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June 2011 Archive for Market Watch

RSS By: Alan Brugler, AgWeb.com

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

Where the Wild Things Are

Jun 24, 2011

Brugler

Market Watch with Alan Brugler

June 24, 2011

Where the Wild Things Are......

It was another great week to be a livestock feeder, with grain prices showing nothing but red ink, while exports and July 4 demand boosted both present and future prices for cattle and hogs. While prices might have gone hog wild in those pits, they had no claim on the wildest price action. Crude oil futures saw an early week rally snuffed out by the IEA, which coordinated a plan to flood the world market with 60 million barrels of strategic reserve oil. While representing just a few hours of global use, the action was widely viewed as a warning shot to crude oil longs about further potential intervention if prices don’t come down. Currencies were also wild, with Papandreou surviving a confidence vote in Greece, and striking an austerity deal with the EU and IMF. Now he just has to get Parliament to pass it and Greece gets a little more time to fix the bigger problems.

Corn futures dropped 30 cents per bushel for the week, which was a relief because it wasn’t the 87 cent loss of the week before. The new crop December was down 28 cents. The main story continued to be long liquidation in the July contract. As of a couple weeks ago there were still over 2 billion bushels of futures contracts open. There just isn’t that much corn available, and the exchange has rules for maintaining an orderly market. Longs were forced to reduce their ownership. Ethanol production increased thanks to the cheaper corn costs, and export bookings also picked up. Livestock margins improved dramatically, which will make it hard to cut feed use estimates. Low prices cure low prices, but one can also argue that low wheat prices are curing high corn prices via substitution buying.

Soybeans dropped less than 1% for the week.  The Census Crush report was bull friendly, showing more grind and smaller ending stocks than the trade expected. However, the export market remains soft, and China again deferred more 2010/11 old crop purchases into new crop 2011/12 shipping slots. That has a number of analysts expecting USDA to show higher ending stocks in July unless the June 30 Grain Stocks report shows that the bushels are already gone via some other means.

Wheat showed all the characteristics of a bear market, dropping hard on bearish news and pretty much ignoring bullish items like the strong weekly export sales report on Thursday and the report that 5 to 5.5 million acres of North Dakota crops would not be planted due to wet conditions. Up to 2 million of those acres are believed to be wheat. The bear news included better than expected yields for US HRW and SRW wheat, upward revisions for German and French production, and low ball pricing of Russian wheat in a Tunisian tender. The EU wheat futures dropped 7.5% in a single day due to currency issues and this low price competition.

Cotton saw divergent paths for old crop (there isn’t any) and new crop (the crop won’t be as large as originally expected but neither is likely global consumption). Nearby July was up 13.8% in a week as mills fixed on call purchases ahead of first notice day. Cert stocks are tight, so the bears didn’t have much leverage and may still be vulnerable to a short squeeze. US export sales continue to be dismal in both old crop and new crop slots. December was down 1.7% for the week. Cotton crop insurance claims are already at an all time high according to Texas sources.

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. 


Here are the Friday night closes for the past four weeks, along with the net change for this week vs. the previous week:

 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

06/03/11

06/10/11

06/17/11

06/24/11

Change

% Change

July

Corn

7.54

7.87

7.0025

6.7

0.3025

4.32%

July

CBOT Wheat

7.7375

7.5925

6.7225

6.3575

0.3650

5.43%

July

KCBT Wheat

9.1425

8.68

8.045

7.485

0.5600

6.96%

July

MGEX Wheat

10.605

10

8.9725

8.26

0.7125

7.94%

July

Soybeans

14.145

13.8725

13.33

13.2025

0.1275

0.96%

July

Soybean Meal

368.4

373.3

349

339.9

9.1000

2.61%

July

Soybean Oil

58.73

56.85

55.92

55.22

0.7000

1.25%

June

Live Cattle

104.175

102.725

109.75

113.05

3.3000

3.01%

Aug

Feeder Cattle

124.25

123.625

132.65

138.6

5.9500

4.49%

July

Lean Hogs

87.85

93.225

95.65

96

0.3500

0.37%

July

Cotton

161.63

150.03

145.18

165.22

20.0400

13.80%

July

Oats

3.78

3.955

3.515

3.355

0.1600

4.55%

July

Rice

14.475

14.895

13.965

13.45

0.5150

3.69%

 

Cattle futures rose 3% for the week.  Cash cattle trade was slow to develop, but came at higher money. It should, with the wholesale prices up more than $5.00 per hundred pounds. Actually, June futures matched the choice cutout value, which was up 3% on a Friday/Friday basis. Estimated beef production for the week was up 2.1% over the same week in 2010, but down 0.2% from the prior week. One big story for the week was the surge in US beef export sales, which was behind the rise in the product value. USDA reported net weekly sales for the week ending June 16 at 23,070 MT. That was the largest weekly sale since February 17. The Year to date shipments total of 350,900 MT wasn’t  met until Labor Day in 2010.

Lean Hogs were the second strongest commodity on our list after cotton, gaining 4.49% for the week. The cutout value of a hog set an all time high on Thursday at $99.27/cwt, and so did cash hog prices. The cutout value was up 3.44% for the week. Pork production YTD is up 1% from last year, but was down an estimated 2.2% this week vs. the previous week. Average carcass weight continues to run about 4 pounds above last year, allowing the extra pork tonnage despite smaller overall slaughter. Hog producers are showing just a whiff of expansion, with Friday’s Hogs & Pigs report showing the breeding herd at 100.3% of last year. The number of market hogs in the pipeline was 0.6% larger than last year. On the other hand, June-August farrowing intentions are smaller than the trade had expected.

Market Watch: We start the coming week with USDA export inspections and the well followed weekly Crop Progress and condition reports. Some grain traders will also be wrestling with surprise futures positions acquired via options exercises on Friday. THE news of the week for grains will be made on Thursday morning, when USDA releases the Planted Acreage and Grain Stocks reports. The former will not be complete by any stretch of the imagination, since there were big chunks of farmland unplanted in the first week of June. It should give us a better handle on how much the big WCB states exceeded their March intentions, but could overstate acres in the problem areas. The Grain Stocks report will be the final Ending Stocks number for wheat for 2010/11, and will tell corn and soybean users how much additional price rationing is required for June-August in order to make it to new crop supplies that will hopefully be ready by September.

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

Livestock Eat Grains Lunch

Jun 17, 2011

brulogomed 

Market Watch

June 17, 2011

Livestock Eat Grains Lunch 

This week was shaken up by a huge move higher in the dollar, driven by a flight to quality because of trouble with Greek debt again. We are nearing the end of the July contracts for grains which will cause volatility, starting with next Friday when July options expire. First notice is June 30th and last trade is on July 14th.

Corn futures began losing ground out of the gate this week dropping nearly a dollar from Monday’s high to today’s low on the July contract with a 67 cents drop on the new crop December. The crop progress report showed corn planting at 99 percent as of Sunday which offset the effects of last Friday’s crop report that showed a reduction in corn acres for this crop year. Adding to the initial bearishness was an improvement in weather conditions for a large portion of the Midwest this week. The rise in the value of the U.S. dollar at midweek gave the bears confidence to keep selling. On the other side of the scale the U.S. is still looking at a substantial reduction in ending stocks, so usage will have to be cut at some levels which could start with ethanol.  The Senate voted yesterday 73-27 to cut the 45 cents given to refiners for every gallon of ethanol bended with gasoline and to end the 54 cent tariff on imported ethanol at the end of 2011. It still has to go through the House and President Obama, who presumably does not want the blame for $.80/gallon higher gasoline prices that would occur if the ethanol plants shut down. An Iowa Senator has suggested a gradual decrease in the subsidies in keeping with the governments mandate for increased renewal fuel production in the U.S. The mandate calls for 12.6 billion gallons of ethanol to be added to the gas pool this year. Current output is running almost 10 percent above that rate. Dropping the 54 cent tariff would allow other alternative fuels like sugarcane ethanol to compete with the U.S. ethanol.

Soybeans closed sharply lower for the week, down 54 ¼ cents or 3.91%. Soybeans were weighed by weakness in crude oil, a sharply higher dollar, and a decent Crop Progress report. The NOPA crush came in lower than last year for May while meal yield was record high. Export sales came in at a healthy pace, up 49% from the previous week.

 

Wheat closed sharply lower for the week, down 87 cents or 11.46% for CBOT, down 63 ½ or 7.32% for KCBT and $1.02 ¾ or 10.28% for MGEX. Wheat was weighed by a higher dollar and weakness in the grains. Export sales were healthy at 455.5 TMT and inspections were 23.9 MB, well ahead of last year. Wheat is at a heavy discount to corn, 72 cents/bu on a pound for pound basis. It hit its highest levels last week at 89 cents which means there will likely be some wheat feeding if end users can get ahold of enough to hold them over for a few months.

Cotton showed some strength earlier in the week but sold off heavily into a higher dollar and broad weakness in commodities. Cotton ended 485 points lower for the week or 3.23%. A bullish Crop progress report earlier in the week with continued dryness in Texas offered support but that apparently wasn’t enough with the low levels of demand for yarn internationally and the cancellations of exports we have been seeing. Exports this week showed a glimmer of hope even though they were extremely low they were not negative.

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. 

Here are the Friday night closes for the past four weeks, along with the net change for this week vs. the previous week:

 

Commodity

 

 

 

 

Weekly

Weekly

Month

05/27/11

06/03/11

06/10/11

06/17/11

Change

% Change

July

Corn

7.585

7.54

7.87

7.0025

0.8675

11.02%

July

CBOT Wheat

8.1975

7.7375

7.5925

6.7225

0.8700

11.46%

July

KCBT Wheat

9.43

9.1425

8.68

8.045

0.6350

7.32%

July

MGEX Wheat

10.5625

10.605

10

8.9725

1.0275

10.28%

July

Soybeans

13.7975

14.145

13.8725

13.33

0.5425

3.91%

July

Soybean Meal

355.6

368.4

373.3

349

24.3000

6.51%

July

Soybean Oil

58.61

58.73

56.85

55.92

0.9300

1.64%

June

Live Cattle

104.1

104.175

102.725

109.75

7.0250

6.84%

Aug

Feeder Cattle

122.72

124.25

123.625

132.65

9.0250

7.30%

July

Lean Hogs

88.6

87.85

93.225

95.65

2.4250

2.60%

July

Cotton

152.67

161.63

150.03

145.18

4.8500

3.23%

July

Oats

3.8275

3.78

3.955

3.515

0.4400

11.13%

July

Rice

15.185

14.475

14.895

13.965

0.9300

6.24%

 

Cattle futures were up about $7.00 for the week on $4 to $5 higher cash prices. The higher prices were supported by today’s monthly Cattle on Feed report. The report was bullish with every category an improvement over the average trade estimate. June 1 on Feed was 104 percent, May Placements were 89 percent and May Marketings were 107 percent versus the average trade estimates of 105.5, 92.5 and 103.5 respectively. Exports have also been robust. Accumulated exports so far this year are 333,755 MT, looking to outpace last year, which was the strongest export year since BSE.  The carcass value was up about $1.40 from last Friday for Choice beef. Beef production is estimated at 523 million pounds, up .4% from a year ago and up 1.8% from last week. Average carcass weight is estimated to be 1 pound lighter than last week for the second week in a row showing a readiness for producers to move cattle at higher money along with the packer willingness to show them the money.   

Lean Hog futures gained 2.43% for the week and have rallied about $7 since June 7th.  Pork production YTD is now only 1.0% ahead of last year, and estimated weekly production of 406.3 million pounds was down 1.5% from a week ago. The pieced out value of the hog rose 2.32% on a Thursday/Thursday basis, with the daily trend moving steadily up this week.  All the cuts improved versus a week ago except for Loins and Hams which showed substantial gains the previous week.  

Market Watch: We start the coming week with USDA export inspections and the well followed weekly Crop Progress and condition reports. Tuesday, June 21st, is the first day for the Federal Open Market Committee meeting and the longest day of the year. Fed Chairman Bernanke probably feels like Bill Murray in Ground Hog Day, for more of the same. Wednesday is the monthly USDA Cold Storage report and the second day for the FOMC meeting. USDA will release weekly Export Sales along with the Cotton Consumption, Census Crush and EIA Gas Storage on Thursday morning and the macro traders will get the weekly Initial Jobless Claims and monthly Housing Starts numbers to play with.  On Friday, USDA will weigh in with the quarterly Hog and Pig report.

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

The Big Muddy

Jun 10, 2011

Brugler

Market Watch with Alan Brugler

June 10, 2011

The Big Muddy

 

In a quirk of the Internet, if you search for "Big Muddy" it comes up as a nickname for the Mississippi River. If you search for nicknames for the Missouri River, you come up with "Big Muddy". It is somehow appropriate that the two sources of flooding problems in the United States this year both have the same nickname, and in fact the Missouri flows into and becomes part of the Mississippi River down by St. Louis. The flooding on the river has also muddied the picture for US corn and soybean production when combined with heavy rains in other areas that prevented planting. USDA on Thursday reduced projected US corn acreage by 1.5 million to reflect prevented planting of intended corn acres, and cut estimated harvested acres by 400,000 additional acres to reflect currently planted corn that is likely to be under water for the next 6 to 8 weeks. While the number of flooded acres will be small by comparison to the total land mass of the United States, the market needed the bushels from that high producing bottom ground. It will be several months before we know how much was lost, because it depends so much on peak water levels, and which levees fail.

 

Corn futures were higher this week, with nearby July up 33 cents despite active liquidation of July longs by the swaps dealers/index funds. December futures posted new life of contract highs on Thursday at $7.22 ¾. Old crop July just missed the magic $8 number, probably because nobody wanted to tell their boss they bought $8 corn. The high on Friday was $7.99 ¾ before profit taking kicked in. The main driver for the week was clearly the USDA decision to cut the estimated acreage without waiting for the June 30 Planted Acreage report. They cut projected new crop ending stocks to 695 million bushels, putting the stocks/use ratio at the tightest level since 1995/96 before the crop is even knee high. The global corn stocks/use ratio is also projected to be the tightest on record, following revisions to Chinese production and consumption numbers.

 

Soybeans retreated almost 2% for the week. Meal futures were up $4.90/ton to support bean values, but soy oil was down 3.2% for the week. Energy futures were lower, with crude oil back below $100 on Friday after Saudi Arabia indicated it would increase crude oil production even if OPEC would not.  USDA trimmed projected biodiesel use of soy oil to 2.4 billion pounds, due to the slow rate of increase in monthly production. That resulted in larger projected new crop soy oil ending stocks but not in a lower cash price estimate. Soybean ending stocks for 2012 were raised to a more comfortable 190 million bushels by USDA, but USDA raised projected cash prices received by farmers to a mid-point of $14.00 per bushel. That was a $1.00 per bushel hike from the May report to the June report. Unlike in corn, USDA made no changes in projected soybean production, likely because too much of the crop is still to be planted.

 

Wheat futures were lower at all three exchanges this week, but the hard wheat markets took the brunt of the selling. KC was down 5.06% on higher than expected yields from the drought stressed HRW crop. USDA raised projected HRW production to 777 million bushels.  The SRW forecast was also hiked 7 million bushels but it didn’t have the same market effect. Chicago wheat is now at a substantial discount to corn, signaling those livestock feeders who can do so to feed more wheat and less corn. USDA lowered overall US wheat ending stocks to 809 million bushels for the year just ended, and sees them declining to 687 million bushels by May 2012.

 

Cotton futures showed the largest loss of any of the tracked commodities, with nearby July down 7.18% despite a strong up day on Thursday. World buyers continue to cancel purchases made in the heat of the moment back in February and March. Cancellations have been larger than new sales for the past 11 weeks in a row. That does hinder front month futures. USDA shocked the market on Thursday by trimming 1 million bales from new crop production. However, a larger carryin forecast and smaller export projection left end stocks UNCH at 2.5 million bushels.  


Here are the Friday night closes for the past four weeks, along with the net change for this week vs. the previous week:

 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

05/20/11

05/27/11

06/03/11

06/10/11

Change

% Change

July

Corn

7.595

7.585

7.54

7.87

0.3300

4.38%

July

CBOT Wheat

8.065

8.1975

7.7375

7.5925

0.1450

1.87%

July

KCBT Wheat

9.3325

9.43

9.1425

8.68

0.4625

5.06%

July

MGEX Wheat

9.9975

10.5625

10.605

10

0.6050

5.70%

July

Soybeans

13.8025

13.7975

14.145

13.8725

0.2725

1.93%

July

Soybean Meal

360.6

355.6

368.4

373.3

4.9000

1.33%

July

Soybean Oil

57.46

58.61

58.73

56.85

1.8800

3.20%

June

Live Cattle

104.975

104.1

104.175

102.725

1.4500

1.39%

Aug

Feeder Cattle

125.75

122.72

124.25

123.625

0.6250

0.50%

June

Lean Hogs

91.975

88.925

89.225

91.7

2.4750

2.77%

July

Cotton

155.61

152.67

161.63

150.03

11.6000

7.18%

July

Oats

3.64

3.8275

3.78

3.955

0.1750

4.63%

July

Rice

15.1

15.185

14.475

14.895

0.4200

2.90%

 

Cattle futures were down $1.45 for the week despite higher cash cattle trade and a supportive rise in hog prices.  Packers could afford the higher cash prices, due to excellent margins built up over the past several weeks. Beef production for the week was up 10.5% over the holiday week, and up 3.1% from last year for the same week. That put some pressure on the carcass value, which closed the week at $171.55 for choice and $165.37 for select. Those were down 3.3 and 3.5% respectively on a Friday/Friday basis. Average carcass weight is estimated to be 1 pound lighter than last year, which is a significant improvement in currentness.

 

Hog futures gained 2.77% for the week.  Pork production YTD is now only 1.1% ahead of last year, and estimated weekly production of 413.3 million pounds was down 0.2% from the same week a year ago. The pieced out value of the hog rose 2.5% on a Thursday/Thursday basis, with erratic daily swings in the reported value of the primal cuts.  Pork loins went from $104 to $110 to $104 to $110 over a period of 6 market days.  USDA cut projected 2011 pork production by 10 million pounds on Thursday, and trimmed likely 2012 production by 40 million to reflect the effects of historically high feed costs and their increased potential for remaining high if crop production doesn’t improve.

 

Market Watch:  The USDA reports may be out of the way, but the calendar is still full. We start the coming week with USDA export inspections and the well followed weekly Crop Progress and condition reports. Tuesday is Flag Day, as well as the expiration day for June hog futures and options. NOPA crush is also expected on Tuesday. Wednesday is a full moon, as if things weren’t crazy enough already. USDA will release weekly Export Sales on Thursday morning and the macro traders will get the weekly Initial Jobless Claims and monthly Housing Starts numbers to play with.  On Friday, USDA will weigh in with the monthly Cattle on Feed report.


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

Prices are Rising, the Devil's to Pay

Jun 03, 2011

Brugler

Market Watch with Alan Brugler

June 3, 2011

Prices are Rising, The Devil’s to Pay

 

I started out with this week’s theme being rising temperatures, with much above normal temps in the forecast for much of the eastern 2/3 of the country over the next 14 days. I was remembering a song lyric ‘temperature’s rising, the devil’s to pay’. As with a lot of songs, I wasn’t exactly right on the words. The actual phrase was "Prices are rising, the Devil’s to Pay" from the 1970’s group Three Dog Night in Family of Man. Then I realized it didn’t make any difference! Prices and temps are both rising, and somebody is going to pay whether it is the grower, the processor the feedlot or the consumer. Ideal weather was needed to make the grain balance sheets work, and we don’t appear to be getting it.

 

Above normal temps are seen for most of the next two weeks in the central US as the drought area in Texas refuses to move. The long range weather forecasts suggest drying and likely planting progress in OH and IN but with further delays in the Dakotas as above normal precip continues there. "Planned flooding" by the Army Corp of Engineers will be required from Montana to St. Louis, and low lying corn has already been lost in NE and IA along the Missouri River. Larger water releases are planned for this week to keep the dams from overflowing. Quantifying acreage losses is a real challenge, and USDA is doing the June Planted Acreage surveys right now! For those with the crop planted and regular rains and with no river nearby, life is good...

 

Corn had a nice up day on Thursday, with December futures posting new life of contract highs. Nearby July was down 4 ½ cents for the week, all of it coming from the 12 ½ cent Friday sell off. Open interest in the July contract is still more than 2.5 billion bushels, requiring a LOT of both long liquidation and short covering over the next 30 days. The big index funds have already begun rolling out of the July, but another one is scheduled to begin on Tuesday. USDA weekly export sales were neutral on Friday morning as USDA put the actual number at 700,900 MT.  Crop condition ratings were historically low for late May, but the correlation to final yields is very weak.

 

Soybeans rallied a sharp 2.5% this past week. Meal was up 3.6% despite the weaker tone in corn, due to low crush rates and thus less meal output. Egg sets and broiler placement data do not show any consistent cutbacks in the broiler industry (which is engaged in a market share battle). Soy oil was up 0.2% for the week. Prices in China were up sharply, as the price controls on veg oils were apparently allowed to expire on May 31. If that situation is allowed to continue, it might take pressure off of the crush plants and allow more of the imported beans piled up at the ports to be used. US weekly export sales are typically light this time of year. USDA put the actual net sales for last week at 155,500 MT.

 

Wheat futures were higher in MPLS for the week, but settled lower in Chicago and KC. MPLS was up 4 cents per bushel, with the CWB indicating that Canadian acreage would be down. US planting is also still lagging and acreage estimates are slipping with each passing week. Wheat prices were sharply lower on Tuesday after the Russians announced the end of the export embargo on July 1. However, Russian internal prices quickly rose to match global values, and calls for export tariffs began to surface within the Russian political structure. The intent of those would be to slow exports and limit the internal price increases.

 

Cotton futures showed the largest advance for the week, up 5.87%. This came despite a 9th consecutive week of old crop export sales net cancellations. The bull story for the July came from cert stocks. A merchant de-certified most of the existing warehouse inventory, suggesting that it would be shipped out and thus not available for the July delivery process. That had shorts scrambling to get out. Mills also appear to have a large book of unfixed on call purchases tied to the July contract. That did not go well for them in March, with the bulls pressing them right into deliveries.


Here are the Friday night closes for the past four weeks, along with the net change for this week vs. the previous week:  

 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

05/13/11

05/20/11

05/27/11

06/03/11

Change

% Change

July

Corn

6.82

7.595

7.585

7.54

0.0450

0.59%

July

CBOT Wheat

7.2775

8.065

8.1975

7.7375

0.4600

5.61%

July

KCBT Wheat

8.695

9.3325

9.43

9.1425

0.2875

3.05%

July

MGEX Wheat

9.0025

9.9975

10.5625

10.605

0.0425

0.40%

July

Soybeans

13.295

13.8025

13.7975

14.145

0.3475

2.52%

July

Soybean Meal

345.4

360.6

355.6

368.4

12.80

3.60%

July

Soybean Oil

56.14

57.46

58.61

58.73

0.12

0.20%

June

Live Cattle

109

104.975

104.1

104.175

0.08

0.07%

Aug

Feeder Cattle

132.45

125.75

122.72

124.25

1.53

1.25%

June

Lean Hogs

94.55

91.975

88.925

89.225

0.30

0.34%

July

Cotton

145.15

155.61

152.67

161.63

8.96

5.87%

July

Oats

3.445

3.64

3.8275

3.78

0.0475

1.24%

July

Rice

13.98

15.1

15.185

14.475

0.7100

4.68%

 

Cattle futures were actually up 7 ½ cents for the week, a surprise to some after the pasting they took on Tuesday and Wednesday. However, the sell off appeared to be overdone technically, and cash cattle for the most part traded even with the previous week. Estimated beef production for the week was 2% smaller than last year and down 8.5% from the previous week because of the holiday on Monday.  Wholesale prices were mixed for the week, with choice boxed beef up 33 cents for the week, but select down $1.32/cwt on a Friday/Friday basis. One problem has been the slowdown in South Korean purchases. The emergency buying program needed to compensate for the FMD losses boosted overall US exports earlier in the spring, but the Koreans now appear to be back to more typical purchasing levels.

 

Hog futures also closed 30 cents higher this week. The cash hog market was volatile, in terms of day to day changes. Futures are still discounting another $2+ drop in the CME Lean Hog Index between now and June contract expiration. Pork production for the week was 1.3% smaller than the same week in 2010, with YTD production 1.2% larger than a year ago. The cutout value of the hogs held up fairly well, losing 0.3% or 27 cents on a Friday/Friday basis. Pork loin values had more than a $12 range for the week.

 

Market Watch:  Monday will be the 67th anniversary of D-Day. It will also be first notice day for June cattle deliveries, and an adjustment day for those with surprise futures positions after Friday’s June options expirations.  For a while it looked like $102 was the "pin", but June settled at $104.17 so some call sellers may have been surprised, and some options longs are now long futures. The focus on Monday afternoon will be the weekly USDA Crop Progress report, with corn planting expected to be in the low 90% range.  The major USDA reports for the week will be the monthly Crop Production and WASDE (supply & demand) reports on Thursday morning.  Friday will mark the last trading day for July 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 2011 Brugler Marketing & Management, LLC

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