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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.

Warming Up

Feb 03, 2012

Brugler

Market Watch with Alan Brugler

February 3, 2012

Warming Up

Midwest temperatures have been unusually warm this winter. Grain markets have taken the hint and warmed up a little themselves. You can also think of it as warming up for the next main event, the March USDA Planting Intentions report. Coincidentally, we're also now in the pricing period used to set crop revenue insurance guarantee levels for 2012 crops.

Corn futures eked out a 3 cent per bushel gain for the week, extending a string of higher weekly closes.  A private analyst left projected Brazilian corn production UNCH at 61 MMT and dropped Argentina 1.5 MMT to 22.5 MMT. Other Argentine estimates have been another 40 million bushels lower but the cut made it more likely that USDA will follow suit in Thursday’s WASDE estimate. Weekly export sales hit 912,000 MT for 2011/12 and 63,000 MT for 2012/13 and were in line with trade expectations. Private exporters announced the sale of 107,340 MT of corn to Japan for 2011/12 delivery on Thursday. South African corn production was reduced to 11.5 MMT in a report issued by the USDA attaché for South Africa. Weekly ethanol production refused to back down, likely because of previous hedging, but stocks have built to nearly 21 million gallons and are putting pressure on ethanol prices.

The wheat complex saw all three exchanges higher for a change. There was still some spread trading between markets, but Chicago ended the week 2.1% higher. KC was up 1.8% and MPLS was up 1 5%. Weekly export sales were a net 518,900 MT for 2011/12 delivery and 35,200 MT for 2012/13 delivery, at the low end of trade guesses. The Rosario Grain Exchange predicts a crop of 12.5 MMT, down substantially from 2010 production of 16.1 MMT. The USDA attaché estimates Argentine wheat production at 14 MMT for 2011/12 with exports projected at 9.5 MMT. Goldman Sachs raised their near term wheat futures target to $6.80 from $6.20 but remains longer term bearish.

Soybeans were up 14 cents for the week, a 1.1% gain. Soybean meal was up 2%, while soy oil struggled to a 0.12% pickup for the week. Weekly soybean export sales were again below trade estimates, but the market shook that off on Friday, which accounted for nearly the entire advance for the week.  A private forecasting firm on Friday lowered their projection for soybean production in Brazil to 70 MMT, and put Argentina at 46.5 MMT. The combined cuts were larger than expected from that firm, and gave beans a good boost on Friday.  

 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

01/13/12

01/20/12

01/27/12

02/03/12

Change

% Change

Mar

Corn

$6.00

$6.12

$6.42

$6.45

0.03

0.43%

Mar

CBOT Wheat

$6.02

$6.11

$6.47

$6.61

0.14

2.09%

Mar

KCBT Wheat

$6.70

$6.67

$7.00

$7.13

0.13

1.82%

Mar

MGEX Wheat

$8.01

$7.99

$8.26

$8.39

0.12

1.48%

Mar

Soybeans

$11.58

$11.87

$12.19

$12.33

0.14

1.11%

Mar

Soybean Meal

$301.50

$311.90

$322.20

$328.60

6.40

1.99%

Mar

Soybean Oil

$50.29

$50.43

$51.59

$51.65

0.06

0.12%

Feb

Live Cattle

$122.77

$124.55

$124.70

$123.63

-1.08

0.86%

Jan

Feeder Cattle

$150.58

$151.63

$154.60

$154.45

-0.15

0.10%

Feb

Lean Hogs

$85.60

$85.33

$86.68

$87.53

0.85

0.98%

Mar

Cotton

$95.47

$98.60

$96.00

$96.34

0.34

0.35%

Mar

Oats

$2.83

$2.95

$2.99

$3.14

0.16

5.19%

Mar

Rice

$14.44

$14.54

$14.64

$13.88

-0.76

5.19%

 

Cotton futures rose 0.35% for the week. All of the gain came on Friday. The U.S. economic news was positive on Friday, with unemployment dropping to 8.3%. Weekly export shipments were a marketing year high at 366,000 RB in the most recent USDDA report, with China the main destination. The USDA set the prevailing world market price (AWP) for upland cotton at 80.57 cents through February 9th. As you can see, US futures are well above that.

Cattle futures posted some new highs early in the week, but backed off on Friday to close $1.08 lower, or 0.86%. Cash cattle trade was down $1 in the south on Friday. Dressed business was reported $1-2 lower in the north, at $198.  The wholesale market was lower. Select boxes were down $.45, while Choice graded product was down $.07 with light to moderate demand and offerings. Weekly beef production was down an estimated 3.1% from the previous week, and down 5.8% from the same week in 2011. YTD beef production is down 5.2%.

Lean Hog futures were up 85 cents for the week, or about one percent. Ham prices rose $2.51 from Monday to Friday, helping to support the cutout value and the hogs. USDA projected weekly slaughter (including the Saturday estimate) was 2.137million head, down 30,000 from the previous week but up from year ago. The national average base hog price was $83.81, down $1.33 from the previous day and running a different direction than the product value as we headed into the weekend.

Market Watch: Most of the USDA report action will be on Thursday, with the monthly crop production and world supply/demand estimates due out at 7:30 am CST. No US production estimate revisions are expected, but cuts in South American crop size are widely expected. With US export shipments of corn running close to last year’s pace, and USDA well below that in the January report, traders will also be interested in the weekly Export Inspections report on Monday and the weekly Export Sales report. The latter is also a Thursday morning release. The cattle market will begin Monday by reacting to "surprise" positions acquired or lost from the Feb options expiration on Friday. Friday will mark the expiration of March cotton options.

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 2012 Brugler Marketing & Management, LLC

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