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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.

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

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