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September 2012 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.

Quarterly News is Big Once More

Sep 28, 2012

 

Brugler

Market Watch with Alan Brugler

September 28, 2012


Quarterly News Is Big Once More

We’ve seen this movie before. The markets grind lower for weeks, expecting burdensome USDA numbers in a quarterly Grain Stocks report. We get technically oversold ahead of the report, and then USDA ‘s real numbers turn out to be more bullish than the crowd’s assumption of what they would be. The result is a limit up move as many are caught on the wrong side of the market. For corn, by our count this was the 7th quarterly Grain Stocks report in the last 9 reports where there was a limit move following the report. Not all of them have been up, in some cases we right into the report all bulled up and find out there is more inventory. This time it was a bull story for corn and wheat, and soybeans went along for the ride.


Thanks to the 40 cent, limit up move on Friday, nearby corn futures ended the week 1% higher. Weekly export sales for the prior week were almost 0 the prior week, at a net 400 MT. According to our friend Dean, that is only about 16 truckloads! Cancellations by customers with buyers remorse offset a nice sized sale to Japan. Ethanol production also slowed, dropping to an annualized pace of about 4.4 billion bushels while ethanol stocks rose. Brazilian ethanol imported by the Californians bulked up US supply and resulted in larger weekly stocks. These were the stories before the Grain Stocks report. The conversation changed when USDA found only 988 million bushels of old crop corn out there on September 1. That was a 190 million bushel drop from their September 12 estimate and basically is the same to the balance sheet as dropping the US average yield by nearly 2 bushels per acre.


Soybeans lost 6.74% two weeks ago, but the loss slowed to 1.28% this past week. Weekly export sales were no the high end of trade estimates, but pretty much ignored on Thursday as the funds were focused on exiting longs while they still had some money made. US export sales for the year remain heavily front end loaded, with 77% of the USDA projected shipments for the year already on the sales book. Shipments have only been running at last year’s depressed levels, but should ramp up sharply in October. That will mean a more concerted effort to buy beans in the country. USDA put final soybean ending stocks at 169 million bushels. You can’t have negative stocks in any state, so old crop 2011 production was increased 37 million bushels to square things up. This was based on known use and "administrative data" that usually means FSA numbers.

The three wheat markets were all higher for the week, again due to the sharp rally on Friday. USDA didn’t surprise anyone with the wheat production estimate at 2.269 billion bushels. Spring wheat production was raised and SRW was reduced, with minor changes in the other classes. The big surprise was in the September 1 stocks number, only 2.103 billion bushels. Implied 1Q feed use was about 435 million bushels, a huge number historically and likely to be tamed a bit over the next 3 quarters with some negative residual use numbers. The apparently huge feed use offset a bearish start to the wheat export year. Export commitments YTD are only 39% of the USDA forecast for the year. They would typically be 57% by now.

Nearby cotton futures lost 4% for the week after being down 4.5% the prior week. USDA has projected world ending stocks rising to multi-decade highs of 76.52 million bales. That ending stocks figure represents 259 days of use at the current consumption rate, or 71% of global annual production for 2012/13. It is still weighing on prices, trying to uncover demand. The deepening recession in the EU is threatening lower global consumption.  US export sales are doing OK, with 47% of expected shipments for the year already booked. That is close to the 48% average for this date.

 

Commodity

 

 

 

 

Weekly

Weekly

Month

09/07/12

09/14/12

09/21/12

09/28/12

Change

% Change

Dec

Corn

$8.00

$7.82

$7.48

$7.56

$0.08

1.07%

Dec

CBOT Wheat

$9.05

$9.24

$8.97

$9.03

$0.05

0.59%

Dec

KCBT Wheat

$9.23

$9.48

$9.26

$9.28

$0.01

0.13%

Dec

MGEX Wheat

$9.58

$9.78

$9.58

$9.59

$0.01

0.08%

Dec

Soybeans

$17.37

$17.39

$16.22

$16.01

($0.21)

-1.28%

Oct

Soybean Meal

$527.20

$523.50

$484.50

$487.00

$2.50

0.52%

Oct

Soybean Oil

$56.24

$56.97

$54.45

$52.18

($2.27)

-4.17%

Oct

Live Cattle

$126.48

$127.05

$125.53

$122.08

($3.45)

-2.75%

Oct

Feeder Cattle

$146.15

$146.63

$147.23

$143.80

($3.42)

-2.33%

Oct

Lean Hogs

$71.35

$74.03

$75.80

$77.18

$1.38

1.81%

Oct

Cotton

$75.72

$75.39

$72.00

$69.15

($2.85)

-3.96%

Dec

Oats

$3.91

$3.96

$3.76

$3.71

($0.05)

-1.46%

Nov

Rice

$14.96

$15.28

$15.24

$15.48

$0.23

1.54%

 

Cattle futures lost $3.45 for the week in the nearby futures. The board got ahead of the cash market, and began to have doubts about whether cash was going to catch up. Those fears were well founded, as cash trade was sharply lower this week. Wholesale prices were down hard. Choice boxes were down 2.3% for the week, and select production was down 3.3%. Weekly beef production was up 4.1% from the previous week, accounting for some of the pressure, and weekly export sales also declined to below ten thousand metric tonnes. Beef production YTD is still down 2% from last year. 

Hog futures were up another 1.8%, a third week of gains. Estimated pork production for the week was down 2,2% from the previous week, helping firm up the product market. Production is still getting larger compared to last year, however, up 2.5%. FI slaughter was 4.1% larger than the same week in 2011. It had been 5% larger the previous week, so that is a moral victory for the bulls. Estimated carcass weight is down 2 pounds from last year, which helps keep a lid on tonnage. Friday’s Hogs & Pigs report showed some downsizing. Market hogs were 100.4% of last year, which sounds bigger. However, the market hog numbers under 120 pounds are below year ago, the breeding herd is down to 99.7% of last year, and farrowing intentions for Sep-Nov were down 2.7%. 

Market Watch:

We’ll start October still reacting to the Friday USDA reports, since corn was locked limit up on the close Friday, and the quarterly Hogs & Pigs report didn’t come out until after the close of business. October soybean meal and soy oil are also now into the futures delivery period. Cotton deliveries continue, although little has been happening. The main USDA reports for the week are the usual weekly Export Inspections and Crop Progress reports on Monday, and the weekly Export Sales report on Thursday. Friday will market the last trading day for October live cattle options.  Chinese futures markets will be closed all week for the Golden Week or Mid-Autumn Festival holiday period. 

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. Visit our web site at https://www.bruglermarketing.com for more information on our consulting and advisory services for farm family enterprises and agribusinesses.

Copyright 2012 Brugler Marketing & Management, LLC

Dive,Dive,Dive

Sep 21, 2012

Brugler

Market Watch with Alan Brugler

September 21, 2012


Dive, Dive, Dive

In a move reminiscent of World War II submarine movies, the bean market, and to a lesser degree corn went into a steep dive this week. November soybeans lost $1.17 per bushel for the week! While it is tempting to blame the drop on improved yield reports coming out of US fields, the big picture is a little more complex. There were a lot of bearish depth charges being thrown off of that destroyer. The US dollar index posted its first weekly gain since July, making commodities priced in floating currencies more expensive to buy. The dollar was actually weaker against the Chinese yuan, however. Crude oil dropped, dragging out all of the energy molecules with it, including biodiesel and ethanol. Some fund traders were also beginning to exit their summer weather market trades, looking to go back into the equity markets for the winter. Others were simply adjusting their asset allocations, paring back their winners and buying or getting ready to buy underperforming commodities for the next quarter.  

Nearby corn futures ended the week 4.3% lower. Weekly export sales for the prior week were again very light, reinforcing bearish arguments that the current level of prices is sharply reducing consumption/disappearance as it needs to do. Producers were also getting into higher producing full season varieties, and harvest yield results were starting to look a little better. There are still plenty of poor numbers to go around, but part of the USDA yield estimate is based on farmer surveys that may not have quite as pessimistic of a view point in October as they had in September. On the bull side, ethanol production jumped to the highest level in months as plants ramped up to use new crop corn. If the current grind was sustained for 52 weeks, corn used for ethanol would jump to 4.8 billion bushels, which is 300 million above USDA. However, there is a seasonal component to that production and we do not expect that level of production all year, particularly given the build up in ethanol stocks we got with the current level of production. It is worth noting that Brazil is also restoring the blending requirement for ethanol to 25% from 20%, which should keep more of their production at home. 

Soybeans were hammered this week, losing 6.74%. Soybean meal fell $39/ton, a welcome relief for livestock feeders but putting a lot of pressure on crush margins. Soy oil was also down 4.4% under the influence of cheap palm oil and a sliding crude oil market. US export sales for the year remain heavily front end loaded, with 72% of the USDA projected shipments for the year already on the sales book. That means sales only need to average about 6 million bushels per week or less for the rest of the year (assuming minimal rollover of business to 2013/14. Informa on Friday projected production at 2.662 billion bushels on 77.1 million planted acres. They are also projecting 2013 acreage will hit 79.9 million, a new record.

The three wheat markets held up better than corn and beans, but were still down more than 2% for the week. US export sales were a healthy 488,900 MT, but export commitments as a percentage of the USDA forecast for the year are still low considering we are more than a quarter of the way through the marketing year. Australia got a few showers, taking a little starch out of the argument for a drop to 20 MMT from the USDA 26 MMT estimate. Things are still on the dry side there, however. Russia continues to sell wheat for now, but they did indicate an interest in buying replacement wheat from Ukraine and Kazakhstan if the sales program drops available supplies too low in their domestic market. US winter wheat planting is running a little behind the average pace, due mostly to dry soil conditions in the Great Plains.  

Nearby cotton futures lost 4.5% for the week, extending a string of losses that began following the prior week’s USDA world production and ending stocks numbers. USDA had projected world ending stocks rising to multi-decade highs of 76.52 million bales. That ending stocks figure represents 259 days of use at the current consumption rate, or 71% of global annual production for 2012/13. USDA reported net weekly export sales for the past week slowed to 226,100 RB of combined upland and pima sales. The stronger US dollar was clearly a headwind for cotton, which lacked other strong bullish fundamentals to provide the push.

 

Commodity

 

 

 

 

Weekly

Weekly

Month

08/31/12

09/07/12

09/14/12

09/21/12

Change

% Change

Dec

Corn

$8.00

$8.00

$7.82

$7.48

($0.34)

-4.32%

Dec

CBOT Wheat

$8.90

$9.05

$9.24

$8.97

($0.27)

-2.92%

Dec

KCBT Wheat

$9.06

$9.23

$9.48

$9.26

($0.22)

-2.29%

Dec

MGEX Wheat

$9.48

$9.58

$9.78

$9.58

($0.20)

-2.07%

Dec

Soybeans

$17.57

$17.37

$17.39

$16.22

($1.17)

-6.74%

Oct

Soybean Meal

$536.20

$527.20

$523.50

$484.50

($39.00)

-7.45%

Oct

Soybean Oil

$56.65

$56.24

$56.97

$54.45

($2.52)

-4.42%

Oct

Live Cattle

$126.02

$126.48

$127.05

$125.53

($1.52)

-1.20%

Sep

Feeder Cattle

$144.60

$144.30

$145.00

$143.80

($1.20)

-0.83%

Oct

Lean Hogs

$74.18

$71.35

$74.03

$75.80

$1.77

2.40%

Oct

Cotton

$76.48

$75.72

$75.39

$72.00

($3.39)

-4.50%

Dec

Oats

$3.98

$3.91

$3.96

$3.76

($0.20)

-5.05%

Nov

Rice

$15.29

$14.96

$15.28

$15.24

($0.04)

-0.26%

 

Cattle futures lost $1.20 for the week in the nearby futures. The board got ahead of the cash market, and began to have doubts about whether cash was going to catch up. Cash cattle prices were mostly steady to $1 lower ahead of the monthly USDA Cattle on Feed report released on Friday afternoon. The COF report showed slightly smaller than expected numbers on feed September 1, at 99.1% of year ago vs. trade ideas at 99.9%. Placements during August were much smaller than expected, but offset by lighter marketings. Wholesale prices were mixed, with choice 600-900 pound carcasses up 0.4% for the week but the select product down 0.6%. Cash cattle traded at $125-127. Weekly slaughter was estimated at 647,000 head vs. 659,000 last year.

Hog futures were the lone bullish market in our table, up 2.4% after gaining 3.75% the previous week.  Estimated pork production for the week was down 0.6% from the previous week, but heavy market runs continue and the tonnage was up 4.5% compared to the same week a year ago.  FI slaughter was 5.0% larger than the same week in 2011. The pork market appeared to be finding its footing late in the week. The pork carcass cutout value was up only 5 cents for the week but up $2.30 from Wednesday to Friday night.

 

Market Watch:

 Livestock traders will begin the week reacting to the USDA Cattle on Feed and Cold Storage reports that were released after the close on September 21. Grain traders will be reacting to the exercise of the October grain options and any surprise long or short positions they acquired on Friday. There were definitely a number of long calls that were in the money right up until this week, but expired worthless, Conversely, a number of long puts ended up in-the-money.  The major USDA reports this week will fall on Friday, with the quarterly Grain Stocks and Small Grains production numbers released at 7:30 am CDT on the 28th. The quarterly Hogs and Pigs report will also be out at 2 pm CDT. Friday will also mark first notice day for October soy meal and soy oil futures deliveries, and the end of the quarter for some spec funds. That can mean big shifts from commodities that were up big for the quarter to the laggards.

 

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. Visit our web site at https://www.bruglermarketing.com for more information on our consulting and advisory services for farm family enterprises and agribusinesses.

Copyright 2012 Brugler Marketing & Management, LLC

Easing Through Harvest

Sep 14, 2012

Brugler

Market Watch with Alan Brugler

September 14, 2012


Easing Through Harvest

 USDA’s crop estimates on Wednesday were the main fundamental news event, but in broad commodity market terms the Fed announcement of the implementation of the QE3 easing program became the price driver. The Fed indicated that it would buy $40 billion per month of MBS for as long as needed to lower long term interest rates and thus stimulate housing and improve unemployment. The open ended nature of the commitment triggered a sharp decline in the US dollar index and a jump in most commodities from gold and crude oil to cattle and rice.

Nearby corn futures ended the week 2.2% lower. Weekly export sales for the prior week were again very light, reinforcing bearish arguments that the current level of prices is sharply reducing consumption/disappearance as it needs to do. USDA also cut the old crop export estimate on Wednesday in the WASDE report, confirming the drop. Weekly ethanol production slowed down to only 816,000 bpd. This is primarily due to scheduled downtime by plants. At the current production rate corn use for ethanol would slow to 4.5 billion bushels per year, or 500 million below last year. The big fundamental news items for the week were USDA’s 122.8 bushel per acre national yield estimate and their cut in the projected national average price for the year from a mid-point of $8.20 to $7.90. The WASDE analysts had an extra 160 million bushels of old crop carryover to work with, and that eases the job that price rationing needs to do.

Soybeans were 0.66% higher this week, a 5 cent per bushel increase in price that happened entirely on crop report day. Soybean meal lost $7/ton as September expired at $524.60, keeping a little downward pressure on product value. Soy oil was up 0.66% despite a burdensome supply of palm oil. USDA did lower projected US average soybean yield to 35.3 bushels per acre, but their production estimate was within 4 million bushels of the average trade guess. The bullish reaction stemmed from the export sales. USDA trimmed that forecast to 1.055 billion bushels. As of Thursday’s weekly export sales report, the US has already obtained sales commitments for 762 million of those bushels. Average weekly sales need to be below 6 million bushels per week for the year to hit the USDA forecast. They will likely be larger early and tiny late in the marketing year, but the end users concluded that it will take higher prices to choke off those sales. After a 5 day break, they were buyers on Wednesday, along with some spec funds.

The three wheat markets were up by $.13 (CBT), $0.34 (KCBT) and $0.06 (MGEX) for the week, with double digit gains on Friday.  USDA trimmed projected Russian and FSU wheat production by 4 MMT in Wednesday’s report, but left exports UNCH at 8 MMT, drawing down projected ending stocks further but not to the levels seen a few years ago. Projected world ending stocks were trimmed less than expected, partly because USDA left their Aussie crop estimate at 26 MMT. ABARE in Australia is estimating only 22.5 MMT so that is a bit of a discrepancy. It is still early spring in the Southern Hemisphere, so there is still time for the moisture situation there to improve. It has a mixed track record of doing so, and there is little certainty about the development of the El Nino weather pattern.

Nearby cotton futures broke down after the crop report, although it was actually the supply/demand report that contained the bearish news. USDA trimmed projected US production to 17.11 million bales and trimmed 200,000 bales from anticipated 2013 ending stocks. That was the good news. The bad news is that projected world ending stocks have risen to all time or at least multi-decade highs of 76.52 million bales and US export sales potential is shrinking.  That ending stocks figure represents 259 days of use at the current consumption rate, or 71% of global annual production for 2012/13. USDA reported net weekly export sales were 317,500 RB for 2012/13. Prices did rebound nicely on Friday thanks to the Fed stimulus package and some "risk on" spec buying as the Fed basically said to forget making money on savings accounts and go invest it.

 

 

 

 

Commodity

 

 

 

 

 

 

 

 

 

Weekly

 

Weekly

 

Month

 

08/24/12

 

08/31/12

 

09/07/12

 

09/14/12

 

Change

 

% Change

 

Sep

 

Corn

$8.02

$8.03

$7.95

$7.78

($0.18)

-2.20%

 

Sep

 

CBOT Wheat

$8.68

$8.70

$8.85

$8.98

$0.13

1.44%

 

Sep

 

KCBT Wheat

$8.77

$8.81

$9.00

$9.33

$0.34

3.72%

 

Sep

 

MGEX Wheat

$9.20

$9.37

$9.40

$9.46

$0.06

0.66%

 

Sep

 

Soybeans

$17.38

$17.65

$17.32

$17.37

$0.05

0.27%

 

Sep

 

Soybean Meal

$533.40

$547.10

$531.60

$524.60

($7.00)

-1.32%

 

Sep

 

Soybean Oil

$56.24

$56.42

$56.27

$56.64

$0.37

0.66%

 

Oct

 

Live Cattle

$124.45

$126.02

$126.48

$127.05

$0.57

0.45%

 

Sep

 

Feeder Cattle

$142.95

$144.60

$144.30

$145.00

$0.70

0.49%

 

Oct

 

Lean Hogs

$72.38

$74.18

$71.35

$74.03

$2.68

3.75%

 

Oct

 

Cotton

$74.45

$76.48

$75.72

$75.39

($0.33)

-0.44%

 

Sep

 

Oats

$3.89

$3.89

$3.86

$3.89

$0.03

0.78%

 

Sep

 

Rice

$15.41

$15.01

$14.72

$15.10

$0.39

2.62%

 

Cattle futures were up $.57 per cwt for the week. Cash cattle prices jumped sharply this past week, as the declining fall ready numbers made themselves felt. Wholesale prices were mixed, with choice 600-900 pound carcasses up 0.4% for the week but the select product down 0.6%. Cash cattle traded at $125-127. Weekly slaughter was estimated at 647,000 head vs. 659,000 last year. Due to estimated weights 20 pounds above last year, production was up 0.8% vs. the same week in 2011. Weekly beef export sales for the prior week were 16,800 MT, a little slower than the previous week. Census reported official exports for July, which were the second largest July ever but continue to lag last year. We continue to see declining supplies of ready cattle coming out of the feedlots, with October being the bottom of the hole. The cattle market is very good at closing those holes, however, by backing cattle into them or pulling cattle ahead.

Hog futures were up 3.75% this past week.  Estimated pork production for the week was up a huge 5.98% from last year. Average weights are now believed to be 1 pound lower than last year, which offsets some of the larger marketings in the tonnage department. Year to date production is still up 2.3%. Fortunately, Census exports through July have also been confirmed to be larger than last year. Cash hogs were lower on Friday, with IA/MN down an average 95 cents, the WCB down 43 cents and the ECB down 55 cents.  The pork carcass cutout value was down $.25 for the week, bottoming on Wednesday.  

Market Watch:

With expiration of September futures contracts, the Fed meeting and the monthly USDA crop reports all in the rear view mirror, the market will shift gears toward harvest pressure and end of quarter asset allocation adjustments. Grain traders will also start to look forward to the September 28 quarterly Grain Stocks and Small Grains reports. The former has been associated with a number of limit moves, falling as it does on the end of quarter boundary for the investment firms. In the meantime, we have USDA weekly Export Inspections on Monday morning, and weekly Export Sales on Thursday.  USDA monthly Milk Production will be out on the 19th. The biggest livestock reports for the week will come on Friday afternoon, with the monthly USDA Cattle on Feed and Cold Storage reports. October grain options contracts also expire on Friday. Saturday is the official start of Autumn, although we’re already well into fall harvest and fall football games!

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. Visit our web site at https://www.bruglermarketing.com for more information on our consulting and advisory services for farm family enterprises and agribusinesses.

Copyright 2012 Brugler Marketing & Management, LLC

 

Wheat Is The Exception

Sep 07, 2012

 

Market Watch with Alan Brugler

September 7, 2012

 

Wheat The Exception

 

Wheat was the bull leader this week, with all three exchanges closing higher. Minneapolis was the weakest of the three markets, due to excellent US and Canadian yields. KC and Chicago also rallied, despite middle of the road US export sales and aggressive Russian, Romanian and Ukrainian sales of wheat to Egypt and others. Wheat from the Black Sea is moving at an embargo discount. You can get it cheaper than other origins, but have more risk that the door will be shut before you get your product. The spread between those origins and EU wheat narrowed. The US still isn’t seeing much in the way of export sales, but still might when the Russians run out of wheat to sell. Russia also indicated that it would import wheat from neighbors to fill needs if too much is shipped out.  

Nearby corn futures were down 1% for the week, losing 8 cents per bushel as September contract went into delivery (there have been none thus far) and spec longs exited. December is nowhere near full carry, making it a dicey proposition for a hedge fund to take delivery and back to back it to December delivery. Weekly export sales for the prior week were again very light at a net 44,000 MT, reinforcing bearish arguments that the current level of prices is sharply reducing consumption/disappearance as it needs to do. Weekly ethanol production on the other hand, rebounded by 10,000 barrels per day from the previous week. At the current production rate corn use for ethanol would slow to 4.5 billion bushels per year, or 500 million below last year. Of course, the other question mark is production. Private yield estimates were all over the place this week, running from 116.6 to 124 bushels. Nearly all were below the USDA August forecast, and it can be argued that we are already trading a 120-121 bushel yield because the market failed to rally when numbers that low or lower were released.


 

 

 

Commodity

 

 

 

 

 

 

 

 

 

Weekly

 

Weekly

 

Month

 

08/17/12

 

08/24/12

 

08/31/12

 

09/07/12

 

Change

 

% Change

 

Sep

 

Corn

$7.99

$8.02

$8.03

$7.95

($0.08)

-0.97%

 

Sep

 

CBOT Wheat

$8.75

$8.68

$8.70

$8.85

$0.15

1.70%

 

Sep

 

KCBT Wheat

$8.86

$8.77

$8.81

$9.00

$0.19

2.13%

 

Sep

 

MGEX Wheat

$9.28

$9.20

$9.37

$9.40

$0.03

0.32%

 

Sep

 

Soybeans

$16.71

$17.38

$17.65

$17.32

($0.33)

-1.86%

 

Sep

 

Soybean Meal

$522.70

$533.40

$547.10

$531.60

($15.50)

-2.83%

 

Sep

 

Soybean Oil

$53.11

$56.24

$56.42

$56.27

($0.15)

-0.27%

 

Oct

 

Live Cattle

$125.27

$124.45

$126.02

$126.48

$0.46

0.36%

 

Sep

 

Feeder Cattle

$142.20

$142.95

$144.60

$144.30

($0.30)

-0.21%

 

Oct

 

Lean Hogs

$76.20

$72.38

$74.18

$71.35

($2.82)

-3.81%

 

Oct

 

Cotton

$72.66

$74.45

$76.48

$75.72

($0.76)

-0.99%

 

Sep

 

Oats

$3.84

$3.89

$3.89

$3.86

($0.03)

-0.71%

 

Sep

 

Rice

$15.42

$15.41

$15.01

$14.72

($0.30)

-1.97%


Soybeans fell back 1.86% for the week after being up 1.55% the prior week. The market hit new all time highs, but couldn’t hold them. Meal futures were up $13.70/ton a week ago, but gave back $15.50/ton this week. Soy oil was also down a quarter percent, putting additional pressure on product value.  The USDA weekly soybean export sales were 5,100 MT for 2011/12 with net sales of 520,600 MT for 2012/13 delivery. China bought 453,000 MT of the new crop. Totals were below trade estimates of 600 to 775 thousand MT.  Informa estimates soybean production will be 2.639 billion bushels with a yield of 35.4 bpa. Stats Canada reported total canola stocks were down 64.1% to 787,700 MT as of July 31. On farm Canadian canola stocks dropped to the lowest level since 2004 at 225,000 MT contributing to the drop.  Soy oil futures were lower anyway, with all of their net loss for the week on Friday.

Nearby cotton futures lost 1% for the week, giving back a portion of the 2.7% advance from the previous week. Cotton is still in the midst of a rally that began back in the first week of June. It hasn’t been showy like the corn and soybean rallies, but there is a modest inflation/weak dollar argument out there, and also a number of indications that Southern Hemisphere producers are ignoring the white stuff in order to grow more of the yellow stuff this season. US weekly export sales through August 40 were 83,900 RB for 2012/13 delivery for upland cotton with traders looking for between 50,000 and 100,000 RB. Net sales of Pima were 30,100 RB

Cattle futures also escaped with a small gain for the week, 0.36%. The trade has definitely been looking for tighter supplies and higher cash prices into the fall. Cash cattle trade was very slow to develop. The choice cutout rose $1.11 this week, while the Select beef price finished 2.14% higher at $181.70. Weekly beef export sales improved to 18,200 MT. We continue to see declining supplies of ready cattle coming out of the feedlots, with October being the bottom of the hole. The cattle market is very good at closing those holes, however, by backing cattle into them or pulling cattle ahead. Weekly estimated slaughter was only 551,000 head, 28,000 smaller than the Labor Day week total for 2011. Weekly beef production was down 2.6% vs. year ago.  

Hog futures had the worst performance of the ag commodities we track, losing 3.8% for the week. Packers have been swamped with hogs, with market runs 6% or more above year ago. These are not sows, but market hogs. There is spirited debate within the industry about whether USDA missed low on the June snout count. Other opinions have producers marketing early because of the early corn harvest, and/or to avoid feeding more expensive corn to them. Estimated weekly pork production was up 2.7% from last year. Average weights have dropped to 201 pounds, matching year ago. Cash hogs eroded almost daily this week and were down $1.25 on average in IA/MN, down $2.28 in the WCB and down $2.55 in the ECB today.    The pork carcass cutout value was down $4.87 for the week, at $78.03. Estimated weekly slaughter was 54,000 head larger than year ago.

 

Market Watch:

We get a fresh round of USDA reports this week, with Crop Production and WASDE supply/demand numbers both due to be released at 7:30 am CDT on Wednesday morning. We’ll also get the usual Crop Progress and Export Inspections reports on Monday and USDA Weekly Export Sales on Thursday morning. NOPA is expected to release the monthly soybean crush report on Friday morning. Friday will also mark the expiration of the September grain futures contracts.

 

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. Visit our web site at https://www.bruglermarketing.com for more information on our consulting and advisory services for farm family enterprises and agribusinesses.

Copyright 2012 Brugler Marketing & Management, LLC

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