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January 2013 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.

Redemption of the Bulls

Jan 25, 2013


Brugler

Market Watch with Alan Brugler

January 25, 2013

Redemption of the Bulls

Last week we talked about the collapse of the cattle futures market following the Cargill plant closing announcement. We suggested that the number of cattle had not changed, and the market would firm up once the soon to be homeless cattle found another place to go. That happened quickly, at least in the opinion of the futures market. Futures shorts were faced with a potentially bullish USDA Cattle on Feed report on Friday, and bought back positions in enough quantity to drive futures higher. Longs with patience got some of their money back, and short hedgers rolled down their put positions and banked some of the gains.

Corn futures lost a little less than 1% this week after climbing 48 cents per bushel in the two previous weeks. Old crop corn stocks are tight, and first quarter use was stout due to reduced DDG production and some new crop grain that was pulled into the consumption pipeline back in July and August. Weekly export sales through January 10 were the strongest since April 2012 @ 393,300 MT.  USDA put the actual figure for the week ending the 17th at only 189,800 MT including new crop. A switch from unknown to China cut the net sales, but there were other cancellations as well. The EIA weekly ethanol report on Thursday was supportive, with ethanol stocks falling 20.083 MB and production rising by 8,000 BPD from the previous week.

The soybean market picked up another 12 cents per bushel after rising 4.08% the previous week. US export sales were again strong @ 978,300 MT. New crop bookings were larger than old crop sales. Most of the US old crop is already committed, even if not yet purchased from the producer. Weather in South America remains generally benign, but there has been a drying out trend in a few major production areas over the past two weeks. The main story is the resumption of Chinese buying, and their increased interest in US new crop 2013/14 soybeans. Soybean meal was up .48% for the week, and soy oil also advanced. The reduced US ethanol production has constricted supplies of DDG and corn oil, supporting their substitutes in the soy complex.

Wheat was lower on all three exchanges. The CBOT had been the strongest of the three, and lost the most when the profit taking began. USDA reported weekly export sales for the week ending January 17 totaled 647,500 MT, including 75,000 MT for 2013/14 delivery. This was again larger than the trade expected. The main buyers were Japan and Nigeria. KC futures still show little or no concern about winterkill or drought, taking a wait and see attitude. In the longer term, the drought maps still cover most of the Plains HRW area, and the NOAA 90-day forecast calls for above normal temps throughout the central US, with below normal precip across the South.

Cotton prices were up 2.5% past week, extending the bull run. The tighter US ending stocks forecast at 4.8 million bales is supportive, but the main story is active world buying of US cotton despite projected record large world cotton surplus stocks by the end of the marketing year on July 31. China continues to be an active importer. US weekly export sales totaled 264,100 RB, a little slower than the previous week but still larger than expected given the global surpluses.

 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

01/04/13

01/11/13

01/18/13

01/25/13

Change

% Change

Mar

Corn

$6.80

$7.09

$7.28

$7.21

($0.07)

-0.93%

Mar

CBOT Wheat

$7.47

$7.55

$7.91

$7.77

($0.15)

-1.86%

Mar

KCBT Wheat

$8.06

$8.11

$8.44

$8.29

($0.15)

-1.75%

Mar

MGEX Wheat

$8.43

$8.47

$8.74

$8.64

($0.10)

-1.09%

Mar

Soybeans

$13.67

$13.73

$14.29

$14.41

$0.12

0.82%

Mar

Soybean Meal

$399.00

$404.30

$414.40

$416.40

$2.00

0.48%

Mar

Soybean Oil

$49.90

$49.24

$51.68

$52.10

$0.42

0.81%

Feb

Live Cattle

$132.95

$130.60

$124.95

$126.30

$1.35

1.08%

Jan

Feeder Cattle

$153.18

$149.88

$143.90

$144.70

$0.80

0.56%

Feb

Lean Hogs

$86.23

$84.20

$85.35

$86.83

$1.47

1.73%

Mar

Cotton

$74.91

$75.62

$78.55

$80.52

$1.97

2.51%

Mar

Oats

$3.33

$3.47

$3.56

$3.63

$0.07

2.11%

Mar

Rice

$15.29

$15.22

$15.16

$15.48

$0.32

2.11%

 

Cattle futures rallied 1.08% this past week after a 4.33% plunge the week before. Prices just got too cheap on the Cargill plant closing announcement. Weekly beef production was 1.5% larger than last week, but up 6.2% from the same week in 2012. Packers were into some bigger numbers, at lower average cash prices. Average carcass weights are still an estimated 16 pounds per animal higher than last year at this time. Wholesale prices were down $2.40/cwt for Choice boxes, a 1.3% slide. Select was also down, but a more orderly 0.4%.  US weekly beef export sales through January 17 were 14,200 MT. Friday’s USDA Cattle on Feed report was bull friendly. December placements were smaller than expected at 99.4% of year ago, and December marketings were above the trade guesses at 98.3%. The bottom line is January 1 inventory that is only 94.4% of a year ago.

Hogs were up 1.7% for the week after a 1.4% gain the prior week. Estimated weekly slaughter was 2.159 million head, down from 2.222 million head the previous week. That is a 2.8% drop in numbers. Pork production was down 2.6% from the previous week, but up 0.1% from the same week in 2012. Average weights are now estimated to be equal with year ago. The pork carcass cutout value rose $1.48 for the week, a gain of 1.8%. Cash hog prices were weaker on Friday in the west, but firmer in the ECB. The average WCB direct sale was $85.64, down $1.74. The ECB average was $83.03, and 38 cents higher on the day.

Market Watch: Cattle traders will begin the week dealing with the aftermath of the USDA Cattle on Feed report from Friday night. The Fed Open Market Committee meets Tuesday and Wednesday, but is not yet expected to raise interest rates. January feeder cattle futures and options expire on Thursday.  The main USDA reports will be the Export Inspections on Monday and the Export Sales on Thursday morning, along with the annual Cattle Inventory report on Friday afternoon. On Friday, we also turn the calendar to February and begin calculating the monthly average prices used in the crop revenue insurance calculations for 2013 production. Friday will also mark the expiration of the February live cattle options. Saturday will be Groundhog Day!

 

Brugler Marketing has a lot more information available than that contained in these free weekly columns. For a full two day educational experience and our complete 2013 outlook for global ag markets, attend one of the two Brugler Marketing Winter Seminars. Our Dayton, OH seminar is January 29-30 at the Holiday Inn Northwest, and Omaha, NE will be held February 4-5 at the Regency Lodge. For details and online registration, visit our web site at https://www.bruglermarketing.com.

 

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 2013 Brugler Marketing & Management, LLC

The Sky is Falling

Jan 18, 2013

Brugler

Market Watch with Alan Brugler

January 18, 2013 

The Sky Is Falling

 Chicken Little is famous for running around proclaiming that "the sky is falling". While the chicken’s conclusion was based on a false assumption (an acorn to the head caused the belief), you can’t excuse cattle traders from feeling a little bit like that same sky fell in on them this week (with a similar false assumption). After weeks of talk about beef production running 3-5% below year ago throughout 2013, longs had been comfortable with $130-140 futures discussions even if those would require record high consumer level prices. Those same tight cattle supplies turned out to be a liability this week, as Cargill announced that it will close its Plainview, TX facility on February 1 due to an ongoing lack of sufficient cattle numbers in the area. In the long run, all of the cattle will be slaughtered, and beef supplies will still be smaller than year ago. In the short run, the closing announcement created some potentially homeless cattle and downward pressure on both cash bids and futures. Beef prices got in on the act, with buyers sitting on their hands to see just how cheap things could get.

 Corn futures shot up 4.9% two weeks ago, and another 2.65% this past week. USDA found only 8.03 billion bushels of corn stocks on December 1. That just confirmed what the cash market was already telling us. Old crop corn stocks are tight, and first quarter use was stout due to reduced DDG production and some new crop grain that was pulled into the consumption pipeline back in July and August. USDA knocked 200 million bushels off of projected exports on January 11 due to lack of sales, but ending stocks are still seen shrinking to 602 million bushels. Weekly export sales through January 10 were the strongest since April 2012 @ 393,300 MT.

The soybean market posted a 4.08% advance for the week. The biggest cause for concern was the lack of a bullish response to large export sales announced by the USDA on Thursday at 1.6 MMT. It is still a bear market when bull news fails to make it move higher. Fortunately for producers, the gains on Wednesday and Friday offset the "sell the fact" attempt on Thursday. What we are looking for is bear news that fails to make it go down. At that point, things are fully priced. On Friday, a Memphis based forecasting firm reduced its projected 2013 soybean acreage to 78.77 million, just a little above our own number.

CBT Wheat was again the strongest of the three exchanges, up 4.8% for the week. KC was up 4.1% and MPLS was up 3.1%. The Dec 1 stocks number was only 1.66 billion bushels, requiring an upward revision in feed use. USDA reported weekly export sales of 574,700 MT.  That was about 5 million bushels larger than the trade guesses. The previous week, net sales were only 233,700 MT. KC futures were buoyed by both short term and long term weather forecasts. In the short term, snow cover is lacking and there is a risk of winterkill. In the longer term, the drought maps still cover most of the Plains HRW area, and the NOAA 90-day forecast calls for above normal temps throughout the central US, with below normal precip across the South.

Cotton prices were up 3.9% this past week. The tighter US ending stocks forecast at 4.8 million bales is supportive, but the main story is active world buying of US cotton despite projected record large world cotton surplus stocks by the end of the marketing year on July 31. USDA sees world ending stocks @ 81.72 million bales. That represents 77% of this year’s total use, or a 281 day supply. Of the 81.72 million bales, USDA thinks China will be holding 40.61 million, which is more than this year’s consumption (35.5 million) for them.  It would be drawn down quickly if Chinese consumption returned to 2010/11 levels of 46 million bales annually. China only produces 30-34 million bales annually. China continues to be an active importer. US weekly export sales totaled 339,000 RB of upland and 28,700 RB of pima cotton. This was a six-week high.

 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

12/28/12

01/04/13

01/11/13

01/18/13

Change

% Change

Mar

Corn

$6.94

$6.80

$7.09

$7.28

$0.19

2.65%

Mar

CBOT Wheat

$7.79

$7.47

$7.55

$7.91

$0.36

4.84%

Mar

KCBT Wheat

$8.26

$8.06

$8.11

$8.44

$0.33

4.10%

Mar

MGEX Wheat

$8.68

$8.43

$8.47

$8.74

$0.27

3.13%

Mar

Soybeans

$14.18

$13.67

$13.73

$14.29

$0.56

4.08%

Mar

Soybean Meal

$424.80

$399.00

$404.30

$414.40

$10.10

2.50%

Mar

Soybean Oil

$49.44

$49.90

$49.24

$51.68

$2.44

4.96%

Feb

Live Cattle

$133.58

$132.95

$130.60

$124.95

($5.65)

-4.33%

Jan

Feeder Cattle

$152.03

$153.18

$149.88

$143.90

($5.97)

-3.99%

Feb

Lean Hogs

$86.38

$86.23

$84.20

$85.35

$1.15

1.37%

Mar

Cotton

$74.66

$74.91

$75.62

$78.55

$2.93

3.87%

Mar

Oats

$3.49

$3.33

$3.47

$3.56

$0.09

2.52%

Mar

Rice

$15.27

$15.29

$15.22

$15.16

($0.06)

-0.39%

 

Cattle futures plunged 4.33% after being down 1.77% the previous week.  The sell off started out as a technical play, with Head & Shoulders tops in several contracts. It soon proved to be more than that, as Cargill announced that it would be closing its Plainview, TX slaughter plant due to an extended lack of adequate cattle numbers. The tight numbers are supportive, but in the short run the announced February 1 closing was expected to result in a lot of homeless cattle and downward pressure on cash cattle prices. Weekly beef production was 1.2% smaller than last week, but up 2.0% from the same week in 2012. Average carcass weights are still an estimated 21 pounds per animal higher than last year at this time. Wholesale prices were down $4.40/cwt for Choice boxes, a 2.3% slide. Select was also down, but a more orderly 0.5%.

 Hogs were up 1.4% for the week. Estimated weekly slaughter was 2.227 million head, down from 2.284 million head the previous week. Pork production was down 2.3% from the previous week, and down 0.3% from the same week in 2012. Average weights are still running 2 pounds below year ago, helping to limit the tonnage a little bit. The pork carcass cutout value dropped 27 cents for the week, a loss of gain of 0.32%.

Market Watch: The markets are closed on Monday for the ML King holiday in the United States. USDA offices are also closed, so the regular Monday and Thursday reports for Export Inspections and weekly Export Sales will be delayed until Tuesday and Friday respectively. USDA will issue the month Cold Storage report on Tuesday afternoon, with monthly Milk Production on Wednesday.  Friday will feature the monthly USDA Cattle on Feed report. It will also mark the expiration of the February options for a number of grains and oilseeds.

Brugler Marketing has a lot more information available than that contained in these free weekly columns. For a full two day educational experience and our complete 2013 outlook for global ag markets, attend one of the two Brugler Marketing Winter Seminars. Our Dayton, OH seminar is January 29-30, and Omaha, NE will be held February 4-5. For details and online registration, visit our web site at https://www.bruglermarketing.com.

 

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 2013 Brugler Marketing & Management, LLC

Midday USDA

Jan 11, 2013

Brugler

Market Watch with Alan Brugler

January 11, 2013

 Midday USDA 

USDA changed their release times for grain reports in 2013, releasing them this morning at 11 am CST instead of the traditional 7:30 am. That gave the trade only 3 hours to play with the numbers before the weekend. There has been some thought in the trade that releasing during trading hours (which began last spring due to an extension of those hours by the CBOT) has muted the limit move mentality by allowing the market to work out all of its concerns in real time. Friday was a win for those arguing that way, as none of the major grains finished with a limit move. 

Corn futures shot up 4.9% this week, ending a string of losing weeks. The USDA report on Friday accounted for part of the gain, but short covering had already been moving prices higher. March was up all five trading days of the week. The Friday reports were significant. USDA found only 8.03 billion bushels of corn stocks on December 1. They also found little in the way of additional production, bumping up average yield to 123.4 bpa while trimming harvested acres to 87.4 million. They were very aggressive in cutting projected exports, knocking off 200 million bushels due to lack of sales, but ending stocks are still seen shrinking to 602 million bushels.

The soybean market posted a 2.6% gain for the week, but that was in the soon to expire January contract. March wasn’t as robust. The USDA reports on Friday were very neutral, bumping up projected ending stocks to 135 million bushels while adding to both production and crush use. Brazil’s production estimate was raised 1.5 MMT, but Argentina was trimmed 1 MMT. The Dec 1 soybean stocks were slightly smaller than the average trade guess at 1.966 billion bushels, but not by enough to cause major USDA adjustments. The biggest cause for concern was the lack of a bullish response to large export sales announced by the USDA under the daily reporting system on Thursday. It is still a bear market when bull news fails to make it move higher. What we are looking for is bear news that fails to make it go down. At that point, things are fully priced.

CBT Wheat was the strongest of the three exchanges, up 1% for the week. The gain of 8 cents all occurred on Friday. KC was up 4 cents and MPLS was up a nickel. The Friday gain came about because USDA reduced projected US ending stocks to 716 million bushels. The Dec 1 stocks number was only 1.66 billion bushels, requiring an upward revision in feed use estimates to explain what happened to the missing bushels. World wheat ending stocks were almost UNCH at 195.78 MMT vs. 195.77 MMT last month. July futures got a boost at all three exchanges from smaller than expected winter wheat plantings. HRW acreage is actually smaller than last year at 29.1 million. That had KC July up 10 ½ cents on Friday. There are an extra 1.3 million acres of SRW (Chicago) compared to last year. That could eat into corn and soybean acreage potential in the better watered part of the Corn Belt.

Cotton prices were up 0.95% this past week. USDA cut its harvested acreage estimate, while raising estimated average yield to 866 pounds. That is the highest average yield estimate since 2007, when the US average was 879 pounds. This is the second highest average yield since the modern USDA records began in 1960. US ending stocks declined to 4.8 million bales from 5.4 million in the December estimate, as USDA hiked projected exports 400,000 bales while trimming the production by 250,000 bales. World ending stocks increased anyway to a record surplus of 81.72 million bales. That represents 77% of this year’s total use, or a 281 day supply. Of the 81.72 million bales, USDA thinks China will be holding 40.61 million, which is more than this year’s consumption (35.5 million) for them.  It would be drawn down quickly if Chinese consumption returned to 2010/11 levels of 46 million bales annually. China only produces 30-34 million bales annually.

 

Commodity

 

 

 

 

Weekly

Weekly

Month

12/21/12

12/28/12

01/04/13

01/11/13

Change

% Change

Mar

Corn

$7.02

$6.94

$6.80

$7.09

$0.29

4.19%

Mar

CBOT Wheat

$7.92

$7.79

$7.47

$7.55

$0.08

1.00%

Mar

KCBT Wheat

$8.42

$8.26

$8.06

$8.11

$0.04

0.53%

Mar

MGEX Wheat

$8.82

$8.68

$8.43

$8.47

$0.05

0.56%

Jan

Soybeans

$14.31

$14.24

$13.89

$14.25

$0.36

2.57%

Jan

Soybean Meal

$433.80

$427.70

$398.20

$403.10

$4.90

1.23%

Jan

Soybean Oil

$48.71

$48.94

$49.42

$48.88

($0.54)

-1.09%

Feb

Live Cattle

$133.58

$133.58

$132.95

$130.60

($2.35)

-1.77%

Jan

Feeder Cattle

$152.15

$152.03

$153.18

$149.88

($3.30)

-2.15%

Feb

Lean Hogs

$86.98

$86.38

$86.23

$84.20

($2.03)

-2.35%

Mar

Cotton

$76.22

$74.66

$74.91

$75.62

$0.71

0.95%

Mar

Oats

$3.65

$3.49

$3.33

$3.47

$0.14

4.21%

Jan

Rice

$15.21

$14.96

$15.03

$15.04

$0.00

0.03%

 

Cattle futures were down 1.77% for the week.  Weekly beef production jumped 20% from the holiday depressed week before. It was still 0.8% smaller than last year for the same week. Estimated carcass weight was 22 pounds higher than a year ago, as cheaper corn and fairly mild weather allowed decent performance. Wholesale prices for the week showed a 2 cent increase for Choice beef and a $1.27 gain for Select. The spread between the two continues to narrow seasonally. The higher carcass weights tell you that we’re getting more choice cattle in the supply, and may be backing up cattle just a bit.

Hogs were down 2.35% this week. Estimated weekly slaughter was 2.284 million head, up from 1.969 million head the previous week. Pork production was up 15.9% from the previous week, and up 1.8% from the same week in 2012. Average weights are still running 2 pounds below year ago, helping to limit the tonnage a little bit. The pork carcass cutout value rose 44 cents for the week, a gain of 0.53%.

Market Watch: Things will slow down a little this coming week, now that the much anticipated USDA reports are out, and the index fund re-balancing period is coming to an end. There will still be news, however. NOPA is expected to release a monthly soybean crush report on Monday, with some sources expecting that the December crush was record or near record large. The January futures contracts for rice and the soybean complex expire on Monday. We’ll also get the regular Export Inspections report. Weekly Export Sales will come out on Thursday morning. Friday marks the expiration of a number of equity options, and the start of a 3 day weekend. The markets are closed on January 21 for the ML King holiday in the United States.

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 2013 Brugler Marketing & Management, LLC

New Year, Old Story

Jan 04, 2013

  Brugler

Market Watch with Alan Brugler

January 4, 2013

 

New Year, Old Story

 

The calendar may say that we began a new year on Tuesday, but thus far 2013 has looked a lot like the tail end of 2012. Fund traders have been exiting commodity positions because of investors shifting money to other asset classes or because of putrid export sales achievements or just because the 2012 drought is over and any 2013 edition is still hypothetical under January snow cover.

Corn futures lost 1.98% this week after being down more than 2% the prior week. Weekly ethanol production fell back from the previous week, to only 807,000 barrels per day. Ethanol stocks dropped to 20.2 million barrels. USDA put the net weekly export sales for this week at 49,100 MT, basically only 1 shipload. There was a cancellation of 86,900 MT by "unknown destinations". A Memphis firm projected final production at 10.8 billion bushels on Friday, using a 123.3 bpa yield. The trade is estimating the Dec 1st US corn stocks to be between 8.050 billion bushels and 8.30 billion bushels.

The soy complex was down 2.46% this week. Export sales and shipments are slowing as we get closer to South American harvest supplies. China has also been cancelling some prior purchases, reducing the net sales numbers. Weekly export sales estimates ran 200-400,000 MT because of the holidays. USDA put the actual number at a larger than expected 496,300 MT, including 61,400 MT of new crop. However, the ag attaché also indicated that the Brazilian crop might exceed 83 MMT and Argentina reported more rapid planting progress. A stronger US dollar didn’t help US export prospects in general.

KC wheat fell by 2.39%, with CBOT wheat with even bigger losses of 4.04%. The ongoing drought in the central US is a threat to US production in 2013, but also on the other side of unknown winter snowfalls. It is supportive but not definitive.  State crop reports from KS and OK both showed further deterioration in crop conditions. The USDA Export Sales were expected to be between 250-550,000 MT. For the week ending December 27 (which included the Christmas holiday period) USDA said that US sales netted 402,500 MT, about as expected. Egypt is making noise about not needing further imports, but low prices cure low prices by stimulating consumption. Argentina estimated the crop has been 79 percent harvested, down from the 93 percent that was completed at this time a year ago. Weather conditions have dried out with rain not expected to return until next week.

 

Commodity

 

 

 

 

Weekly

Weekly

Month

12/14/12

12/21/12

12/28/12

01/04/13

Change

% Change

Mar

Corn

$7.31

$7.02

$6.94

$6.80

($0.14)

-1.98%

Mar

CBOT Wheat

$8.14

$7.92

$7.79

$7.47

($0.32)

-4.04%

Mar

KCBT Wheat

$8.64

$8.42

$8.26

$8.06

($0.20)

-2.39%

Mar

MGEX Wheat

$8.85

$8.82

$8.68

$8.43

($0.25)

-2.91%

Jan

Soybeans

$14.96

$14.31

$14.24

$13.89

($0.35)

-2.46%

Jan

Soybean Meal

$460.10

$433.80

$427.70

$398.20

($29.50)

-6.90%

Jan

Soybean Oil

$49.63

$48.71

$48.94

$49.42

$0.48

0.98%

Feb

Live Cattle

$132.60

$133.58

$133.58

$132.95

($0.63)

-0.47%

Jan

Feeder Cattle

$153.08

$152.15

$152.03

$153.18

$1.15

0.76%

Feb

Lean Hogs

$85.40

$86.98

$86.38

$86.23

($0.15)

-0.17%

Mar

Cotton

$75.13

$76.22

$74.66

$74.91

$0.25

0.33%

Mar

Oats

$3.90

$3.65

$3.49

$3.33

($0.16)

-4.66%

Jan

Rice

$15.42

$15.21

$14.96

$15.03

$0.08

0.50%

 

 Cotton prices were up 0.33% this past week. Weekly export sales were softer than the week before at 183,800 running bales. China is active in the export market, despite holding major stockpiles of domestic production and imported Indian cotton. They bought 51,500 RB last week. They did indicate that they might start to sell cotton out of those reserves in order to cool domestic prices. US cotton acreage is expected to decline in 2013/14 due to high prices for competing field crops. That is also supportive for deferred futures.

 

Cattle futures were down 0.47% for the week.  Weekly beef export sales slowed to only 9,700 MT for combined 2012 (4 days) and 2013 business. They had been more than double that the previous week. Weekly estimated slaughter was 519,000 head including Saturday. That was up 40,000 head from Christmas week, but still 42,000 head smaller than the same week a year ago. Estimated carcass weight this week was 18 pounds larger than the actual number from last year. Wholesale prices were stronger this week. Choice boxes were up 0.4% and Select was up 1.10% for the week on a Friday/Friday basis. Weekly beef production was 5.3% smaller than the same week in 2011, and total YTD production in 2013 has still been 20.3% smaller thus far. Cattle trade on Friday afternoon was $205 on a dressed basis in Nebraska, about $2-3 higher than the previous week. Cash cattle trade on a live basis were at a standstill this week but were trading at $127 in Nebraska and $127.50 in Colorado last week.

 

Hogs were down 0.17% this week. Estimated weekly slaughter is 1.975 million head, down 89,000 from the same week in 2011. Weekly pork production was up 12.3% from the previous week, but down 5.7% from the same week a year ago. Estimated carcass weights are down 3# from last year, having risen less rapidly than usual out of the fall low. The pork carcass cutout rose 2.63% from last week. Strength in pics and hams were countered by weakness in butts.

 

Market Watch:

 

This week will be the BIG ONE. Not the Mayan type, or even an earthquake as far as we know. USDA will likely cause some shaking, however, but shedding some light in some dark corners of the grain (and cotton) supply/demand picture. On Friday morning at 11 am CST, they will issue the Final Crop Production estimates for grains, the Quarterly Grain Stocks for December 1, Winter Wheat Acreage, and the monthly WASDE supply/demand estimates which are revised based on those other numbers. There have been 5 limit moves in corn out of the past 6 January Grain Stocks reports, because there are so many moving parts. Somebody is sure to be surprised this time as well, with a range of estimates of nearly 500 million bushels. The rest of the week should be fairly routine, with USDA Export Inspections on Monday and weekly Export Sales on Thursday morning. Livestock folks have to deal with the feed cost elements of the above reports.

 

 

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 2013 Brugler Marketing & Management, LLC

 

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