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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.

Wild Card

Sep 27, 2013

 Brugler

Market Watch with Alan Brugler

September 27, 2013

Wild Card 

The baseball season is coming down to the last week, with several teams still in contention for the wild card playoff slots. There is tension, excitement, and the potential for your favorite team to make a run deep into the post season. For the grain markets the harvest season is just ramping up. The Grain Stocks and Small Grains reports on Monday are the equivalent of the wild card slots.  The market might get there by default (the other team losing) or with a walk off homer (USDA stocks or production WAY below trade estimates). And, of course you get the league championship series’ followed by the World Series in baseball. For the grains, we go on to the USDA October 11 Crop Production and WASDE reports, with USDA expected to bring updated Prevented Planting and FSA acreage data out of the bullpen.  

December corn futures were up 3 cents on the week, bumping along near the August low while awaiting USDA production data on the 11th.  The overall tone continues to be bearish because of large anecdotal yield reports. As always the question to ask is "It surprised you, but did it surprise USDA?" The Commitment of Traders report on Friday showed the Managed Money added 22,134 new short positions, taking their net short position to 126,345 contracts as of September 24 (631 million bushels). US ethanol production slowed this past week. Imports jumped to 43,000 bpa, but ethanol stocks dropped to the lowest level since June.

November futures eked out a 4 cent gain for the week after losing 66 cents per bushel the previous week. The expected poor yield reports are being offset by others that are much better than expected, diluting the bears’ certainty that the US average yield is below 41 bpa. Weekly export sales were strong at over 2.8 million metric tonnes. Much of this business was a broad contract signed publicly by Chinese companies here in a trade delegation. Thus, we didn’t get the big bullish reaction when USDA released the numbers. The latest Commitment of Traders data showed managed money spec funds trimming 12,499 contracts from their net long position in soybeans, taking it to 135,252 contracts as of September 24.

Wheat futures broke out above chart resistance and took off. Chicago was up 5.7% this week in nearby December futures. KC was up 5.3% and MPLS rose 4.6%.  US export sales continue to be well ahead of the most recent years, with 59% of the USDA forecast for the year already on the books or shipped out. Japan has been a steady buyer, along with China. The trade average guess for All Wheat production in the September 30 report is 2.108 billion bushels. September 1 stocks, which combine production, carryover and first quarter use, are expected to be 1.91 billion bushels, with several estimates below the 1.9 billion mark. Spec funds trimmed their net short position in Chicago wheat by about 25% in the week ending September 24. They are net long in KC.

Cotton futures rallied 2.8% this week, posting the highest Friday close of the month. USDA reported net weekly export sales through September 17 totaled 66,500 RB of upland cotton and 20,900 RB of pima. There were 9,900 bales sold for 2014/15.  The large spec funds added 1,460 contracts to their net long position in cotton during the reporting week ending September 24. Harvest continues to run a little behind normal, but old crop stocks are adequate to carry us for a while and global stocks are still seen as being record large in 2013/14.

 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

09/06/13

09/13/13

09/20/13

09/27/13

Change

% Change

Dec

Corn

$4.68

$4.59

$4.51

$4.54

$0.03

0.67%

Dec

CBOT Wheat

$6.48

$6.42

$6.46

$6.83

$0.37

5.69%

Dec

KCBT Wheat

$6.955

$6.915

$6.928

$7.318

$0.39

5.63%

Dec

MGEX Wheat

$7.13

$7.06

$6.99

$7.32

$0.32

4.61%

Nov

Soybeans

$13.68

$13.82

$13.15

$13.20

$0.04

0.34%

Oct

Soybean Meal

$434.70

$444.60

$413.40

$419.90

$6.50

1.57%

Oct

Soybean Oil

$43.43

$42.34

$42.09

$41.51

($0.58)

-1.38%

Oct

Live Cattle

$125.68

$125.25

$125.95

$128.25

$2.30

1.83%

Oct

Feeder Cattle

$158.02

$159.27

$160.22

$164.13

$3.91

2.44%

Oct

Lean Hogs

$90.90

$90.70

$90.05

$92.93

$2.88

3.19%

Oct

Cotton

$83.24

$85.21

$83.33

$85.66

$2.33

2.80%

Dec

Oats

$3.20

$3.12

$3.09

$3.17

$0.08

2.59%

Nov

Rice

$15.41

$15.42

$15.55

$15.40

($0.15)

-0.93%

 

Cattle futures rallied 1.83% this week. Beef production this week was 0.3% smaller than the previous week, and down 2.5% from the same week in 2012. Production year to date is down 0.9%. Weekly slaughter was 2.6% smaller than in 2012 with estimated carcass weights within a pound per animal of last year’s 798#. Wholesale beef prices were slightly higher this week despite weaker export sales (9,300 MT). Choice boxes were weaker on Friday but up 0.1% for the week. Select boxes were up 0.1% on a Friday/Friday basis. Cash cattle trade on Friday was mostly $2 higher than last week at $126+, with northern trade up $4 at $200.

Hog futures rose 3.2% this week. The estimated weekly slaughter was off 5.7% from the same period a year ago.  Runs in late August and September were unusually large a year ago, but the drop off has still caught the attention of end users. Pork production for the year is down 1.1%. The pork carcass cutout value gained 1.8% this week. Estimated week to date slaughter (including Saturday’s estimates) came in at 2.19 million head vs. 2.341 million a year ago this week. Weekly US pork export sales through September 17 totaled 9,500 MT. The reported data has been running around 30% of the actual total pork exports released by Census a couple months later.

The USDA Hogs & Pigs report was released after the close on Friday.  It showed more market hogs than expected at 100.3%, and fewer sows (although still showing slight expansion) at 100.4% of year ago. The All Hogs number is up 0.3% from year ago. 

Market Watch

Hog traders will begin the week reacting to the quarterly Hogs & Pigs report results from Friday night. Grain traders won’t be able to ease into their Monday, with the USDA Grain Stocks and Small Grains reports due out at 11 am CDT. The regular Monday USDA reports (Export Inspections and Crop Progress) will be of interest, particularly the rate at which the crops are maturing and being harvested. Monday also marks the end of the month and end of the 3rd quarter and the end of the federal fiscal year in the United States. There will be money sloshing around. Weekly ethanol production and stocks will be out on Wednesday. USDA weekly Export Sales will be released on Thursday. October cattle options will expire on Friday.

Visit our Brugler web site at http://www.bruglermarketing.com, find our iPad app "AgMarket" in the app store, or call 402-697-3623 for more information on our consulting and advisory services for farm family enterprises and agribusinesses.


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.  

Copyright 2013 Brugler Marketing & Management, LLC

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