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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.

Chop, Chop, Chop. Chopping Around.

Jun 20, 2014

Brugler 

Market Watch with Alan Brugler

June 20, 2014

Chop, Chop, Chop. Chopping around.

 

The meat markets stayed in their respective uptrends this week, but the feeder market was especially choppy.  Limit down in several contracts on Wednesday, then September feeders were limit up the very next day.  Wholesale beef was one directional, streaking higher every day this week as retail stores start to stock up the shelves for the 4th of July Holiday.  The butchers will be doing some extra "chopping" this week too.  A bit humorous that after all of that chopping, the retail stores will eventually be "chopping" the prices of the cuts that did not sell before the holiday rush!  The grain markets were chopping around quite a bit this week too, as it seemed like fund money was unsure of where to go after the fed meeting.  Soybean meal chopped around this week and lost more than eight bucks per contract, even after posting an $8.00 gain on Friday.  So you could say that the movement of money caused some "chopping" while it was "shhh-opping" for the best value in the market this week.

  

Corn was 1.23% higher for the week, netting a six cent gain since last Friday.  This was the first week where corn ended higher since the week of May 12th.  Fundamental news was somewhat mixed this week.  Ethanol production in the weekly EIA report was reported at one of the highest levels of any week on record.  Stocks of ethanol were able to shrink, even with all of that production.  Weekly export sales were 109,000 MT for 2013/14, down from the 409,700 MT  reported the previous week.  Cancellations from "unknown" destinations were 396,900 MT in this report.  China is trying to rotate out state reserves of old crop before the new crop harvest is coming on.  Total commitments as a % of total projected exports are still at 97%, with 11 more weeks to book old crop sales.  The CFTC Commitment of Traders report this afternoon showed managed money decreasing their net long position in corn by 9,156 contracts as of June 17, giving them a net long position of 137,280 contracts.  Excessive rains in the northern Mid-West and the northern Corn Belt have the new crop market wondering if the "rain makes grain" adage is as true as it was a few weeks ago.    

 

Soybean futures were only down 8 cents this week, adding a fourth to the string of down weeks in the front month contract.  USDA reported weekly export sales for old crop at the top of the range of that the trade was looking for at 97,900 MT.  Bookings for the 2014/15 marketing year came in at 285,800 MT with 90,500 MT marked for China, and 185,000 MT slated for UNKNOWN destinations.  Another new crop bean export sale of 110,000 MT to UNKNOWN was announced this morning.  As of the close on June 17, CFTC shows managed money accounts decreasing their net long position for soybeans from the previous week by another 33,519 contracts bringing their overall net long position down to 46,624 contracts.  Soybean meal chopped around this week and lost $8.00, even after an $8.00 gain on Friday.  Friday was the most violent, with July bean meal futures posting a trading range of $20.50 and closing just 80 cents higher on the day.

 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

05/30/14

06/06/14

06/13/14

06/20/14

Change

% Change

July

Corn

$4.66

$4.59

$4.48

$4.53

$0.06

1.28%

July

CBOT Wheat

$6.27

$6.18

$5.85

$5.85

$0.00

0.00%

July

KCBT Wheat

$7.23

$7.36

$7.11

$7.21

$0.09

1.30%

July

MGEX Wheat

$7.07

$7.09

$6.82

$6.90

$0.07

1.06%

July

Soybeans

$14.93

$14.57

$14.27

$14.16

($0.11)

-0.77%

July

Soybean Meal

$500.20

$487.60

$467.20

$459.20

($8.00)

-1.71%

July

Soybean Oil

$38.50

$39.01

$39.73

$40.04

$0.31

0.78%

June

Live Cattle

$137.80

$140.13

$147.60

$147.55

($0.05)

-0.03%

Aug

Feeder Cattle

$198.13

$200.52

$208.15

$206.88

($1.28)

-0.61%

July

Lean Hogs

$120.48

$124.98

$127.00

$129.15

$2.15

1.69%

July

Cotton

$86.27

$84.78

$86.95

$88.16

$1.21

1.39%

July

Oats

$3.71

$3.57

$3.47

$3.40

($0.07)

-2.09%

July

Rice

$14.99

$14.18

$14.51

$14.64

$0.13

0.86%

 

Wheat futures were mostly choppy this week, but CBOT ended flat.  KC and MPLS ended the week 9 and 7 cents higher respectively.  Excessive moisture on thin stands of otherwise harvest-ready wheat fields in Kansas, brought a buzz to the wheat market earlier in the week.  The range of yields reported thus far is wide and has an extremely low end.  Traders were hot on all three wheat markets until they got tired of waiting for better yield reports, and let the prices slip today.  USDA said the export sales figure for this week’s report at 372,600 MT.  Total commitments as a % of total exports are currently 5 points ahead of the five year average for this week.  Mexico started booking US wheat for the 2015/16 crop year this week and was in for 8200 MT as the only new crop buyer in this report.  As of the close last Tuesday, managed money increased their net short position in CBT wheat by 1,807 contracts over the past week.  They are now net short -28,942 contracts.  The managed money accounts added another 87 contracts to their net long position in HRW wheat, giving them a net long position of 24,744 contracts as of the close on Tuesday.

 

July Cotton futures were higher everyday this week except for Thursday when it gave back most of what it gained on Monday and Tuesday.  December was lower for the week, but July was able to squeeze out a 1.39% gain, ending the week 121 points higher.  The weekly Commitment of Traders report showed managed money accounts increasing their net long position in cotton by 2,712 contracts bringing their overall net long on June 17 to 25,264 contracts.  Export sales were reported by the USDA this week with net sales of 153,100 RB for Upland cotton, and 2,100 RB for Pima.  2014/15 bookings were for 103,300 RB and another 200 RB of Pima sales.  Total commitments as a % of total exports for upland cotton are currently at 105%, which compares to the 106% last year and the 5 year average of 108%. New crop prices struggled to follow the front month higher, in part due to the projected ending stocks of 4.3 million bales, with USDA recently boosting expected harvested acres by 300,000.

 

Front month cattle futures were actually lower for the week, losing a net 5 cents in the June contract after chopping around its $3.675 trading range this week. August feeder cattle ended the week lower in large part due to a limit down move across the board for feeder contracts on Wednesday.   Cash cattle trade was reported mostly steady to higher than last week, with stronger demand from processors.  Texas, Kansas, and Nebraska all had reports of significant sales at the $150 level.  Dressed sales of 30,000 head sold in Nebraska were reportedly in the $237-$238 range.  In the monothly cattle on feed report that came out today after the market closed, USDA shows the average trade estimate for May placements was 92.6% of last year, and the report showed 93.04%.  Marketings were expected to be 95.6%, and came in at 95.74 %.   June 1 cattle on feed were reported at 98.39%, when the average pre-report estimate was for 98.3% of 2013.  The range of estimates was from 96.0%-99.0%.  Wholesale beef prices were sharply higher this week.  Choice boxed beef gained $9.57 or 4.14%, and select boxes increased $9.49 or 4.24% from Friday to Friday.  USDA reported weekly beef export sales at 16,100 MT for this past week, which is 33% more than the previous four week average.  The weekly Commitment of Traders report showed managed money accounts backing off of their net long position in cattle, bringing their overall net long on June 17 to 124,400 contracts, 1,709 smaller than it was on the previous Tuesday. 

 

June Hog futures were 1.69% higher this week, up $2.15 since last Friday.  The pork carcass cutout value was sharply higher this week, gaining $5.80 or about 4.77% for the week.  Ribs gained another 6.96% this week after adding 6.35% last week.  Anyone planning to eat ribs on the fourth of July this year?  Weekly pork export sales were only 6,500 MT this week, which is down 24% from the previous week. The weekly Commitment of Traders report showed managed money accounts expanding their net long position in lean hogs by 1,462 contracts bringing their overall net long on June 17 to 55,313 contracts.  Weekly FI slaughter was estimated to be 16,000 head smaller than last week, and 79K head smaller than the same week a year ago. The market got wind that a PEDv vaccination has been approved, but many vets are skeptical as to how reliable the vaccine will be once the temperatures drop, and it gets cold again this Winter.

 

-

Market Watch

 

We start the week with the typical export inspections report on Monday morning, followed by the cold storage report, and then the crop progress report.  Fresh economic data regarding consumer confidence and new home sales will be out on Tuesday.  The durable goods report and an update on GDP will be breakfast conversation on Wednesday, and then we get the next glimpse at corn use for ethanol in the weekly EIA report later that morning.  Thursday brings a new export sales report, and Friday features the Hogs and Pigs report at 2:00.  The quarterly grain stocks and acreage reports are not until the following week, but they are on the first day of that week and the last day in the month of June; and the last day of Q2…. don’t let those two reports sneak up on you!

 

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

 

 

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