lid on the Dec futures. Estimated pork production for the week was down 3.1% from the previous week, but up 3.5% from the same week in 2009. Pork production for the year to date is down 3.1%.
 
Cotton futures continued their comeback rally. They were up another 3.5% for the week, and posted the highest front month contract settlement since the November USDA report. Prices were trying to do the limit move thing when USDA put out their WASDE numbers on Friday, but the market faded into the close and settled only 1.02 cents higher in the key March contract. USDA trimmed US production by 150,000 bales, and also added 100,000 to domestic mill use. After a residual use adjustment, that took projected ending stocks down to a squeaky tight 1.9 million bales from the prior estimate of 2.2 million. World stocks were increased slightly to 43.39 million bales.
 

Market Watch:  The USDA reports on Friday generated little market reaction. The main reports for this week are the routine Export Inspections on Monday, Export Sales on Thursday, and the Cattle on Feed report on Friday afternoon. NOPA will issue its monthly soybean crush estimate on Tuesday morning. Tuesday will also be the last trading day for December grain futures.

 
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
 

 

Violent Reactions

Dec 03, 2010

 brulogomed

Market Watch with Alan Brugler
December 3, 2010
Violent Reactions
 
The soybean complex was up sharply, despite the well advertised Chinese efforts to slow down economic growth and food prices. China continues to buy U.S. soybeans at a brisk clip, and has inked a deal to buy at least 5.5 MMT more. They bought 1.484 MMT in the most recent reporting week, including 456,000 MT of switches originally sold to other destinations. Soy oil was the big story in the complex, up 6.37% for the year. The highest crude oil prices since October 2008 gave motor fuels a boost. Soy oil use for biodiesel is down to almost nothing in the United States, but a lot is being used in South America. More palm oil is also expected to go to biodiesel in Indonesia due to new production capacity.
 
Corn prices were up 21 cents for the week, or 3.8%.  The acreage battle of 2011 is still simmering, with bulls on hold while they Washington political process debates the extension of the ethanol blend credits. Old crop basis has firmed 21 cents per bushel nationally since early October, signifying commercial demand for the cash corn. It is out there, but the bin doors have been shut by the price drop following the November crop report, and due to tax considerations in some cases. Weekly export sales bookings have picked up with the price drop over the past couple weeks. They were 758,100 MT in the most recent reporting week.
 
Wheat futures posted double digit gains for the week, at all three exchanges. Chicago was the biggest mover in percentage terms, up 13.84%. Egypt bought both hard and soft wheat from the U.S. during the week, and there were indications from Russia that the country might actually import wheat in order to maintain orderly markets. USDA reported combined old/new crop wheat export sales were 704,200 MT in the week ending November 25. Continued wet weather played havoc with the mature Australian wheat crop and threatened to turn a substantial quantity of it into feed quality wheat rather than export quality milling wheat.
 
Cattle futures were up another 95 cents this week. Boxed beef prices have been firm in the post-holiday period, with solid restaurant demand and annual beef export sales that will be the largest since 2003. The price rise is impressive given that beef production YTD is now 0.6% above last year, an the tonnage in the most recent week was up 16.5% from the Thanksgiving holiday week. Cash cattle prices were stronger than packers had expected, with some Texas cattle trading at $104 as the trading wrapped up early on Thursday. Early week sales were in the $102 range. On a Friday/Friday basis, choice boxed beef was up 1.3% and select was up .2%.  Restaurant traffic has picked up in several categories, which is helping with the choice beef demand.
 

 
Commodity
 
 
 
 
Weekly
Weekly
Month
11/12/10
11/19/10
11/26/10
12/03/10
Change
% Change
Dec
Corn
$5.34
$5.21
$5.38
$5.59
0.21
3.86%
Dec
CBOT Wheat
$6.69
$6.45
$6.48
$7.38
0.90
13.84%
Dec
KCBT Wheat
$7.30
$7.10
$7.21
$8.12
0.91
12.63%
Dec
MGEX Wheat
$7.45
$7.26
$7.34
$8.17
0.83
11.34%
Jan
Soybeans
$12.69
$12.02
$12.39
$13.00
0.62
4.99%
Dec
Soybean Meal
$339.70
$325.80
$336.80
$350.10
13.30
3.95%
Dec
Soybean Oil
$52.53
$48.96
$49.90
$53.08
3.18
6.37%
Dec
Live Cattle
$98.40
$101.45
$102.23
$103.18
0.95
0.93%
Jan
Feeder Cattle
$114.40
$117.40
$118.75
$118.68
0.08
0.06%
Dec
Lean Hogs
$68.98
$69.13
$70.35
$69.28
1.07
1.53%
Dec
Cotton
$140.18
$127.90
$116.06
$144.99
28.93
24.93%
Dec
Oats
$3.40
$3.53
$3.44
$3.67
0.23
6.61%
Jan
Rice
$14.07
$13.90
$13.41
$14.67
1.27
9.44%

 
Hogs went back to about where they were two weeks ago.  Pork cutout value dropped $2.12/cwt to $77.12 this past week. All of the major cuts except ham were lower on the week, and packers were inclined to be conservative on their hog buys as a result. Pork production for the week was up 12.4% from the holiday depressed prior week, but were also up 3.5% from the same week in 2009.
 
Cotton futures had a complete reversal of fortune after the dollar index started to reverse, with multiple limit up days. Weekly export sales data from USDA was supportive, as the weekly total was almost double the average trade guess ahead of the Thursday morning report. Old crop upland sales were 323,000 running bales, but in a sign of the more inflationary attitudes China booked 264,600 RB of 2011/12 cotton from the U.S.
 
Market Watch:  Dec cattle options expired on Friday, along with the currencies. That will lead to a few position adjustments as futures traders either lost their cover or gained unexpected positions. The main USDA reports for the week are on Friday morning, with USDA Crop Production and WASDE supply and demand estimates. USDA is unlikely to do much on the US production side, but a number of world adjustments are possible given the dryness in Argentina, wetness in Australia, and the Stats Canada production revisions announced on December 3. Monday December 6 will be first notice day for December cattle deliveries. Wednesday will be the last trading day for December cotton futures. 
 
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.  
 
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