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Market Watch

RSS By: Alan Brugler, AgWeb.com

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

A Whole New Ball Game

Apr 04, 2014

 Brugler

Market Watch with Alan Brugler

April 4, 2014

It’s a Whole New Ballgame

 

Major League baseball started its 2014 season this week, trying to jazz things up with some unusual venues but still with a long season ahead. While the NCAA basketball tournament is still wrapping up, and the NBA will drag on into June, the seasonal switch in attention is underway. The grain and livestock markets are also showing that is a whole new ball game, with hogs and wheat selling off sharply since the calendar turned to April. The other grains and oilseeds are still trying to determine whether they’ve given adequate attention to the Grain Stocks and Planted Acreage numbers released at the end of the old ballgame, on March 31. 

Corn futures closed 2% higher this week, the highest front month weekly close since September. Weekly corn export sales slowed to 998,500 MT, but were still seen as positive because export commitments have now reached 100% of the US forecast for the entire year.  Daily average ethanol production rose to 922,000 bpd last week, and ethanol stocks rose by 200,000 barrels amidst very high cash ethanol prices. Imports did start to arrive, with 11,000 bpd coming into the East Coast for the first time in 26 weeks. US ethanol prices had rallied enough to make imports competitive, and rail snafus continue to hinder US ethanol movement. The CFTC Commitment of Traders report on Friday afternoon confirmed that spec fund buying continues. The Managed Money reporting category added another 36,549 contracts to their net long, which reached 275,836 contracts as of April 1.

Soybean futures were up 2.6% this week, aided by a 2.3% advance in soybean meal and a 2.7% jump in soy oil. The $1 blend credit for soy oil use in biodiesel was included in Senate discussion of a tax extenders bill, but the bill is given slim chance of passing the House in its current form. Old crop beans got a boost because March 1 stocks stayed below 1 billion bushels, and were the tightest in 10 years. New crop saw record projected acreage at 81.5 million, but November futures rallied along with the old crop. Weekly US soybean export sales slowed to a paltry 85,500 MT, with only 19,300 MT of new crop booked. Total US export Commitments for 2013/14 are now at 107% of the USDA forecast for the year. As of the close on this past Tuesday, CFTC shows managed money accounts adding a few longs vs. the previous week. Their net long grew 8,071 contracts bringing their overall net long position to 193,446 contracts.

 

 

4/4/2014

           

 

Commodity

 

 

 

 

Weekly

Weekly

Month

03/14/14

03/21/14

03/28/14

04/04/14

Change

% Change

May

Corn

$4.86

$4.79

$4.92

$5.02

$0.10

1.98%

May

CBOT Wheat

$6.87

$6.93

$6.96

$6.70

($0.26)

-3.70%

May

KCBT Wheat

$7.52

$7.71

$7.64

$7.34

($0.30)

-3.93%

May

MGEX Wheat

$7.34

$7.43

$7.40

$7.22

($0.19)

-2.50%

May

Soybeans

$13.89

$14.09

$14.37

$14.74

$0.37

2.59%

May

Soybean Meal

$444.00

$455.90

$468.40

$479.10

$10.70

2.28%

May

Soybean Oil

$42.29

$41.02

$40.48

$41.57

$1.09

2.69%

April

Live Cattle

$145.25

$144.00

$146.50

$143.05

($3.45)

-2.35%

Apr

Feeder Cattle

$177.25

$175.28

$178.35

$177.70

($0.65)

-0.36%

April

Lean Hogs

$119.30

$125.68

$125.58

$123.15

($2.43)

-1.93%

May

Cotton

$92.19

$93.31

$93.74

$92.40

($1.34)

-1.43%

May

Oats

$4.44

$4.15

$4.02

$4.11

$0.09

2.18%

May

Rice

$15.36

$15.43

$15.51

$15.76

$0.25

1.61%

 

Wheat futures were sharply lower. Chicago was down 3.7%, KC slipped 3.9% and the MPLS May contract was off 2.5%. Weekly wheat export sales reported this week were 646,900 MT, down from 728,000 MT the previous week. That encouraged the already aggressive bears. USDA wheat stocks were about as expected, at 1.06 billion bushels. Planting intentions were a little smaller than expected at 55.8 million, but some spotty rains helped improve HRW prospects and settled some of the dust storms that had been making the news. The EU approved another 506,000 MT of wheat for export, taking the total to 23.3 MMT. As of the close on March 25, managed money accounts were still expanding their new net long in CBT wheat to 45,025 contracts. The big spec funds were already net long and expanded that position to 45,709 contracts in KC wheat.

Cotton futures were down 1.4% this week. USDA put weekly export sales for cotton last week at 120,000 RB, o f which 114,200 RB was upland and 5,500 RB was pima.   Total commitments as % of total exports are now at 92% compared to 91% last year and the 5 year average of 96%. The weekly Commitment of Traders report showed managed money accounts paring back their net long position by 4,711 contracts, a few more than they added the week before. That left the net position at 63,305 long.

Cattle futures were down 2.4% this week. Cash cattle traded at $148 in the south, down $2 from the previous week. The CME is still at a big discount to that level of cash prices, with first notice day for April futures on Monday. We would expect zero deliveries. Wholesale prices continued to retreat from the March 18 high. Choice boxes were down 2.4% this week, while Select dropped 4.4%. Weekly estimated slaughter at 583,000 head was down 2,000 from last week and 14,000 below year ago. Beef production YTD is down 5.9% from last year. USDA weekly beef export sales totaled 13,800 MT, up slightly from 13,300 MT the prior week and showing little price rationing damage.  

 

April Lean Hog futures lost 1.9% this week following the bearish Hogs & Pigs report. April futures were supported by their discount to the CME Lean Hog Index, and the need to converge with that Index on April 14. Summer futures were down $8.80 in the June contract for the week, as the H&P report showed more hogs would be available this summer than the market had been trading. Estimated weekly slaughter was 2.03 million head, down 3,000 head from the previous week. That was down 3.2% from the same week in 2013 and thus supportive to nearby pork prices. Carcass weights were up 6# from last year, which meant pork production for the week was down only 0.4% despite the light run. The pork carcass cutout lost 0.25% this week, with half of the primal rising and half of them declining. USDA weekly export sales for pork were stronger than expected at 13,800 MT vs. 6,600 MT the previous week.

 

Market Watch

 

Cattle traders will begin the week reacting to any surprise positions from the April cattle options expiration on Friday. Grain traders will get the usual USDA Export Inspections report on Monday morning at 10 am CDT and weekly USDA Export Sales report on Thursday morning. USDA will issued Crop Production and Supply/Demand reports on Wednesday morning, with some "known" changes stemming from the March 31 Grain Stocks reports.

 

Visit our Brugler web site at http://www.bruglermarketing.com, find our iPad app "AgMarket" in the app store, or call 402-697-3623 for more information on our consulting and advisory services for farm family enterprises and agribusinesses.

 

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.                  

Copyright 2014 Brugler Marketing & Management, LLC

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