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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.

Twisted

Sep 23, 2011

brulogomed

Market Watch

September 23, 2011

Twisted

 This week was quite twisted with the worst week since October 2008 for the Dow Jones equity index. Ben Bernanke announced the telegraphed bond yield curve ‘twist’ this week, which is to buy more longer dated issues and let up on the shorter dated, at the tune of $400 billion. The dollar had a huge rally of over 1400 points, while crude tanked over $7 and gold dropped $160.

Corn was down the forth week in a row, losing nearly 8% of its value this week. Analysts continue to revise their crop production numbers as the harvest moves north. Informa Economics lowered their production expectations to 12.620 billion down from 12.711 billion bushels. The International Grains Council cut their 2011/12 Global corn production by 4 MMT which is still a record and up 19 MMT from last year. Field reports of harvested yields in some of the disaster areas this year were just barely above the insured amount but other weather damaged areas will be collecting to offset a portion of their losses. Domestic feed use is assumed to be slipping, and USDA cut projected feed use for the year by 200 million bushels last week, however cattle continue to go into feedlots at lower weights at unprecedented numbers due to the Southern Plains drought. USDA weekly corn export sales were at the low end of trade expectations at 598,100 MT which is interesting considering the U.S. dollar was on a down note that export week. The dollar was up sharply this week however as importers covered that end of their buying risk.

 

Commodity

 

 

 

 

Weekly

Weekly

Month

09/02/11

09/09/11

09/16/11

09/23/11

Change

% Change

Dec

Corn

7.6

7.365

6.92

6.385

0.5350

7.73%

Dec

CBOT Wheat

7.755

7.2975

6.8825

6.4075

0.4750

6.90%

Dec

KCBT Wheat

8.8

8.325

7.84

7.3125

0.5275

6.73%

Dec

MGEX Wheat

9.4275

9.0725

8.5625

8.51

0.0525

0.61%

Nov

Soybeans

14.4575

14.2675

13.555

12.58

0.9750

7.19%

Oct

Soybean Meal

379.9

370.3

348.7

326

22.7000

6.51%

Oct

Soybean Oil

57.88

58.34

56.55

52.4

4.1500

7.34%

Oct

Live Cattle

114.8

118.45

118.5

116.825

1.6750

1.41%

Sep

Feeder Cattle

132.65

133.225

135.3

132.1

3.2000

2.37%

Oct

Lean Hogs

85.8

87.25

87.35

88.8

1.4500

1.66%

Oct

Cotton

106.59

110.3

109.08

99.99

9.0900

8.33%

Dec

Oats

3.69

3.4825

3.455

3.315

0.1400

4.05%

Nov

Rice

18.225

18.33

17.89

16.485

1.4050

7.85%

 

Wheat futures were weighed on by the massive spike in the dollar and general uncertainty along with the other markets, coming down almost 7% in Chicago and KC while MN stood by nearly unscathed with only a nickel loss. The Dec contract hit the lowest levels since July 2010. The front month saw these levels in July 2011. Export sales came in higher than expected for the week ending 9/15 at 679.5 TMT. Egypt bought 240 TMT of wheat from Russia this week. The Ukraine harvest produced about 22.2 MMT and most of it milling quality. Informa sees 2011 HRW production at 444 million bushels.

Soybeans were down just shy of $1, over 7% following last week’s 5% decline. Crude oil tanking this week sure didn’t help out, dropping over $7/barrel. Soybeans hit the lowest levels since March 2011 on the Nov and the lowest levels since Dec 2010 on the front month. Informa sees 2012 soybean acreage at 75.8 million acres and 2011 production at 3.092 billion bushels. China appreciated the drop in bean prices this week with Private Exporters announcing the sale of 306,000 MT of soybeans for 2011/12 delivery. Weekly export sales for the week ended 9/15 were near targets at 404 TMT. The Census Crush report which would have normally been released this week has been discontinued.

Cotton was down 909 points, ending at 99.99 in the 9th month of the year. It fared the worst this week of the above tracked commodities, down 8.33% on continued global economic and stability concerns. The dollar rallying hard did not help along with the rest of the ag markets down heavily. Weekly export sales for the week ended 9/15 were positive, at 66.3K RB. The Census Cotton Consumption report which would have normally been released this week has been discontinued.

Cattle futures were down $1.67 for the week and Feeder cattle were down $3.20 for the week. We could see a turn around in prices on Monday however with the monthly Cattle on Feed report much friendlier than was anticipated by analysts. The number of cattle on feed as of September 1st were 10.721 million head with the average trade estimate looking for 10.985 million head. Cattle under 600 pounds coming into the feedlots were 144.4% above last year with the placement number actually down just under 1% from last year. Cattle 600-699 pounds were 93.67%, cattle 700-799 pounds were 84.28% and cattle over 800 pounds were 84.66% letting us know market ready cattle numbers will be down into October and maybe November although this is the third highest on feed number since the series began in 1996.

Lean Hog futures were the only commodity to show black ink this week closing up 1.66% from the previous week. The monthly Cold Storage report showed a 3% drop from the previous month likely attributed to strong export sales. Total pork stocks were up 13% from a year ago however at 440.66 million pounds. Carcass cutout prices have been rising, closing up $2.47 for the week while cash hog prices have been dropping this week improving packer margins.  Pork and poultry supplies are up year over year with chicken breast and breast meat nearly double a year ago competing with beef for the consumer dollar. And with the latest twist to Fed policy the consumer will be watching their dollars even closer.

Looking to enhance your existing Ag Marketing Professional subscription? Add free futures market quotes sent to your cell phone via our Market Monitor service. Or "push" the daily recommendations out to your phone as they happen with Market Messenger 2. Call in consulting service with Alan is also available for a limited number of new customers in our Ag Marketing Professional Premium package. Call our office for details on either service at 402-289-2330. 

 Market Watch: Next week brings: Weekly Export Inspections, Crop Progress, Weekly Export Sales, Q2 GDP, and the much awaited Grain Stocks report Friday. All of these reports are important but the Grain Stocks report tells us what the implied use was and how much corn there really was over the year. German Chancellor Merkel is meeting Tuesday with Greek Prime Minister Papandreou to try and sort out the Euro crisis, but this has been going on now for some time. Also inspectors will be headed to Athens to check up on Greek progress of the bailout program (Reuters).

 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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