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March 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.

Market Madness II

Mar 28, 2013

Brugler

Market Watch with Alan Brugler

March 28, 2013

Market Madness II

 

This weekend marks the next two rounds of the NCAA college basketball tournament, popularly nicknamed the Sweet 16 and Elite 8 games. March Madness continues in that arena, with number 1 and 2 seeded teams being upset. Our Market Madness also continues, and the March 28 Grain Stocks report triggered a crazy sell off in corn, soybeans and wheat on Thursday. USDA pulled off the bearish upset by surprising the trade with the largest corn stocks figure relative to trade expectations in modern history. The surprisingly large March 1 stocks figure of 5.4 billion bushels strongly suggests that the USDA World Outlook Board was just plain wrong in raising projected feed & residual use two weeks ago. The soybean stocks number was also larger than expected, implying negative residual use in the second quarter. We explain negative residual use as "we found it and we don’t know where it came from".

Corn futures lost 31 cents for the week, all of it on Thursday with the limit down move following the USDA reports. Corn stocks were 10% smaller than last year at this time, but not as tight was the trade (and the WAOB within USDA) had believed. Second quarter use was nearly 1 billion bushels smaller than the same three months in 2011/12. Not to be ignored, USDA also released a Planting Intentions report, with corn at 97.282 million acres. If actually planted, that will be the largest area since 1936. The EIA showed increased slower average daily ethanol production for last week, but dropped US ethanol stocks to the lowest reading since December 2011. West Coast stocks rose thanks to imports, but the East Coast was very tight. Weekly corn export sales continue to lag the pace needed to meet the USDA forecast for the year. Cumulative commitments are 72% of the USDA forecast, compared to 80% in an average year.

Soybeans fell 36 cents per bushel for the week, a 2.5% drop that also occurred entirely on Thursday. Soy oil was down less than 1% for the week, but soybean meal took a 3.5% hit due to the sliding feed grain prices and perhaps some surplus production. Meal basis was sloppy despite continued solid export sales. USDA reported smaller than expected soybean acreage intentions of 77.126 million. Weekly export sales also released on Thursday morning were 674,100 MT, including 607,700 MT of new crop. Old crop export sales commitments total 97% of the USDA forecast for the year, running ahead of the 90% average for this date.

Wheat was sharply lower at all three exchanges this week. The frost/freeze damage to HRW wheat was ignored, since USDA showed larger carryover stocks from last year than had been anticipated. The March 1 wheat stocks were 1.234 billion bushels. That was up from 1.2 billion a year ago. US all wheat acreage is expected to creep higher to 56.440 million acres from 55.736 million a year ago. That is contingent on 12.7 million acres of Other Spring wheat being planted compared to 12.3 million last year. Given the expansion in other crops in that growing area, it isn’t a sure thing. Weekly US export sales were very good at 580,800 MT of old crop and 248,300 MT of new crop.

Cotton was up 1.34% this week after a huge 5.7% decline the week before. US cotton producers were not convinced to expand planned acreage despite an 18% rally in December futures. USDA confirmed on Friday that intentions were still only 10 million acres vs. 12.3 million last year. Weekly export sales were 246,000 RB for upland cotton. Overall commitments are 92% of the USDA figure for the year. The five year average pace would be 93% for this date. Global ending stocks remain burdensome, but much of that cotton is locked up in China, and China indicated that it would continue to be an active buyer past the end of the marketing year on July 31.  

 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

03/08/13

03/15/13

03/22/13

03/28/13

Change

% Change

May

Corn

$7.04

$7.17

$7.26

$6.95

($0.31)

-4.27%

May

CBOT Wheat

$6.97

$7.23

$7.30

$6.88

($0.42)

-5.76%

May

KCBT Wheat

$7.34

$7.52

$7.62

$7.27

($0.35)

-4.53%

May

MGEX Wheat

$7.92

$7.96

$8.07

$7.80

($0.26)

-3.25%

May

Soybeans

$14.71

$14.26

$14.41

$14.05

($0.36)

-2.48%

May

Soybean Meal

$435.25

$418.80

$419.30

$404.60

($14.70)

-3.51%

May

Soybean Oil

$50.34

$49.91

$50.43

$50.11

($0.32)

-0.63%

Apr

Live Cattle

$127.55

$125.78

$126.20

$128.90

$2.70

2.14%

Mar

Feeder Cattle

$138.98

$136.68

$134.65

$135.53

$0.88

0.65%

Apr

Lean Hogs

$82.03

$79.68

$78.05

$80.60

$2.55

3.27%

May

Cotton

$86.75

$92.57

$87.29

$88.46

$1.17

1.34%

May

Oats

$3.88

$4.02

$3.96

$3.96

($0.01)

-0.19%

May

Rice

$15.37

$14.68

$14.90

$15.38

$0.48

3.22%

 

Cattle futures rallied 2.1% in this holiday shortened week. Boxed beef had a weekly change of -3.91% or $3.91 for Choice. That was the second consecutive week of big losses following the Japanese purchase. The Select boxes were down harder, losing $4.40 on a Thursday/Thursday basis, or 2.28%. Weekly beef export sales were solid at 17,300 MT, with exports matching the new sales total. Japan, Canada and Mexico continue to be the main buyers.

Hog futures jumped 3.3% for the week, triggering technical buy signals after an extensive price decline while the market looked for demand and/or a slowdown in slaughter runs. Carcass weights are still running about a pound below year ago, helping to offset the larger slaughter.   The pork carcass cutout value was a little higher on Thursday, but was down 0.82% for the week on a Thursday/Thursday basis. That kept some pressure on packer margins. The Thursday evening USDA Hogs & Pigs report showed an increase in hog numbers. The All Hogs figure was 101.5% of year ago, and the Market Hogs were 101.6% of last year. Sow numbers crept up slightly, with the Kept for Breeding at 100.2%. That was actually slightly smaller than the trade average guess. Farrowing intentions for Mar-May were larger than expected at 99.1% of last year. Pigs per litter hit a new all time high as expected, up 1.1% from last year.

Market Watch: The market is closed on Friday for Good Friday and the Easter holiday weekend. Trading will resume at the normal 5 pm CDT on Sunday evening. Monday is, of course, April Fool’s Day. It is also the start of the second calendar quarter, and we can expect to see some asset allocation adjustments tied to the price moves in the first quarter.  USDA will release the usual Weekly Export Inspections report on Monday and the Export Sales report on Thursday. Friday will mark the expiration of the April cattle 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.  Visit our web site at https://www.bruglermarketing.com or call 402-697-3623 for more information on our consulting and advisory services for farm family enterprises and agribusinesses.

Copyright 2013 Brugler Marketing & Management, LLC

Market Madness

Mar 22, 2013

             Brugler

                                

                                                Market Watch with Alan Brugler

March 22, 2013

Market Madness

 

This week marks the beginning of the NCAA college basketball tournament, popularly nicknamed "March Madness" because of the frequency of shocking game outcomes and the unpredictability of the final winner. The ag world has its own version of March Madness, with the USDA quarterly Grain Stocks and Planting Intentions reports coming up on March 28. We call it madness because the release of the numbers has frequently been followed by limit price moves. The market tends to be surprised by these survey based reports. Last year, May corn was limit up following the March 30 reports. May soybeans were up 47 ¾ cents. Historically, the market has under-estimated corn acreage and overestimated soybean planting intentions, but the Grain Stocks numbers have tended to be a larger surprise because they define otherwise fuzzy feed & residual use estimates.

Corn futures gained 9 cents per bushel for the week, a 1.3% advance and the second consecutive higher weekly close. They shook off a profit taking sell off on Friday which trimmed the weekly gain by 7 cents. The EIA showed increased daily average ethanol production for last week, and dropped US ethanol stocks to a multi-month low. Ethanol imports did rebound after two weeks of zero activity, but that volume was absorbed by the market. RIN values eased back a little, but should still be sending the signal for expanded voluntary blending and export sales. The RBOB/Ethanol spread still says it is a no-brainer to use as much ethanol as you can if you are a blender.  US weekly export sales were 275,500 MT, but weekly corn shipments hit their highest level since Jan 24. Accumulated exports to date are running at 71% of the USDA projection, down 7% from the 5-year average.

Soybeans were up just a little over 1% this week, thanks to a matching gain in soybean oil futures. Meal crawled 0.12% higher. China’s Feb soybean imports totaled 2.9 MMT, down 24.3% over the previous year. Combined Jan-Feb imports were 7.681 MMT according to Chinese Customs, down 9% from last year. Supplies at Chinese port elevators are less than one month of use. Chinese imports of rape and palm oil were up in Jan-Feb, while soy oil imports were down vs. the same period in 2012. US weekly export sales data was disappointing for soybeans but strong for bean oil and meal. Soybean total commitments stand at 97% of the USDA projection compared to the 5-year average of 89%. Soybean meal commits stand at 95%.

KC Wheat regained 10 cents of the 20 cents per bushel lost the previous week. A threat of frost/freeze damage over this weekend and into Monday had traders putting a little weather premium back into the market. Chicago was up .9%, and MPLS was up 1.29%. Weekly export sales were much smaller than the previous week at 573,300 MT in total sales. Wheat total commitments stand at 89% of the USDA total for the year compared to the 5-year average of 97% for this date. US SRW wheat at the Gulf is currently cheaper than corn. There is an improved chance of moisture for some of the hard red winter wheat growing areas over the next few days.

Cotton was 5.7% lower this week, ending a string of gains that had December futures up 18% from their November bottom. Weekly export sales were down a little bit, but cumulative sales are already at 91% of the USDA’s revised forecast for the year. The five year average pace would be 92% for this date. Global ending stocks remain burdensome, but much of that cotton is locked up in China, and China continues to be an active buyer in the world market. US weekly shipments fell to the lowest level since Dec 20. Trade estimates for Thursday’s Planting Intentions are running from 10 to 11 million acres, down from year ago but up from earlier expectations because of the rise in futures prices.

 

Commodity

 

 

 

 

Weekly

Weekly

Month

03/01/13

03/08/13

03/15/13

03/22/13

Change

% Change

May

Corn

$7.09

$7.04

$7.17

$7.26

$0.09

1.29%

May

CBOT Wheat

$7.21

$6.97

$7.23

$7.30

$0.07

0.93%

May

KCBT Wheat

$7.56

$7.34

$7.52

$7.62

$0.10

1.30%

May

MGEX Wheat

$8.05

$7.92

$7.96

$8.07

$0.10

1.29%

May

Soybeans

$14.44

$14.71

$14.26

$14.41

$0.15

1.02%

May

Soybean Meal

$429.30

$435.25

$418.80

$419.30

$0.50

0.12%

May

Soybean Oil

$49.67

$50.34

$49.91

$50.43

$0.52

1.04%

Apr

Live Cattle

$129.95

$127.55

$125.78

$126.20

$0.42

0.34%

Mar

Feeder Cattle

$141.55

$138.98

$136.68

$134.65

($2.03)

-1.48%

Apr

Lean Hogs

$81.13

$82.03

$79.68

$78.05

($1.63)

-2.04%

May

Cotton

$85.40

$86.75

$92.57

$87.29

($5.28)

-5.70%

May

Oats

$3.80

$3.88

$4.02

$3.96

($0.06)

-1.37%

May

Rice

$15.78

$15.37

$14.68

$14.90

$0.22

1.50%

 

Cattle futures eked out a 0.34% gain for the week. As we had anticipated, a strong basis triggered some midweek cash cattle sales at lower numbers. Boxed beef had a weekly change of -2.2% or $4.33 for Choice. The Select boxes were only off $1.65 or 0.9%, resulting in the Choice/Select spread becoming inverted for the first time since last April. Feedlots are being paid zero for adding finish to cattle right now. Weekly beef export sales were again above 15,000 MT. Beef production was up 0.7% from the same week in 2012, but slowed 1.1% from last year. Average carcass weights are still running about 9 pounds higher than year ago.  USDA on Friday afternoon showed that the number of cattle in US feedlots continued to shrink in February, with placements only 86.5% of year ago and the smallest for that month since the data series began in 1996. The March 1 On Feed inventory was 93.0% of year ago, vs. trade expectations of 93.5%. These bullish numbers were offset a little by the Cold Storage report and its larger beef inventory. Beef in storage was up 1% from January, and 4% larger than year ago. Keep in mind that March 1 was before the large Japanese purchase was made.

Hog futures dropped more than 2% this week. Similar to cattle, the trade is concerned over export and retail demand for pork. The loss of the Russian market, and restrictions on Chinese pork imports, have backed up product into the US market.  Pork production for the week was up 2.1% from the same week in year ago. Pork production YTD is down 1.1% from last year. Carcass weights are still running about a pound below year ago, helping to offset the larger slaughter.   The Cold Storage report showed total pork in the cooler up 5% from January and up 2% from year ago. Ribs and picnics were particularly abundant at the end of February.

Market Watch: The ag markets will begin the week dealing with the aftermath of Friday afternoon. USDA released Cattle on Feed and Cold Storage reports, and the April grain options also expired. The "pin" battles were in the soybeans at the 1440 strike price and in May wheat at the 730 strike price. USDA will have the usual weekly Export Inspections report on Monday and Export Sales on Thursday, but the big reports of the week will be on Thursday morning. That is when the quarterly Grain Stocks and Prospective Plantings reports will be released. Trading activity will be compressed, because the US markets are closed on Friday for Good Friday and the 3-day Easter holiday weekend.

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.  Visit our web site at https://www.bruglermarketing.com or call 402-697-3623 for more information on our consulting and advisory services for farm family enterprises and agribusinesses.

Copyright 2013 Brugler Marketing & Management, LLC

Green Shoots and Cool Dirt

Mar 15, 2013

Brugler 

Market Watch with Alan Brugler

March 15, 2013

 

Green Shoots and Cool Dirt

 

There are some hints of spring around. The birds are singing, the snow is melting faster, and the days are getting longer. In some places, the crocuses are starting to pop out. Soil temps, on the other hand, are a lot less spring like than they were a year ago. According to the folks at Planalytics, the 40 degree line is just now reaching the Oklahoma border, and soil temps are 2-3 weeks from the 55 degrees needed for corn in areas of MS, AL, GA that last year were already planting. If that delay continues, it will have implications for old crop corn consumption in July and August.

 

Corn gained 14 cents per bushel for the week in the nearby May contract. The EIA reported that ethanol stocks are the smallest in 15 weeks, and there were zero imports for the second week in a row. Weekly export sales were the strongest in a while, at 653,318 MT in total sales. Total export commitments for the 2012/13 marketing year stand at 71% of the USDA projection vs. the 5-year average of 77% for this date. Weekly export shipments hit a 5-week high at 408,201 MT. Spec funds were getting interested in testing the long side, with the Friday CFTC report showing an increase in their net long position to 87,671 contracts as of last Tuesday. The main bearish fly in the ointment was the increased use of wheat for feed in domestic rations.

 

Soybeans were down 45 cents per bushel for the week, a 3.06% drop. Various factors were cited, including a delay in the scheduled port strike in Brazil and a smaller than expected NOPA crush report for February that came out on Friday morning. Harvest progress in Brazil and weak Brazilian FOB prices vs. the US were also circulating. On the bull side, US weekly export sales were still running strong in the Thursday report, and USDA reported another 165,000 MT of new crop sales to China under the daily reporting system on Friday.

 

KC Wheat was up 18 cents per bushel for the week after being down 20 cents the previous week. Chicago was down a steeper 3.26% last week, and back up 3.73% this week. Minneapolis eked out a ½ percent gain. Weekly export sales were stronger than the pre-report trade estimates at over 1,087,000 MT. Weekly shipments were the largest in over a year. Total wheat commitments stand at 87% of the USDA projection vs. the 5-year average of 96%.

 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

02/22/13

03/01/13

03/08/13

03/15/13

Change

% Change

May

Corn

$6.84

$7.09

$7.04

$7.17

$0.14

1.92%

May

CBOT Wheat

$7.19

$7.21

$6.97

$7.23

$0.26

3.73%

May

KCBT Wheat

$7.60

$7.56

$7.34

$7.52

$0.18

2.38%

May

MGEX Wheat

$8.12

$8.05

$7.92

$7.96

$0.04

0.54%

May

Soybeans

$14.44

$14.44

$14.71

$14.26

($0.45)

-3.06%

May

Soybean Meal

$426.40

$429.30

$435.25

$418.80

($16.45)

-3.78%

May

Soybean Oil

$50.73

$49.67

$50.34

$49.91

($0.43)

-0.85%

Apr

Live Cattle

$128.23

$129.95

$127.55

$125.78

($1.77)

-1.39%

Mar

Feeder Cattle

$141.25

$141.55

$138.98

$136.68

($2.30)

-1.65%

Apr

Lean Hogs

$81.65

$81.13

$82.03

$79.68

($2.35)

-2.86%

May

Cotton

$83.14

$85.40

$86.75

$92.57

$5.82

6.71%

May

Oats

$3.85

$3.80

$3.88

$4.02

$0.14

3.54%

May

Rice

$15.89

$15.78

$15.37

$14.68

($0.69)

-4.46%

 

Cattle futures ignored strong beef prices and settled $1.77 lower for the week.  Cash cattle traded $1 lower at $125-127, with Nebraska quotes at $200-201. The futures drop created some attractive basis opportunities for hedgers and caused the cash cattle to trade. Boxed beef retreated $1.52 per cwt this past week after a gain of $9.18 for Choice boxes the previous week. The Select boxes were exactly UNCH for the week on a Fri/Fri basis. Weekly beef export sales were huge, at 31, 500 MT. Japan was a major buyer now that the new procedures for importing beef from animals up to 30 months of age are in place. US weekly beef production was up 1.6% from the previous week, but still 1.2% smaller than the same week in March 2012. Year to date production is down 2.9% from last year. Average carcass weights are still running about 6 pounds higher than year ago.

 

Hog futures sank 2.86% for the week. The trade is still very concerned over export and retail demand for pork. The loss of the Russian export market, and restrictions on Chinese pork imports, have backed up product into the US market.  On a Fri to Fri basis the pork cutout was actually $.89 higher, not that you could have deduced that from most of the market commentary. Pork production for the week was up 0.3% from the same week in year ago. Pork production YTD is down 2.0% from last year. Carcass weights are still running about 2 pounds below year ago, which is the reason slaughter is only down 1.4% but production is down 2%. USDA announced a furlough plan for meat inspectors, who will not report for work on 11 days, beginning in July.  All will be off on the same days, and those days will not be consecutive. The two big questions are 1) will Congress pass some emergency legislation allowing USDA to cancel the plan? and 2) Can plants adjust their kill schedules on the remaining days enough to keep up with the supply of ready hogs?

 

Cotton was again a big winner, advancing another 6.71%.  Spec funds continued to add to their net long positions begun back in December. Global ending stocks remain burdensome, but much of that cotton is locked up in China, and China continues to be an active buyer in the world market. USDA weekly sales were 187,600 RB for 2012/13, which was up 25% from the previous week and 14% ahead of the 4-week average. 2013/14 sales were 40,500 RB. Total Upland cotton export commitments stand at 90% of the USDA’s projected exports, which is right on pace to meet the target. Net American pima sales were 44,900 RB, which was a marketing year high.

 

Market Watch: USDA will have the usual export reports on Monday (Inspections) and Thursday (Sales). The major monthly reports for the week will be Cattle on Feed and Cold Storage, both scheduled for Friday afternoon. The Fed Open Market Committee is scheduled to meet on Tuesday and Wednesday, with no change in short term interest rate targets expected. Spring officially begins this week, on March 20. Friday will mark the expiration of the April grain options, including corn, oats, rice, wheat and the soy complex.

 

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.  Visit our web site at https://www.bruglermarketing.com or call 402-697-3623 for more information on our consulting and advisory services for farm family enterprises and agribusinesses.

Copyright 2013 Brugler Marketing & Management, LLC

In Like a Lamb, Out Like a Lion?

Mar 08, 2013

Brugler


Market Watch with Alan Brugler

March 8, 2013

In like a Lamb, Out Like a Lion?

There is a saying that March "comes in like a lion and goes out like a lamb". That is mostly a weather statement, alluding to blustery, stormy conditions as winter comes to an end, transitioning to spring warm by the end of the month. The month began in somewhat lamb like fashion, if you count a few big snow storms as positive events. It is too early to tell how the markets will react to the end of month March 28 USDA reports. Those market movers include the quarterly Grain Stocks report (responsible for most of the limit moves in the past three years) and the Planting Intentions report. The reports still come at the end of the month and the end of the quarter, a time period when big chunks of money are sloshing around. To complicate things, this will also be a 3 day weekend for Easter, with many traders taking extra days away from the market. In the meantime, this week includes Shakespeare’s famous Ides of March (March 15). That is as in "Beware the Ides of March" and a warning to Julius Caesar that was ignored to his own detriment.

Corn gained 2 cents per bushel for the week in the nearby March contract, thanks to a 13 cent rally on Friday. New crop wasn’t nearly as strong, down 9 ¼ cents on the week. The EIA decreased ethanol stocks and zero imports for the week (which were friendly), but the average daily ethanol production was lower and thus implied corn use for the week was also down.  Old crop export sales were net negative, with cancellations exceeding new bookings. USDA reflected that export weakness by cutting their annual projection by 75 million bushels on Friday. They also upped imports to a record large 125 million bushels. Because of the increased availability, they raised projected feed & residual use by 100 million bushels, leaving ending stocks at 632 million. The average cash price dropped a dime, however because of the easing.   

Soybeans were up a hefty 3% for the week, with very strong export sales and limited delivery stocks both driving the March futures higher ahead of expiration. The November contract had a much smaller gain of 5 ¾ cents. The Friday USDA supply/demand report had no surprises, as USDA made no changes in the old crop balance sheet. They did cut projected Argentine production, but left Brazil UNCH and bumped up expected world ending stocks due to smaller Argentine crush ideas.  Weekly US export sales continue to run "hot" vs. the export forecast for the year. Shipments will have to drop off dramatically in the second half of the year to achieve the anticipated 125 million bushel carryover.

KC Wheat lost 20 cents for the week because of improving moisture conditions in the Plains HRW growing area. Chicago was down a steeper 3.26%, and MPLS was down 1.7% for the week. Weekly export sales were stronger than the pre-report trade estimates, but cumulative commitments still lag the pace needed to meet the diminished USDA forecast for the year. USDA trimmed projected exports to 1.025 billion bushels in the Friday WASDE report, but is clearly anticipating stronger than typical US export sales over the next couple months. The US is about the only major supplier other than India during that time frame. 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

02/15/13

02/22/13

03/01/13

03/08/13

Change

% Change

Mar

Corn

$6.99

$6.90

$7.24

$7.26

$0.02

0.24%

Mar

CBOT Wheat

$7.42

$7.15

$7.13

$6.90

($0.23)

-3.26%

Mar

KCBT Wheat

$7.78

$7.50

$7.57

$7.37

($0.20)

-2.58%

Mar

MGEX Wheat

$8.24

$8.03

$8.20

$8.06

($0.14)

-1.68%

Mar

Soybeans

$14.25

$14.61

$14.65

$15.09

$0.44

3.00%

Mar

Soybean Meal

$409.40

$426.90

$427.30

$436.10

$8.80

2.06%

Mar

Soybean Oil

$51.62

$50.35

$49.47

$50.16

$0.69

1.39%

Apr

Live Cattle

$130.45

$128.23

$129.95

$127.55

($2.40)

-1.85%

Mar

Feeder Cattle

$143.38

$141.25

$141.55

$138.98

($2.58)

-1.82%

Apr

Lean Hogs

$84.25

$81.65

$81.13

$82.03

$0.90

1.11%

May

Cotton

$83.19

$83.14

$85.40

$86.75

$1.35

1.58%

Mar

Oats

$3.79

$3.88

$4.03

$4.04

$0.02

0.43%

Mar

Rice

$15.84

$15.59

$15.53

$15.13

($0.41)

-2.61%

 

Cattle futures ignored strong beef prices and steady/firm cash cattle trade. April settled at $127.55, with cash cattle at $128. Nebraska trade was at $203-204. We may be setting up a formula for cash cattle being sold because of the strong basis rather than the board price? Boxed beef had a weekly change of +4.9% or $9.18 for Choice. The Select boxes were up $8.12 or 4.4% on a Fri/Fri basis. Weekly beef export sales rebounded sharply this week to over 15,000 MT. Beef production was up 5.4% from the storm limited prior week, but down 4.8% from the same week in 2012. Average carcass weights are still running about 9 pounds higher than year ago.

Hog futures managed to gain 90 cents for the week, thanks to a triple digit rally on Thursday. Similar to cattle, the trade is concerned over export and retail demand for pork. The loss of the Russian market, and restrictions on Chinese pork imports, have backed up product into the US market.  On a Fri to Fri basis the pork cutout lost $2.89 or 3.57%. Pork production for the week was up 2.4% from the same week in year ago. Pork production YTD is down 2.2% from last year. Carcass weights are still running about 2 pounds below year ago, helping to offset the larger slaughter.  

Cotton was again a big winner this week with the front month up 135 points, gaining 1.58% on the week.  Weekly export sales were down a little bit, but cumulative sales are already at 90% of the USDA’s revised forecast for the year. USDA hiked projected exports on Friday, and cut expected year end stocks to 4.2 million bales. The average cash price estimate was increased to 71.5 cents. Global ending stocks remain burdensome, but much of that cotton is locked up in China, and China continues to be an active buyer in the world market. 

Market Watch: We start off the week dealing with the effects of the time change, with most of the US switching to Daylight Savings time on Sunday.  USDA will have the usual export reports on Monday (Inspections) and Thursday (Sales). NOPA is expected to release their February soybean crush report on Thursday.  Thursday will also be the last trading day for the volatile March grain futures contracts.  Friday will be a "triple witching" expiration day for stock market futures and options.  Coming up: Spring officially begins on March 20. We’re ready, are you? 

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.  Visit our web site at https://www.bruglermarketing.com or call 402-697-3623 for more information on our consulting and advisory services for farm family enterprises and agribusinesses.

 

Copyright 2013 Brugler Marketing & Management, LLC

Spring is Coming, Change is in the Air

Mar 01, 2013

 

Market Watch with Alan Brugler

March 1, 2013

 

Spring is Coming, Change is in the Air

 

After weeks of snow or rain in the North East, the Southern Plains and the Midwest, accompanied by back to back weekly losses for much of the agricultural commodities, this week it seems like change is in the air, and not just the typical Spring warm up.  Major spending cuts for the federal government as a result of the budget sequestration will require USDA meat inspectors to cut one day out of their work week.  The packing plants can’t run without inspectors, so the packing plant volume will likely slip as plant managers grapple with a shorter work week.  The US dollar is the strongest it has been since August of last year, and crude oil is the lowest it has been since the day after Christmas.  Yesterday, the DJIA came very close to taking out the previous all-time-high set back in October of 2007.  The Italian election produced no clear winner and some additional uncertainty in Europe, and for the first time in history the Pope resigned.  The outside markets still weighed on commodities, but it was not all doom and gloom this week; a bit refreshing!    

 

Corn was the biggest winner in the ag commodities basket, gaining 4.89% on the week, closing 34 cents higher than last Friday.  The EIA reported increased ethanol production and decreased stocks, (which is friendly), but imports were also higher on the week.  Decent export sales reported on Thursday morning, and a stronger cattle market brought support.  A commodities analysis firm which typically produces estimates on the bearish end of the trade guesses, released updated estimates for the Argentine and Brazilian corn production that were lower than the most recent USDA estimates published in the February WASDE.  The updated figures were for a 25 MMT corn crop in Argentina, and a 71.6 MMT corn crop in Brazil; compared to the USDA estimates of 27 MMT and 72.5 MMT respectively.  The USDA will provide updated estimates this coming Friday in the March WASDE report.  The CFTC commitment of traders report released this afternoon shows that as of last Tuesday managed money decreased their net long position by 13,228 contracts and is now net long 52,075 contracts (the lowest level reported since June 12, 2012) 

 

Soybeans were also higher on the week, but only by three cents.  That really doesn’t tell the story very well because there was a 51½ cent range in the front month.  The March contract traded as high as $14.87¾ and as low as 14.36¼ before closing in the upper half of the range at $14.64½.  The November contract had a much smaller trading range of 15 cents, and actually ended the week 1¾ cents lower, despite China buying more than 17.75 million bushels of new crop exports this week.  The Chinese PMI for February came in at 50.1, which was below industry analyst’s expectations, but still above 50.0, the level that is considered to be expansive.  Informa raised its estimate for Brazilian soybean production to 84.4 MMT, exceeding the USDA’s latest estimate by .9 MMT. The firm lowered its production estimate for Argentine soybean production to 51 MMT, which is 2 MMT lower than the February USDA estimate.  Soybean meal was slightly higher on the week, gaining a mere 40 cents per contract.  Soybean oil was off 88 cents, or 1.75%.

 

KC Wheat gained 7 cents and CBOT Wheat lost two cents on the week.  Wheat on the Minneapolis Grain Exchange added 17 cents, or 2.15%.  Smaller export inspections on Monday, and a bit more moisture in winter wheat country put pressure on the markets early in the week, as did some improvement in the statewide conditions ratings.  Decent export sales reported Thursday morning brought some support to the wheat markets, and Brazil showed up as a buyer, which hints that US wheat is starting to look cheap.     

 

Cattle futures rebounded from the lows that were put in the previous week, with the April live futures contract adding $1.72. March feeder cattle added 30 cents on the week. Cattle futures found support early in the week as the winter storm moved across the southwest, disrupting the movement of cattle to slaughterhouses and reducing the rate of gain for cattle in feedlots. Boxed beef had a weekly change of +2.8% or $5.21 on Select and $5.62 or +3.1% on Choice. The CFTC report, which runs Tues to Tues, shows Managed Money going net short in feeder cattle. Sales of cash cattle late in the week helped further support the run up in futures, with cattle in Kansas trading hands at $128 and $129 versus $123 last week. Weekly beef sales hit a marketing year low at 3,900 MT, although the YTD sales are still ahead of the pace set last year.

 

Hog futures wrapped up trade on Friday with a weekly loss of 53 cents on the April contract. The April  was under fire all week as it pushed to new lows not touched since May. The federal spending cuts set to begin on Friday limited any significant gains, with the possibility that meat inspectors being furloughed for 15 days bringing uncertainty to the entire livestock complex. The CFTC report that runs Tues to Tues showed Managed Money pulling out of 56% of their net long positions (12,000+ contracts). Similar to cattle, the trade is concerned over retail demand for pork as consumers face uncertainty in the marketplace. On a Fri to Fri basis the pork cutout lost 52 cents or 0.64%. Slaughter continues to run behind the pace set last year, with the YTD slaughter down 2.2% from the same period in 2012. Packers have been reluctant to offer higher cash prices for hogs given a weaker carcass cutout value contributing to tight margins. A relentless rallying dollar all week brought further uncertainty to future pork export business. 

 

Cotton was a big winner this week with the front month up 229 points, gaining 2.81% on the week.  Crude oil sliding to its lowest level in more than two months helped support the cotton market.  The acreage mix seems to be leaning toward less cotton and the trade talk is for something just over 9 million acres(ma).  Compare that to the 12.315ma planted in 2012, and the 14.735ma planted in 2011.  Cotton had similar planted acreage in 2008 and 2009 when they were 9.471 ma and 9.150 ma respectively.  Other than those two years, you would have to go back to 1983 to find a year with less than 10 ma planted to cotton in the country.  The US export sales report on Thursday morning posted the second largest weekly shipment of cotton so far this marketing year, with the largest reported just three weeks ago.

 

Market Watch: Cattle traders will start the week reacting to the expiration of the March serial options.  USDA will release the usual Monday Export Inspections report and the Thursday Export Sales report to provide fundamental insight. Corn traders will continue to monitor the weekly EIA ethanol production and stocks report on Wednesday morning. The big USDA numbers for the week will be the updated Crop Production and WASDE Supply/Demand estimates to be released at 11 am CST on Friday.  Not be be overlooked, Daylight Savings time begins at 2 am on Sunday morning (10th).

 

 

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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