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May 2013 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.

An Inflation Bull or Just a Soggy Bull?

May 31, 2013


Brugler

Market Watch with Alan Brugler

May 31, 2013

An Inflation Bull or Just a Soggy Bull?

 

Most of the ag commodities were in bull mode this week, although cotton and rice were exceptions and so were soy oil and feeder cattle. The US dollar index was down 0.5% for the week to provide a little support on ideas of inflation. That was one possible interpretation of the bond decline as well. Or maybe the Fed skipped buying bonds for a few days because the guy in charge of printing money was on vacation? The more fundamental explanation for the rally in the grains was wet weather. Planting delays continue, and the weather forecast calls for more of the same. Areas with 10" or more take a long time to dry out. A number of states are past their Prevent Plant dates for corn, which means the producer loses 1% of his insurance coverage each day that he has to wait to plant, unless he gives up and takes the insurance payment.

Corn futures rallied 5 cents per bushel this week, a 0.72% gain. Ethanol plant margins are positive. Weekly ethanol production dropped 12,000 bpd to 863,000 bpd.  There were ethanol imports for the first time in 6 weeks. Ethanol stocks were drawn down anyway, to a snug 16 million barrels. Corn export interest was on the upper end of diminished trade expectations, but still tepid. US planting progress expanded to 86% as of May 26, with trade estimates in the 90% range for this week. The largest area of concern is the Dakotas, SE MN, Eastern IA, western IL and WI.  

Soybeans gained 34 cents per bushels for the week after a 28 cent gain the previous week. On a close to close basis, November futures have now rallied $1.10 per bushel from the low day of April 24. Weekly soybean export sales were about as expected at 648,600 MMT. Soybean meal export activity continues strong, with 190,100 MT booked in the most recent reporting week. Meal commitments are now 101% of the USDA forecast for the year, with soybean commitments at 100%. 

Wheat futures were higher on all three exchanges, with Chicago up 1.15% and MPLS up 1.77% to lead the market. US weekly export sales were a solid 764,200 MT, including 35,900 MT of old crop that needed to be shipped by today. MPLS was supported by ongoing wet weather in Montana, western ND and parts of Minnesota. Winter wheat heading is also running behind the average pace. Old crop export commitments are 98% of year ago. They would typically be 104%, so there is some risk of undershooting the USDA forecast for the year.

Cotton lost 217 points for the week or 2.66%. That was a smaller loss than the week before, but still meant the lowest July futures prices since January. US export sales last week were OK at 153,000 RB. Total US export commitments are now 101% of the USDA forecast for the year. The 5 year average for this date is 105% (some sales are always carried over into the next marketing year). The marketing year ends July 31.

 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

05/10/13

05/17/13

05/24/13

05/31/13

Change

% Change

July

Corn

$6.36

$6.53

6.5725

6.62

$0.05

0.72%

July

CBOT Wheat

$7.04

$6.83

6.975

7.055

$0.08

1.15%

July

KCBT Wheat

$7.59

$7.37

7.4575

7.51

$0.05

0.70%

July

MGEX Wheat

$8.09

$8.04

8.0575

8.2

$0.14

1.77%

July

Soybeans

$13.99

$14.49

14.7625

15.1

$0.34

2.29%

July

Soybean Meal

$406.80

$425.10

428.2

447.2

$19.00

4.44%

July

Soybean Oil

$49.23

$49.52

49.24

48.38

($0.86)

-1.75%

June

Live Cattle

$120.45

$119.40

120.575

121.3

$0.72

0.60%

Aug

Feeder Cattle

$146.63

$143.38

144.55

144.325

($0.22)

-0.16%

June

Lean Hogs

$90.50

$91.53

94.875

95.625

$0.75

0.79%

July

Cotton

$86.48

$86.41

81.53

79.36

($2.17)

-2.66%

July

Oats

$3.79

$3.76

3.65

3.7425

$0.09

2.53%

July

Rice

$15.25

$15.24

15.715

15.295

($0.42)

-2.67%

 

Cattle futures gained $0.72 per cwt this week.  Wholesale beef prices were weaker, with Choice down 1.1% and Select down 1.7% after the former set a new all time record high the week before. Cash cattle trade was mostly $124 and $200 this week, above the futures but at a discount to the beef and about steady with the previous week. US beef production YTD is 1.1% smaller than last year. Weekly slaughter was down 1.7% vs. Memorial Day week in 2012. Estimated carcass weight is 9# below last year’s actual of 788#. USDA reported another sold week of solid weekly beef export sales @ 19,000 MT.

Hog futures were up $.75 for the week, a continuation of a month long rally. Weekly export sales were much improved at 15,100 MT, with Mexico the largest buyer. Estimated weekly slaughter was 1.867 million head. That was down 9.1% from the previous week, but 2.4% larger than last year. Weekly pork production was down 9.3% from the prior week because of the holiday, but 2.3% larger than the same week in 2012. Average carcass weights were estimated to be equal to year ago. Pork production YTD is 0.9% below last year at this time.  The pork carcass cutout value was down 0.12% for the week despite a 7% jump in pork belly prices.

 Market Watch

The calendar turns to June, with a pretty standard report line up for this week. USDA will release Export Inspections on Monday morning, with old crop wheat exports a focus. Will we ship enough to make hitting the USDA forecast likely? Soybean loadings will also be of interest, since recent weeks have tapered off to less than 4 million bushels. The usual Monday USDA Crop Progress report will be out in the afternoon, with the focus still on planting progress for spring wheat, corn and soybeans. USDA Weekly Export Sales will be released on Thursday. June cattle options will expire on Friday. Weather forecasts will also get some attention, due to the implications for completing planting.

There is a risk of loss in futures and options trading.  Such trading is not appropriate for all individuals. Past performance is not necessarily indicative of future results.  Comments made in this article are in no way to be seen as an endorsement of futures and options trading. Reproduction or rebroadcast of any portion of this article without written consent of Brugler Marketing & Management LLC is strictly prohibited.  Visit our web site at https://www.bruglermarketing.com or call 402-697-3623 for more information on our consulting and advisory services for farm family enterprises and agribusinesses.

Copyright 2013 Brugler Marketing & Management, LLC

Getting More Average Every Day

May 24, 2013

Brugler

Market Watch with Alan Brugler

May 24, 2013

Getting More Average Every Day 

Planting progress is catching up with the average pace (maturity measures will take longer), soil moisture is balancing out (drier west, wetter east, too wet north, too dry south), and temperatures are oscillating from unusually cool to unusually warm. In other words, becoming more average. I have said for years that we need to remember that the average yields we see at the end of the growing season are just a series of reductions from optimal. If everything went right all year, the US could probably average 180 bushels per acre for corn and 50 bushels per acre for beans with current genetics. Things are never that perfect. We subtract for wetness, dryness, hail, wind damage, insects, frost and hurricanes, and come up with something above or below trendline. That process is (surprise!) well underway for 2013.  

Corn futures rallied 4 cents per bushel this week, a 0.7% gain. Ethanol plant margins are positive, and weekly ethanol production responded with a jump in average daily production to 875,000 bpd.  Old crop corn consumption for the week was estimated at 92 million bushels for ethanol alone (excluding DDG net back). Ethanol imports were zero for the 6th week of the past 7, and ethanol stocks were drawn down to a snug 16.182 million barrels. Corn export interest was on the upper end of diminished trade expectations, but still tepid. US planting progress expanded to 71% as of May 19, with trade estimates in the 85% range for this week. The largest area of concern is the Dakotas (already at the Prevent Plant dates for insurance), SE MN, Eastern IA, western IL and WI. 

Soybeans gained 28 cents per bushels for the week after a 49 cent gain the previous week and 33 cents the week before. Weekly soybean export sales were stronger than expected at 1.022 MMT. Soybean meal export activity continues strong. Crushers backed off on bids as July futures action grew more volatile and farmer selling picked up. Cash soybean prices hit the highest level since November before backing off at the end of the week.

Wheat futures were higher on all three exchanges, with Chicago up 2.09% to lead the market. US weekly export sales were a solid 953,000 MT, including 239,400 MT of old crop, so somebody still needs US origin wheat. China bought 180,000 MT of new crop SRW, a deal announced on Friday that will show up in next week’s Export Sales report. MPLS was the weakest market of the three, as a small planting window opened.

Cotton lost 488 points for the week, with moving average technical support crumbling and China confirming that total imports for the first four months of the year were smaller than in 2012. US export sales last week were stronger than some had expected at 138,100 RB for net sales and 232,900 RB for weekly export shipments. However, the stronger dollar is still raising doubts about next week’s sales. The dollar reached heights not seen since 2010. Total US export commitments are now 100% of the USDA forecast for the year. The marketing year ends July 31.

 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

05/03/13

05/10/13

05/17/13

05/24/13

Change

% Change

July

Corn

$6.61

$6.36

$6.53

6.5725

$0.04

0.69%

July

CBOT Wheat

$7.21

$7.04

$6.83

6.975

$0.14

2.09%

July

KCBT Wheat

$7.78

$7.59

$7.37

7.4575

$0.09

1.15%

July

MGEX Wheat

$8.19

$8.09

$8.04

8.0575

$0.02

0.25%

July

Soybeans

$13.87

$13.99

$14.49

14.7625

$0.28

1.92%

July

Soybean Meal

$406.50

$406.80

$425.10

428.2

$3.10

0.73%

July

Soybean Oil

$49.27

$49.23

$49.52

49.24

($0.28)

-0.57%

June

Live Cattle

$121.83

$120.45

$119.40

120.575

$1.18

0.98%

Aug

Feeder Cattle

$147.50

$146.63

$143.38

144.55

$1.18

0.82%

June

Lean Hogs

$92.18

$90.50

$91.53

94.875

$3.35

3.66%

July

Cotton

$86.18

$86.48

$86.41

81.53

($4.88)

-5.65%

July

Oats

$3.88

$3.79

$3.76

3.65

($0.11)

-2.80%

July

Rice

$15.36

$15.25

$15.24

15.715

$0.48

3.15%

 

Cattle futures gained $1.18 per cwt this week, with all of the gain on Friday. It did more than erased the loss from the previous week. Wholesale beef prices were very strong. Choice boxed beef set a new all time high. Cash cattle trade was mostly $124-125.50 this week, well above the futures but at a discount to the beef and a dollar weaker than the previous week. US beef production YTD is 1.1% smaller than last year. Slaughter was up 1% vs. the same week in 2012. Estimated carcass weight was actually 2# below last year’s actual of 781#. USDA reported the best weekly beef export sales in many weeks at 20,400 MT.

Hog futures were up a strong $3.35 (3.66%) for the week. The skyrocketing value of the US dollar index caused concern about pork exports, which in recent years have been more than 20% of total production. Weekly export sales were a fairly routine 7,200 MT.  Rising prices for chicken provided support, along with reduced slaughter rates for hogs. Estimated weekly slaughter was 2.054 million head. That was up 1.2% from the previous week, but 0.8% smaller than last year. Weekly pork production was down 1.1% from the prior week, and 0.7% smaller than the same week in 2012. Average carcass weights were estimated to be equal to year ago. Pork production YTD is still 1% below last year at this time.

 Market Watch

This will be a short trading week, with markets closed for Memorial Day in the U.S. on May 27. The usual Monday USDA reports will be delayed until Tuesday, including Export Inspections and Crop Progress. USDA Weekly Export Sales will be delayed until Friday morning. The markets can be expected to have the usual end of month fund money shifts away from the winners and toward the losers. June grain options expired on Friday the 24th, so there are also likely a few folks adjusting to new futures positions following exercise. One major index fund also will begin selling out of July long positions at the end of the week.

There is a risk of loss in futures and options trading.  Such trading is not appropriate for all individuals. Past performance is not necessarily indicative of future results.  Comments made in this article are in no way to be seen as an endorsement of futures and options trading. Reproduction or rebroadcast of any portion of this article without written consent of Brugler Marketing & Management LLC is strictly prohibited.  Visit our web site at https://www.bruglermarketing.com or call 402-697-3623 for more information on our consulting and advisory services for farm family enterprises and agribusinesses.

Copyright 2013 Brugler Marketing & Management, LLC

Roll On, Big P

May 17, 2013

Brugler

Market Watch with Alan Brugler

May 17, 2013

Roll On, Big P

 

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

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

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

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

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

 

Commodity

 

 

 

 

Weekly

Weekly

Month

04/26/13

05/03/13

05/10/13

05/17/13

Change

% Change

July

Corn

$6.20

$6.61

$6.36

$6.53

$0.17

2.53%

July

CBOT Wheat

$6.93

$7.21

$7.04

$6.83

($0.21)

-3.07%

July

KCBT Wheat

$7.51

$7.78

$7.59

$7.37

($0.22)

-2.92%

July

MGEX Wheat

$8.05

$8.19

$8.09

$8.04

($0.05)

-0.62%

July

Soybeans

$13.81

$13.87

$13.99

$14.49

$0.49

3.42%

July

Soybean Meal

$404.70

$406.50

$406.80

$425.10

$18.30

4.30%

July

Soybean Oil

$49.54

$49.27

$49.23

$49.52

$0.29

0.59%

June

Live Cattle

$122.60

$121.83

$120.45

$119.40

($1.05)

-0.88%

May

Feeder Cattle

$141.80

$138.78

$135.38

$133.90

($1.47)

-1.10%

June

Lean Hogs

$92.53

$92.18

$90.50

$91.53

$1.03

1.12%

July

Cotton

$84.32

$86.18

$86.48

$86.41

($0.07)

-0.08%

July

Oats

$3.84

$3.88

$3.79

$3.76

($0.03)

-0.80%

July

Rice

$15.07

$15.36

$15.25

$15.24

($0.02)

-0.10%

 

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

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

 Market Watch

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

There is a risk of loss in futures and options trading.  Such trading is not appropriate for all individuals. Past performance is not necessarily indicative of future results.  Comments made in this article are in no way to be seen as an endorsement of futures and options trading. Reproduction or rebroadcast of any portion of this article without written consent of Brugler Marketing & Management LLC is strictly prohibited.  Visit our web site at https://www.bruglermarketing.com or call 402-697-3623 for more information on our consulting and advisory services for farm family enterprises and agribusinesses.

Copyright 2013 Brugler Marketing & Management, LLC

The Coming Global Surplus

May 10, 2013

Brugler

Market Watch with Alan Brugler

May 10, 2013

The Coming Global Surplus

 

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

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

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

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

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

 

Commodity

 

 

 

 

Weekly

Weekly

Month

04/19/13

04/26/13

05/03/13

05/10/13

Change

% Change

May

Corn

$6.52

$6.44

$7.00

$6.88

($0.12)

-1.71%

May

CBOT Wheat

$7.09

$6.89

$7.11

$6.97

($0.15)

-2.08%

May

KCBT Wheat

$7.46

$7.56

$7.93

$7.72

($0.22)

-2.82%

May

MGEX Wheat

$8.26

$8.11

$8.45

$8.58

$0.13

1.52%

May

Soybeans

$14.28

$14.31

$14.55

$14.88

$0.33

2.23%

May

Soybean Meal

$412.40

$417.90

$417.80

$444.30

$26.50

5.96%

May

Soybean Oil

$49.16

$49.66

$49.16

$49.17

$0.01

0.02%

June

Live Cattle

$121.30

$122.60

$121.83

$120.45

($1.38)

-1.14%

May

Feeder Cattle

$139.20

$141.80

$138.78

$135.38

($3.40)

-2.51%

June

Lean Hogs

$90.20

$92.53

$92.18

$90.50

($1.68)

-1.85%

July

Cotton

$85.15

$84.32

$86.18

$86.48

$0.30

0.35%

May

Oats

$3.92

$3.91

$4.22

$4.09

($0.13)

-3.06%

May

Rice

$15.23

$14.80

$15.20

$15.20

($0.01)

-0.03%

 

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

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

 Market Watch

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

There is a risk of loss in futures and options trading.  Such trading is not appropriate for all individuals. Past performance is not necessarily indicative of future results.  Comments made in this article are in no way to be seen as an endorsement of futures and options trading. Reproduction or rebroadcast of any portion of this article without written consent of Brugler Marketing & Management LLC is strictly prohibited.  Visit our web site at https://www.bruglermarketing.com or call 402-697-3623 for more information on our consulting and advisory services for farm family enterprises and agribusinesses.

Copyright 2013 Brugler Marketing & Management, LLC

May Showers Bring May Showers?

May 03, 2013

 Brugler

 

Market Watch with Alan Brugler

May 3, 2013

May Showers Bring May Showers?

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

 Market Watch

 

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

 

There is a risk of loss in futures and options trading.  Such trading is not appropriate for all individuals. Past performance is not necessarily indicative of future results.  Comments made in this article are in no way to be seen as an endorsement of futures and options trading. Reproduction or rebroadcast of any portion of this article without written consent of Brugler Marketing & Management LLC is strictly prohibited.  Visit our web site at https://www.bruglermarketing.com or call 402-697-3623 for more information on our consulting and advisory services for farm family enterprises and agribusinesses.

Copyright 2013 Brugler Marketing & Management, LLC

 

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