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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.

August Volatility

Aug 12, 2011

Brugler

Market Watch with Alan Brugler

August 12, 2011

 

Corn futures closed 8 ¾ higher for the week, thanks to a near limit up move on Thursday. USDA dropped the projected US average yield to 153 bushels per acre following an analysis of their objective yield plots and the first farmer survey of the crop year. That put the crop estimate below 13 billion bushels, and tightened up projected ending stocks to 714 million bushels. The stocks/use ratio is back down to 5.4%, similar to the mid-1990’s for another year.

Wheat futures were higher at all three exchanges, even though USDA left projected US wheat ending stocks at 671 million bushels and raised projected world stocks. Minneapolis got a boost from the USDA re-survey of planted acreage in MT, SD, ND and MN. Planted and harvested acres were reduced, lowering the Other Spring production estimate to 522 million bushels, and the HRW portion of that to 475 million. USDA did cut projected all wheat production to 2.077 billion bushels, but also reduced expected wheat exports. The Russians and their neighbors have been very aggressive in buying back their export market share. The US is the loser because of freight costs to the Mediterranean/North Africa market from the US.

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

Month

07/22/11

07/29/11

08/05/11

08/12/11

Change

% Change

Sep

Corn

$6.90

$6.66

$6.93

$7.02

0.0875

1.26%

Sep

CBOT Wheat

$6.92

$6.73

$6.79

$7.03

0.2350

3.46%

Sep

KCBT Wheat

$7.80

$7.67

$7.80

$7.98

0.1725

2.21%

Sep

MGEX Wheat

$8.39

$8.31

$8.28

$8.61

0.3375

4.08%

Sep

Soybeans

$13.80

$13.54

$13.32

$13.37

0.0550

0.41%

Sep

Soybean Meal

$363.00

$351.60

$345.20

$348.60

3.4000

0.98%

Sep

Soybean Oil

$56.51

$55.65

$54.90

$54.60

0.3000

0.55%

Aug

Live Cattle

$110.55

$112.63

$114.13

$117.90

3.7750

3.31%

Aug

Feeder Cattle

$136.40

$137.05

$133.70

$135.85

2.1500

1.61%

Oct

Lean Hogs

$92.58

$92.40

$91.85

$89.47

2.3800

2.59%

Oct

Cotton

$99.14

$102.08

$101.48

$101.25

0.2300

0.23%

Sep

Oats

$3.53

$3.46

$3.35

$3.45

0.0975

2.91%

Sep

Rice

$16.74

$16.12

$16.28

$16.81

0.5300

3.26%

 

Soybeans were in the bullish parade, but only for a nickel. They gained 0.41% on the week. The fundamental news was mixed. Projected old crop ending stocks ballooned to 230 million bushels as USDA trimmed export expectations. Chinese buying from the US slowed over the summer due to poor crush margins and sales of government stocks at below market prices. USDA curbed projected new crop export shipments even further for 2011/12, to 1.4 billion bushels. That was actually bullish, however, as they believe it will be due to higher soybean prices. The average cash price estimate was increased 50 cents per bushel, as ending stocks dropped to 155 million bushels. USDA still sees world ending stocks retreating from the all time high of the current year.

Cotton Futures had a quiet week overall, despite being buffeted by serious economic cross currents. The stock market swung wildly on European debt and economic slowdown concerns. Both could impact cotton consumption. However, back to school sales data was mixed, and the price decline since March discounts a lot of bad news on the demand side. USDA did shock those expecting an early fall low, by raising projected US average yield, production and ending stocks. The stocks/use ratio is also a little looser, so the bulls have a little convincing to do if they want to take this thing back up.

Cattle futures were up 3.31% for the week. Cash cattle traded at $116-117, up $3 and more from the previous week. US beef production year to date is 0.6% larger than last year. Estimated carcass weights dropped with the July and early August temps, and are thought to be about 3 pounds below last year. Weekly slaughter was up 2.5% from year ago, as you would expect with the larger feedlot population. Wholesale prices surged $7.17/hundred pounds for the choice boxes this past week, a 4% gain that backed up the rising cash cattle market.

Lean Hog futures were down 2.59% in the October contract, the new lead month after August expired on Friday. August went out with a bang, setting new all time highs for hog futures. That was tied to strength in the underlying cash hog market and the Index used to settle the futures at expiration. Export business continues to be very strong, providing punch to the pork cutouts and giving packers the spending money. Estimated pork production for the week was up 3.5% over the previous week, but trailed year ago by 0.4%. The cutout value was up 0.9%.

Market Watch: We’ll start this current week looking at weekend rainfall totals, to see if the drouthy areas of the Corn Belt got any help. NOPA will also put out a monthly crush report on Monday. USDA will also release the weekly crop progress and condition report on Monday afternoon, with traders leaning toward additional seasonal weakness in the ratings. The Weekly Export Sales report will be out on Thursday morning. The main USDA report for the week will be the Cattle on Feed report on Friday afternoon.

 

Did you miss the Brugler Summer Seminars in Cincinnati and Omaha? You can still attend electronically, from the comfort of your home or office. The presentations were recorded live, and are now available as Webinars at http://bruglermktg.webex.com. Click on the Recorded Presentations link on the left side of the screen to see a list of available segments.

 

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 2011 Brugler Marketing & Management, LLC

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