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Market Watch

RSS By: Alan Brugler, AgWeb.com

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

Turkey Day

Nov 23, 2012

 

 

Brugler

Market Watch with Alan Brugler

November 23, 2012

 Turkey Day

The meat consumption focus may have turned to turkey this week, but the commodity markets soared more like an eagle. Of the commodities we track, only cotton was down for the week, and several markets were up more than 2%. A weaker US dollar index this week aided most commodities priced in dollars, again with the exception of cotton.

Corn futures were 2.5% higher this week.  The demand picture was mixed, with ethanol production dropping and reported ethanol stocks climbing back after a drawdown during the aftermath of Hurricane Sandy. On the other hand, weekly export sales were stout at 958,600 MT, the strongest showing in a long time. The Japanese business (457,700 MT) was known but the total still suggests prices are low enough and wheat stocks tight enough to attract corn buyers back into the market. Low prices cure low prices!

The soy complex also rallied 2.6% this week. Meal was up nearly 1%. Soy oil was up 4.23% to lead all of the commodities we track. The big story in the complex is the large scale soybean oil export sales, both in the weekly USDA report and in additional sales reported under the daily reporting system. Some sources tied the buying to concern about a big US biodiesel program in 2013 and an interest in getting the BO which it was the cheapest since 2010. Weekly soybean export sales themselves declined to 543,600 MT for soybeans, but export commitments are already 74% of the USDA forecast for the year. They would typically only be 61% by this point.

Chicago wheat futures were up 1.2% this week. The hard wheat contracts had a tougher time, with KC up ¼ percent and MPLS up 0.4%.   Weekly wheat export sales were a strong 657,400 MTs, or 24.15 million bushels. Trade estimates on Wednesday had been in the 8-15 million bushel range. Total commitments are still lagging the pace needed to hit the USDA forecast for the year. Commitments are 53% of the USDA annual projection. They would typically be 72% by now. Drought concerns continue in the US Plains HRW growing region, but traders also know there is a weak correlation between fall conditions and eventual spring yields. Winter wheat crop condition ratings dropped again. French winter wheat planting progress has lagged all fall, and is now 94% complete vs. the usual 100% done.

Cotton futures lost 4% this week in the December contract. Longs had to look forward to first notice day for December deliveries on Monday, and at rising cert stocks that make deliveries more likely. Thus, we had some significant long liquidation in the Dec contract. The USDA weekly Export Sales report showed net sales for last week of an impressive 626,600 Running Bales. That includes both old crop and new crop upland cotton, and 33,400 RB of 2012/13 crop pima.  

 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

10/26/12

11/02/12

11/16/12

11/23/12

Change

% Change

Dec

Corn

$7.40

$7.39

$7.27

$7.46

$0.19

2.54%

Dec

CBOT Wheat

$8.65

$8.87

$8.38

$8.48

$0.10

1.16%

Dec

KCBT Wheat

$9.09

$9.22

$8.76

$8.78

$0.02

0.26%

Dec

MGEX Wheat

$9.40

$9.51

$9.10

$9.14

$0.04

0.41%

Jan

Soybeans

$15.64

$15.27

$13.83

$14.19

$0.36

2.57%

Dec

Soybean Meal

$475.90

$449.70

$424.60

$428.60

$4.00

0.94%

Dec

Soybean Oil

$49.26

$47.77

$47.05

$49.04

$1.99

4.23%

Dec

Live Cattle

$125.43

$125.75

$126.15

$128.95

$2.80

2.22%

Jan

Feeder Cattle

$147.08

$146.68

$145.60

$147.88

$2.28

1.56%

Dec

Lean Hogs

$77.75

$80.75

$80.33

$82.48

$2.15

2.68%

Dec

Cotton

$70.35

$69.58

$72.73

$69.83

($2.90)

-3.99%

Dec

Oats

$3.67

$3.64

$3.65

$3.69

$0.04

1.23%

Jan

Rice

$15.11

$15.01

$14.85

$15.04

$0.19

1.28%

 

Cattle futures finished 2.2%% higher for the week. Weekly estimated slaughter totaled 583,000, up  22,000 from the same week a year ago but down from last week. Beef production dropped 7.6% from the prior week, but was 5.4% larger than last year. The YTD production is down 1.6% from last year. Wholesale prices were higher for the week.  Weekly beef export sales for last week improved to 15,300 MT. That is 1% below the 4 week average but larger than last week.

Hog futures added 2.7% for the week.  Estimated weekly slaughter was 2.071 million head, matching the same week in 2011. Weekly pork production was down 1.4% from year ago, due to lower average carcass weight that is running 3 pounds below last year. Pork production YTD has still been 2.1% larger than last year. The pork carcass cutout value slipped 31 cents or 0.38% for the week. Cash hog prices were well supported, with packers first trying to increase kills ahead of the Thanksgiving holiday and then trying to line up hogs for early next week to fill in.

Market Watch:

We finally get back to a full trading week, following the Veterans Day and Thanksgiving week disruptions. Grain traders will first start out reacting to any surprise positions inherited with the expiration of the December grain options on Friday. We’ll get the usual Monday USDA Export Inspections and Crop Progress reports on Monday. Monday is also first notice day for December cotton deliveries. In the background, trading funds will be making month end asset allocation adjustments and getting out of most of their remaining long December positions to avoid being involved in taking deliveries. Friday is first notice day for December futures deliveries.

 

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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