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RSS By: Alan Brugler, AgWeb.com

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

Green Shoots and Cool Dirt

Mar 15, 2013

Brugler 

Market Watch with Alan Brugler

March 15, 2013

 

Green Shoots and Cool Dirt

 

There are some hints of spring around. The birds are singing, the snow is melting faster, and the days are getting longer. In some places, the crocuses are starting to pop out. Soil temps, on the other hand, are a lot less spring like than they were a year ago. According to the folks at Planalytics, the 40 degree line is just now reaching the Oklahoma border, and soil temps are 2-3 weeks from the 55 degrees needed for corn in areas of MS, AL, GA that last year were already planting. If that delay continues, it will have implications for old crop corn consumption in July and August.

 

Corn gained 14 cents per bushel for the week in the nearby May contract. The EIA reported that ethanol stocks are the smallest in 15 weeks, and there were zero imports for the second week in a row. Weekly export sales were the strongest in a while, at 653,318 MT in total sales. Total export commitments for the 2012/13 marketing year stand at 71% of the USDA projection vs. the 5-year average of 77% for this date. Weekly export shipments hit a 5-week high at 408,201 MT. Spec funds were getting interested in testing the long side, with the Friday CFTC report showing an increase in their net long position to 87,671 contracts as of last Tuesday. The main bearish fly in the ointment was the increased use of wheat for feed in domestic rations.

 

Soybeans were down 45 cents per bushel for the week, a 3.06% drop. Various factors were cited, including a delay in the scheduled port strike in Brazil and a smaller than expected NOPA crush report for February that came out on Friday morning. Harvest progress in Brazil and weak Brazilian FOB prices vs. the US were also circulating. On the bull side, US weekly export sales were still running strong in the Thursday report, and USDA reported another 165,000 MT of new crop sales to China under the daily reporting system on Friday.

 

KC Wheat was up 18 cents per bushel for the week after being down 20 cents the previous week. Chicago was down a steeper 3.26% last week, and back up 3.73% this week. Minneapolis eked out a ½ percent gain. Weekly export sales were stronger than the pre-report trade estimates at over 1,087,000 MT. Weekly shipments were the largest in over a year. Total wheat commitments stand at 87% of the USDA projection vs. the 5-year average of 96%.

 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

02/22/13

03/01/13

03/08/13

03/15/13

Change

% Change

May

Corn

$6.84

$7.09

$7.04

$7.17

$0.14

1.92%

May

CBOT Wheat

$7.19

$7.21

$6.97

$7.23

$0.26

3.73%

May

KCBT Wheat

$7.60

$7.56

$7.34

$7.52

$0.18

2.38%

May

MGEX Wheat

$8.12

$8.05

$7.92

$7.96

$0.04

0.54%

May

Soybeans

$14.44

$14.44

$14.71

$14.26

($0.45)

-3.06%

May

Soybean Meal

$426.40

$429.30

$435.25

$418.80

($16.45)

-3.78%

May

Soybean Oil

$50.73

$49.67

$50.34

$49.91

($0.43)

-0.85%

Apr

Live Cattle

$128.23

$129.95

$127.55

$125.78

($1.77)

-1.39%

Mar

Feeder Cattle

$141.25

$141.55

$138.98

$136.68

($2.30)

-1.65%

Apr

Lean Hogs

$81.65

$81.13

$82.03

$79.68

($2.35)

-2.86%

May

Cotton

$83.14

$85.40

$86.75

$92.57

$5.82

6.71%

May

Oats

$3.85

$3.80

$3.88

$4.02

$0.14

3.54%

May

Rice

$15.89

$15.78

$15.37

$14.68

($0.69)

-4.46%

 

Cattle futures ignored strong beef prices and settled $1.77 lower for the week.  Cash cattle traded $1 lower at $125-127, with Nebraska quotes at $200-201. The futures drop created some attractive basis opportunities for hedgers and caused the cash cattle to trade. Boxed beef retreated $1.52 per cwt this past week after a gain of $9.18 for Choice boxes the previous week. The Select boxes were exactly UNCH for the week on a Fri/Fri basis. Weekly beef export sales were huge, at 31, 500 MT. Japan was a major buyer now that the new procedures for importing beef from animals up to 30 months of age are in place. US weekly beef production was up 1.6% from the previous week, but still 1.2% smaller than the same week in March 2012. Year to date production is down 2.9% from last year. Average carcass weights are still running about 6 pounds higher than year ago.

 

Hog futures sank 2.86% for the week. The trade is still very concerned over export and retail demand for pork. The loss of the Russian export market, and restrictions on Chinese pork imports, have backed up product into the US market.  On a Fri to Fri basis the pork cutout was actually $.89 higher, not that you could have deduced that from most of the market commentary. Pork production for the week was up 0.3% from the same week in year ago. Pork production YTD is down 2.0% from last year. Carcass weights are still running about 2 pounds below year ago, which is the reason slaughter is only down 1.4% but production is down 2%. USDA announced a furlough plan for meat inspectors, who will not report for work on 11 days, beginning in July.  All will be off on the same days, and those days will not be consecutive. The two big questions are 1) will Congress pass some emergency legislation allowing USDA to cancel the plan? and 2) Can plants adjust their kill schedules on the remaining days enough to keep up with the supply of ready hogs?

 

Cotton was again a big winner, advancing another 6.71%.  Spec funds continued to add to their net long positions begun back in December. Global ending stocks remain burdensome, but much of that cotton is locked up in China, and China continues to be an active buyer in the world market. USDA weekly sales were 187,600 RB for 2012/13, which was up 25% from the previous week and 14% ahead of the 4-week average. 2013/14 sales were 40,500 RB. Total Upland cotton export commitments stand at 90% of the USDA’s projected exports, which is right on pace to meet the target. Net American pima sales were 44,900 RB, which was a marketing year high.

 

Market Watch: USDA will have the usual export reports on Monday (Inspections) and Thursday (Sales). The major monthly reports for the week will be Cattle on Feed and Cold Storage, both scheduled for Friday afternoon. The Fed Open Market Committee is scheduled to meet on Tuesday and Wednesday, with no change in short term interest rate targets expected. Spring officially begins this week, on March 20. Friday will mark the expiration of the April grain options, including corn, oats, rice, wheat and the soy complex.

 

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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