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April 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.

Zig Zag Corn

Apr 30, 2010
 


Market Watch with Alan Brugler
April 30, 2010
 
Zig-Zag Corn
 
The volatile trade in corn continues. For the past three weeks, net Friday-Friday prices changes were up 18 cents, then down 11 cents, and then up 13 cents. Our recent Bull Side/Bear Side analysis for corn listed more than 20 variables at work in the corn market at the present time. Accurately measuring old crop demand is causing some headaches, given rising monthly ethanol production and the Chinese purchase of 115,000 MT of US corn announced this week. Financially stressed ethanol plants continue to exit bankruptcy and come on line, consuming more corn. Ethanol consumption and inclusion rates have increased as gasoline use rises with the warmer weather and improvements in the U.S. economy. There are many questions about the eventual size of Chinese purchases, anywhere from bearish assumptions that China will reject the two loads purchased on some GMO issue to ideas that Chinese stocks are tight enough to require the full 80 million bushels of imports requested by feed millers. The one thing not in question is that US export sales have improved in recent weeks, despite a move in the U.S. dollar index to new highs for the year.
 
Wheat futures were up for the week at all three exchanges, anywhere from 0.5% to 1.07%. EU wheat futures backed off from their highs of the week before. There were several factors at work there including labor disputes, a choppy euro, and expected improvements in EU wheat condition ratings following weekend rains. The U.S. continues to be a bit of a residual supplier to the world export market, but that hasn’t stopped index or spec funds from coming out of short positions and thereby supporting futures.
 
Soybeans started the week with May pinned at $10 and a lot of options traders on both sides getting exercised into positions over the weekend. The call buyers were the losers if they held onto their long futures all week, since May lost 11 cents for the week. Product value was a bearish influence on the beans, with both meal and oil futures lower for the week. Meal rallied with the corn, but couldn’t get back everything it lost early in the week. USDA export sales show a seasonal decline is underway, with South America capturing a larger percentage of the business. China continues to be a large buyer of US new crop beans, and in fact was the ONLY 2010/11 buyer reported in this week’s USDA report.
 
Cotton futures were down on the week. Export sales were smaller than the trade guesses on Thursday morning. Planting progress is also keeping up with the 5 year average pace and acreage is expected to be up. That limits the amount of weather premium being built into prices. Indian cotton export intentions are murky, with the ginners trying to force the government to re-open exports.
 
Hog futures continued their climb. Pork prices showed a couple days of weakness but came roaring back on Thursday and drove double digits gains in futures on Friday. Pork production YTD is down 4.6% from last year and that supply shortfall is certainly underpinning the strength in the pork product market. The pork cutout value for the week was down 34 cents or 0.4%.
 
Below is a table showing the net weekly changes and 4 week history of selected agricultural futures:
 
 
Market Watch
 
 
 
 
Weekly
Weekly
Month
04/09/10
04/16/10
04/23/10
04/30/10
Change
% Change
May
Corn
$3.46
$3.64
$3.53
$3.66
0.13
3.64%
May
CBOT Wheat
$4.66
$4.91
$4.93
$4.92
0.01
0.31%
May
KCBT Wheat
$4.91
$5.07
$5.06
$5.06
0.00
0.05%
May
MGEX Wheat
$5.01
$5.20
$5.27
$5.26
0.01
0.14%
May
Soybeans
$9.52
$9.85
$10.00
$9.90
0.11
1.07%
May
Soybean Meal
$265.30
$280.90
$292.30
$291.30
1.00
0.36%
May
Soybean Oil
$40.04
$39.80
$39.35
$38.58
0.77
1.93%
June
Live Cattle
$94.75
$94.65
$94.83
$94.22
0.61
0.64%
May
Feeder Cattle
$115.38
$112.68
$112.58
$112.80
0.22
0.20%
May
Lean Hogs
$83.88
$86.42
$87.40
$89.52
2.12
2.45%
May
Cotton
$75.80
$80.01
$84.26
$82.76
1.50
1.87%
May
Oats
$2.15
$2.15
$2.05
$2.05
0.00
0.12%
May
Rice
$13.79
$12.81
$12.41
$12.36
0.05
0.39%
 
Cattle futures were down 61 cents for the week. The wholesale market was firmer again this past week, gaining $1.25 in the choice boxes and up $1.36 in the select. Beef export sales were down from the prior week, but still well above the 4 week moving average. Cash cattle prices were mostly $.50 to $1.00 lower for the week. Weekly red meat production was up 0.4% from last week, but is still down 2.8% for the year to date. Beef production since January 1 is still down 1% from 2009 at this point.
 
Market Watch: This will be a slower news week in terms of the formal government reports. USDA will have the usual Export Inspections on Monday and Export Sales on Thursday morning. There will be significant interest in the Crop Progress and Condition ratings on Monday night, with US corn planting expected to be 70-80% complete. Thursday will mark the last trading day for the May cotton futures. Friday will be the last trading day for May options in currencies, live cattle and pork bellies.  
 
There is a risk of loss in futures and options trading. 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, or of any particular risk management technique. 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 more extensive paid subscription and consulting services.
 
                                                                                                                                      Copyright 2010 Brugler Marketing & Management, LLC

Easy Come Easy Go

Apr 23, 2010

 


 

Market Watch with Alan Brugler

April 23, 2010

Easy Come, Easy Go

 

Nearby May corn futures rallied 19 cents per bushel two weeks ago, and promptly gave back 11 cents this week. All of that selling happened on Monday and Friday. Bears were focused on rapid planting progress with some insisting it would be over 50% in Monday’s USDA report. That’s for the 18 main production states including states like North Dakota, Pennsylvania and Wisconsin that typically are less than 15% done by now. The U.S. average progress since 2001 for this week (with no adjustment for day of week) would be 31%, with 53% not being reached until the following week. Bulls focused on a big jump in export sales interest, rising blend rates for ethanol in conventional gasoline, and year/year increases in egg sets and chick placements.

 

Wheat futures were up on the week until Friday came along. Despite the weaker US dollar and higher energy futures, longs took money off the table rather than risk another Meltdown Monday. Weekly export sales and shipments were about as expected, and failed to provide much bullish fuel. Crop condition ratings also rose, suggesting some yield improvement. Wet weather heading into the end of the week bolstered yield ideas, but also threatened a more rapid spread of the stripe rust that has already been plaguing the crop. The EU wheat futures market set a 3 month high on Friday, with traders there noting dry conditions in some of the French growing areas, and also problems with the Chinese crop. MPLS futures saw their big gain on Thursday, as USDA announced a $6.00 loan rate for durum. That was so far above the spring wheat that traders expected a late acreage switch to durum and away from HRS/DNS. The rally in soybeans also makes them appear more attractive than spring wheat.

 

Soybeans extended their gains of the past three weeks, with May futures closing right on the $10 handle on Friday night. That was likely no coincidence, with May options also expiring on Friday.  Bullish inputs for the week were led by soybean meal, which rose 4.06%. Census reported on Thursday that meal stocks as of March 31 had declined from a burdensome 700 thousand tons in February to more bull friendly 361 thousand tons.  Technically, meal shows a Head & Shoulders bottom, which made the fundamental news easy to buy. Soy oil lagged, losing 45 points on unwinding of oil/meal spreads and a lack of direction in energy futures. Biodiesel plants continue to go out of business as Congress still hasn’t acted to restore the blend credit the plants need to use veg oils and compete with crude oil based product. China was also an aggressive buyer of new crop US beans amid an ongoing trade dispute with Argentina.

 

Some cash cattle traded at $100 again this week, but more appear to have traded in the $99 zone. With cash cattle at that level, April futures have seen zero delivery notices, and have gradually rallied to meet the cash price. Cattle were up 47 cents for the week.  USDA reported weekly Export sales of more than 20 thousand tonnes, nearly doubling the moving average. Friday’s Cattle on Feed report confirmed that we are very current on slaughter, with March marketings at 104.3% of year ago and combined marketings/other disappearance larger than the ready cattle numbers. Placements were also lighter than the average trade guess. The eight weights were notably lighter than a year ago, which we attribute to cattle being held longer on wheat pasture.

 

Hog futures were up almost a dollar for the week. Pork carcass prices rose to the highest level since 2008 ($90.68 on Thursday and holding at $90.30 on Friday), and futures were also heading toward a test of the 2008 highs. The Thursday evening Cold Storage report confirmed that there was still less pork in the cooler than a year ago.

 

Below is a table showing the net weekly changes and 4 week history of selected agricultural futures:

 

Market Watch

 

 

 

 

Weekly

Weekly

Month

04/01/10

04/09/10

04/16/10

04/23/10

Change

% Change

May

Corn

$3.45

$3.46

$3.64

$3.53

0.11

3.02%

May

CBOT Wheat

$4.55

$4.66

$4.91

$4.93

0.03

0.56%

May

KCBT Wheat

$4.70

$4.91

$5.07

$5.06

0.01

0.15%

May

MGEX Wheat

$4.89

$5.01

$5.20

$5.27

0.07

1.30%

May

Soybeans

$9.42

$9.52

$9.85

$10.00

0.15

1.50%

May

Soybean Meal

$265.90

$265.30

$280.90

$292.30

11.40

4.06%

May

Soybean Oil

$38.98

$40.04

$39.80

$39.35

0.45

1.13%

April

Live Cattle

$96.65

$99.65

$98.75

$99.22

0.47

0.48%

April

Feeder Cattle

$110.37

$114.52

$111.95

$112.20

0.25

0.22%

May

Lean Hogs

$81.73

$83.88

$86.42

$87.40

0.98

1.13%

May

Cotton

$81.50

$75.80

$80.01

$84.26

4.25

5.31%

May

Oats

$2.11

$2.15

$2.15

$2.05

0.10

4.76%

May

Rice

$12.38

$13.79

$12.81

$12.41

0.40

3.12%

 

Cotton futures staged a huge 5.37% rally this week, adding to a very similar gain the previous week. Consumer demand is picking up, as measured by retail sales and new home sales. US ending stocks are shrinking, and wet conditions are slowing cotton planting in the southern U.S. The big story for the week was that India was going to slow or halt exports, forcing China and other large users to buy cotton from the U.S., Brazil or Pakistan that it would not otherwise have been forced to purchase. Monday will mark first notice day for May cotton deliveries. Given huge cert stocks, large deliveries are possible. They are only likely if the owner doesn’t have an export market.

 

Market Watch: The May grain options expired on Friday.  Market participants will begin the week adjusting positions for those who were surprised by exercises. The main battle grounds were the May 1000 strike in soybeans and the May 490 strike in CBT wheat.  The market moved away from the May 360 in corn but pinned the 1000 strike in May beans exactly. Traders will be very interested in the planting progress and crop condition ratings from USDA on Monday evening.  The Fed meets on Tuesday and Wednesday, with no rate hike currently expected. Thursday will be the final trading day for April feeder cattle. April live cattle expire on Friday. Friday will also mark first notice day for May futures deliveries.

 

There is a risk of loss in futures and options trading.  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, or of any particular risk management technique. 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 more extensive paid subscription and consulting services.

 

                                                                                                                                      Copyright 2010 Brugler Marketing & Management, LLC

Been Down So Long It Looks Like Up to Me

Apr 16, 2010
 


Market Watch with Alan Brugler
April 16, 2010
 
Been Down So Long It Looks Like Up to Me
 
Nearby May corn futures rallied 19 cents per bushel this week, a gain of more than 5.3%. The rally put a spring in the step of producers across the country, particularly those holding a lot of old crop corn. You’d have thought that prices were back at $4. It’s more a case of relief, confirmation that riding out the early April sell off was the right thing to do. Weekly export sales were up over the 1.1 MMT mark, suggesting that overseas customers were finding value. On the bear side, Midwest weather was favorable for rapid early season planting progress. Early planting is typically associated with above trendline yields, although it can also be a source of bullish momentum if there is a late April or early May freeze event.
 
This was also a week where the Dow Jones average broke the 11,000 mark to the upside. The Dow held the “round number” despite a big sell off on Friday after the SEC charged Goldman Sachs with civil fraud. Gold and crude oil were down sharply on various contorted theories that Goldman and related parties would be forced to liquidate long positions in those commodities. Grains and livestock avoided the panic selling. Goldman will obviously fight the charges.
 
All three wheat markets were higher, by 3 to 5%. Chicago was the strongest, mostly because it has a large speculative short position and periodically those bears get nervous enough to cash out portions of their positions. USDA did tighten up projected US and world ending stocks for wheat in the April 9 WASDE report. Meanwhile, winter wheat crop condition ratings remain the best since 2007.
 
Soybeans also participated in the bullish grain week. Prices shot up 33 cents per bushel, aided greatly by a $15.60/ton rally in soybean meal. Meal in turn was boosted by the rise in the feed grains, and by unwinding of oil/meal spreads. Soy oil was higher in China, but the weakness in energy futures weighed on the BO market. The China-Argentina dispute over hexane levels in Argentine soy oil continued to rattle around, with conflicting reports about the status. Most new crop soy oil has yet to leave Argentina. China has said that it is allowing previous purchases to be unloaded, but Argentine trade sources indicate that Chinese interest in buying new cargoes is significantly lighter than it had been. US weekly export sales were 158,000 MT of old crop (including fresh Chinese business) and 293,200 MT for new crop. Nearly all of the latter is destined to go to China.
 
Cattle futures traded above $100 on Monday, but failed to close the chart gap on the weekly continuation chart. They sold off as cash cattle prices retreated. Show lists ballooned this week both because of the $100 trade the week before and also because finished cattle numbers should begin to rise as we head into May (based on in-weights and normal rates of gain). The greener cattle for the most part will be carried over into this coming week.  Choice boxed beef did continue to advance, up another 1% for the week as February export sales data confirmed increasing world interest, at least back in February.
 
Hog futures were up 3% for the week. The pork carcass cutout rose more than $5.83/cwt. this past week, more than a 7% hike. That stirred up the cash hog markets, and in turn caused futures to reverse from a Monday low to post new life of contract highs on Friday. Weekly pork production was estimated to be up 0.8% from the previous week.
 
Below is a table showing the net weekly changes and 4 week history of selected agricultural futures:
 
 
Market Watch
 
 
 
 
Weekly
Weekly
Month
03/26/10
04/01/10
04/09/10
04/16/10
Change
% Change
May
Corn
$3.56
$3.45
$3.46
$3.64
0.19
5.35%
May
CBOT Wheat
$4.65
$4.55
$4.66
$4.91
0.25
5.37%
May
KCBT Wheat
$4.76
$4.70
$4.91
$5.07
0.16
3.16%
May
MGEX Wheat
$4.97
$4.89
$5.01
$5.20
0.19
3.74%
May
Soybeans
$9.52
$9.42
$9.52
$9.85
0.33
3.47%
May
Soybean Meal
$271.00
$265.90
$265.30
$280.90
15.60
5.88%
May
Soybean Oil
$38.95
$38.98
$40.04
$39.80
0.24
0.60%
April
Live Cattle
$94.02
$96.65
$99.65
$98.75
0.90
0.90%
April
Feeder Cattle
$107.20
$110.37
$114.52
$111.95
2.57
2.24%
May
Lean Hogs
$76.55
$81.73
$83.88
$86.42
2.55
3.03%
May
Cotton
$79.69
$81.50
$75.80
$80.01
4.21
5.55%
May
Oats
$2.12
$2.11
$2.15
$2.15
0.00
0.12%
May
Rice
$12.46
$12.38
$13.79
$12.81
0.98
7.14%
 
Cotton futures staged a huge 5.55% rally this week, getting back most of what it lost last week. Weekly export sales of 281,200 RB were within the range of trade estimates, but continue to show solid world demand. Retail sales data was mostly positive, while employment and other items were more of a mixed bag. Based on Friday night’s CFTC report, traders were just plain exiting the cotton market. Open interest for cotton dropped about 11 thousand contracts from Tuesday to Tuesday.
 
Market Watch: The May cotton options expired on Friday. Market participants will begin the week adjusting positions for those who were surprised by exercises. Grain traders will be looking at the weekly export inspections report to see how well shipments are holding up, and will be very interested in the corn planting progress shown by USDA on Monday night in the Crop Progress reports. Trade guesses are anywhere from 14 to 22%, with our experience being that the trade often overestimates weekly planting progress in April. US producers can plant 40% of the crop in a single week, but with last freeze dates still 3 weeks away or more, most won’t go full bore this early. Census Crush and Cotton Consumption reports are due on Thursday morning, along with the weekly USDA Export Sales report. USDA’s monthly Cold Storage report is also due on Thursday. The Cattle on Feed report is scheduled for release on Friday afternoon. The May grain options will expire on April 23.
 
 
There is a risk of loss in futures and options trading. 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, or of any particular risk management technique. 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 more extensive paid subscription and consulting services.
 
                                                                                                                                      Copyright 2010 Brugler Marketing & Management, LLC

Cattle and Hogs On A Roll

Apr 09, 2010
 

Market Watch with Alan Brugler
April 9, 2010
 
Cattle and Hogs on a Roll
 
Cattle futures posted a net gain of $3.00 for the week, with another week of early and aggressive buying by the packers. Cash cattle traded at $100-101, up $3-4 from the previous week. That pulled up April futures, which are after all in delivery. You won’t see any deliveries with futures at a discount to cash, but it is a great situation for a cattle hedger since he/she gained on the basis while the hedge was in place. Wholesale prices were higher again, with the choice boxes trading at $165.27 on Friday. Demand and offerings were both described as weak, however. Beef production for the week was 0.9% above the same week in 2009. Federally inspected beef production YTD is down 1% for the year.
 
Hogs extended their rally another 2.65%, or $1.97. The lean pork cutout was up more than $5 for the week, gaining 6.7% to $79.51. That fueled gains in the cash hog market and allowed futures to float higher. With April hogs expiring this coming week, and with that contract cash settled to the CME Lean Hog Index, futures need to converge with the Index at expiration. Resolution of the Russian pork dispute is supporting the market. Reductions in the Chinese herd are also spurring talk of better export potential into either China or Hong Kong.
 
Wheat futures were higher at all three exchanges, posting double digit gains for the week despite a little sell off on Friday after the crop report. USDA threw the bulls a few crumbs, cutting projected US ending stocks to 950 million bushels and also dropping projected world ending stocks by about a million tonnes. The adjustment came on improving US wheat export sales. USDA hiked projected world feed use to account for most of the adjustment. US and Russian ending stocks are now seen lower than last month, while Canadian and Aussie stocks are seen larger.
 
Corn prices eked out a higher weekly close after two hard down weeks. The gain came on Wednesday, and they spent the rest of the week giving it back. The WASDE report on Friday showed a 100 million bushel increase in projected US ending stocks, to 1.899 billion bushels. This was required by the Grain Stocks report, and USDA made the adjustment by trimming feed and residual use. They left corn ethanol use UNCH, despite the record ethanol production in January that was announced on Thursday by EIA. The question is whether the weaker margins being seen in March and early April will curb the growth in ethanol production later in the year. It is worth noting that ethanol exports exceeded imports, and this happened before Brazil lifted their import tariff on ethanol. Weekly export sales were robust, allowing USDA to keep the March projection for the year in place.
 
Soybeans rose 1.09% for the week. The world stocks situation continues to look more and more bearish, with USDA hiking projected world ending stocks to 62.96 MMT from only 60.67 MMT the previous month. That’s another 84 million bushels of competition for 2010 crop beans. USDA hiked its estimates for both Brazilian and Argentine production. No change was made to Argentine exports, but Brazilian bean exports were raised another 700,000 MT. Old crop futures were looking at a different picture, and thus the higher close for the week. USDA raised projected exports another 25 million bushels, and then made the “known” cut in residual use to true up the data with the Grains Stocks from March 31. Bears had expected at 15-20 million bushel increase in old crop carryover, but USDA left it at a snug 190 million bushels.
 
Below is a table showing the net weekly changes and 4 week history of selected agricultural futures:
 
 
Market Watch
 
 
 
 
Weekly
Weekly
Month
03/19/10
03/26/10
04/01/10
04/09/10
Change
% Change
May
Corn
$3.75
$3.56
$3.45
$3.46
0.01
0.36%
May
CBOT Wheat
$4.83
$4.65
$4.55
$4.67
0.12
2.70%
May
KCBT Wheat
$4.93
$4.76
$4.70
$4.84
0.14
2.87%
May
MGEX Wheat
$5.09
$4.97
$4.89
$5.01
0.12
2.51%
May
Soybeans
$9.62
$9.52
$9.42
$9.52
0.10
1.09%
May
Soybean Meal
$270.25
$271.00
$265.90
$265.30
0.60
0.23%
May
Soybean Oil
$39.30
$38.95
$38.98
$40.04
1.06
2.72%
April
Live Cattle
$97.97
$94.02
$96.65
$99.65
3.00
3.10%
April
Feeder Cattle
$108.68
$107.20
$110.37
$114.52
4.15
3.76%
April
Lean Hogs
$73.35
$69.67
$74.25
$76.22
1.97
2.65%
May
Cotton
$82.18
$79.69
$81.50
$78.07
3.43
4.21%
May
Oats
$2.25
$2.12
$2.11
$2.15
0.04
2.14%
May
Rice
$12.70
$12.46
$12.38
$13.79
1.41
11.39%
 
Cotton futures dropped sharply, losing 343 points or more than 4.2% of their value at the beginning of the week. Concerns about retail sales continue, as unemployment lingers at relatively high levels. US export sales are also down from year ago, due to the recession and also to the stronger US dollar. On the other hand, USDA revised the size of the 2009 crop downward after reviewing the ginnings report, and that tightened up old crop cotton stocks even further. The world ending stocks estimate was also tightened up, to 50.91 million bales, as production fails to keep up with consumption.
 
Market Watch: Crop progress and condition ratings will begin to take on more importance, as planting of corn, soybeans and spring wheat spreads further north. USDA will issue the weekly Crop Progress report on Monday afternoon at 3 pm CDT. Traders will also watch the demand side of grains, which has been picking up, through the Export Inspections report on Monday and the weekly Export Sales report on Thursday morning. Thursday will also mark the expiration of the April hog futures contract. The folks at NOPA will issue their March crush estimate on April 14, the day of the full moon and a mere 24 hours before tax day. The May cotton options will expire on Friday.
 
 
There is a risk of loss in futures and options trading. 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, or of any particular risk management technique. 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 more extensive paid subscription and consulting services.
 
                                                                                                                                      Copyright 2010 Brugler Marketing & Management, LLC

No Fooling, Grains Down and Livestock Up

Apr 01, 2010
 


Market Watch with Alan Brugler
April 1, 2010
 
No Fooling, Grains Down and Livestock Up
 
It was a short week, with US markets closed on Friday for the Good Friday and the Easter weekend. Some European markets will also be closed on Monday. Just because it was a short week didn’t mean it was quiet and dull. USDA rolled out the much hyped Planting Intentions and Grain Stocks reports on Wednesday morning, and they moved the markets off of dead center. The US dollar index was also lower for most of the week, adding a little volatility to commodity prices overall. Crude oil was the main beneficiary (or victim, depending on your point of view), with May settling at $84.87 on Thursday.
 
Corn prices were down 3.3% for the week, the worst performance among the grains. USDA’s Grain Stocks report was the main reason for the sell off. March 1 inventory was 7.684 billion bushels, failing to show any feed use impacts of light test weight corn. It is highly likely that USDA will raise projected ending stocks for the year in the April 9 WASDE report, based on this information. The planting intentions figure at 88.798 million acres was neutral to friendly, but with the assumed increase in carryover stocks it could not be deemed bullish.
 
Soybeans dropped another 10 cents per bushel for the week, just over 1%. We said the same exact thing last week. Meal futures were a lot different, however, losing $5.10/ton for the week after double digit losses on Wednesday. Soy oil was up a mere 3 ticks for the week, and that was due to a 67 point rise on Thursday. Concerns about China limiting veg oil imports turned out to be more of an Argentine issue, and that allowed higher energy futures to spill over into the soy oil market on Thursday. Census also revised the February soy oil stocks lower in the Fats & Oils report than they had been in the Crush report. Looking at soybeans themselves, USDA’s acreage intentions figure of 78.098 million was regarded as neutral to friendly. However, the March 1 stocks figure of 1.27 billion bushels was above the trade average guess. It implies ending stocks of 200 million bushels or so, depending on your summer crush and export sales expectations. That is “comfortable” and fueled a sell off on Wednesday. The settlement of the Argentine stevedores strike (via a 27% wage hike) also put pressure on US soybean prices.
 
Wheat futures were again lower at all three exchanges. USDA reported larger than expected spring wheat planting intentions at 13.906 million acres. It also found a few more winter wheat acres than were shown in the January report. The new estimate is 37.698 million. Along with durum, that pushed total 2010 acreage to 53.827 million. With a billion bushels of old crop expected to still be in the bin on May 31, the extra acres were not welcome. Prices slumped to new life of contract lows on Wednesday. USDA weekly export sales on Thursday morning were at the upper end of the trade estimates. Egypt continues to favor cheaper Russian wheat, but the US is making sales.
 
Cotton prices were up 2.27% for the week, with inflation or at least consumer spending expectations fueling the higher prices. A weak US dollar also helped this week. The 2010 cotton planting intentions as of early March totaled 10.505 million acres according to the USDA survey. With ginning data suggesting that perhaps the 2009 crop was overestimated, the market rallied on the fact,  in an attempt to attract a few more acres by the time the planters are done rolling. Turkey was the largest buyer in the export market for the previous week.
 
Cattle futures had a nifty 2.8% gain for the week, offsetting a good chunk of the damage from the prior week. Weekly export sales slowed to 7,500 MT (?), but shipments are still solid and the U.S. consumer appears to be inclined to spend a little more on meat. Choice boxed beef on Thursday was quoted at $163.41. That was up 72 cents from the previous Friday. Cash cattle on Thursday traded at $156 in Nebraska, and $96 in the South.
 
Below is a table showing the net weekly changes and 4 week history of selected agricultural futures:
 
 
Market Watch
 
 
 
 
Weekly
Weekly
Month
03/12/10
03/19/10
03/26/10
04/01/10
Change
% Change
May
Corn
$3.64
$3.75
$3.56
$3.45
0.12
-3.30%
May
CBOT Wheat
$4.85
$4.83
$4.65
$4.55
0.10
-2.21%
May
KCBT Wheat
$4.95
$4.93
$4.76
$4.70
0.05
-1.16%
May
MGEX Wheat
$5.13
$5.09
$4.97
$4.89
0.08
-1.61%
May
Soybeans
$9.25
$9.62
$9.52
$9.42
0.10
-1.05%
May
Soybean Meal
$251.30
$270.25
$271.00
$265.90
5.10
-1.88%
May
Soybean Oil
$39.55
$39.30
$38.95
$38.98
0.03
0.08%
April
Live Cattle
$95.10
$97.97
$94.02
$96.65
2.63
2.80%
April
Feeder Cattle
$105.98
$108.68
$107.20
$110.37
3.17
2.96%
April
Lean Hogs
$72.65
$73.35
$69.67
$74.25
4.58
6.57%
May
Cotton
$80.47
$82.18
$79.69
$81.50
1.81
2.27%
May
Oats
$2.19
$2.25
$2.12
$2.11
0.02
-0.71%
May
Rice
$12.43
$12.70
$12.46
$12.38
0.08
-0.64%
 
Hogs spent all week reversing the sell off they had experienced in the week prior to the Hogs & Pigs report. The H&P report was bullish in almost all categories, leading to a mostly limit up day on Monday and a 6.57% rally for the week. Pork prices jumped to $74.14 on Thursday, up $3.38 for the week. There’s nothing like a Hogs & Pigs report showing fewer hogs in the pipeline to make that pork worth more to the seller!
 
Market Watch: April cattle options expired on Thursday, leaving a few traders with surprise positions or a lack of positions to be dealt with on Monday. Monday is also first notice day for deliveries against April cattle futures. Grain traders have the usual Export Inspections report on Monday and weekly Export Sales report on Thursday. The Monthly USDA WASDE report is scheduled for Friday morning, April 9. Many of the US balance sheet changes will be driven by the information from the March 31 reports, but there will be interest in exactly how USDA allocates the “extra” bushels found in the stocks reports. Adjustments in the world numbers can also affect US export forecasts.
 
There is a risk of loss in futures and options trading. 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, or of any particular risk management technique. 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 more extensive paid subscription and consulting services.
 
                                                                                                                                      Copyright 2010 Brugler Marketing & Management, LLC
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