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September 2010 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.

Frantic Friday's

Sep 24, 2010

brulogomed

 Market Watch and Tech Talk

September 24, 2010

Frantic Friday’s

Forget the midweek action. Lately we’ve been seeing big volume and volatile trading on Friday’s. For the corn and soybeans, additional sell paper is available as elevators pre-hedge anticipated weekend cash grain purchases. That gives the funds something to buy against. Dollar weakness and the potential for weekend surprises is also a background factor.

Soybeans were the bull leader this week, with all contracts out through September 2011 breaking the $11 barrier. You could get a lot of different stories, from crop losses in Minnesota due to heavy rains to the weak dollar to insatiable Chinese buying. Unwinding of corn/soy spreads also helped boost beans, and there were definitely some stops triggered above $11. While U.S. ending stocks appear comfortably above 300 million bushels, the pace of expansion in use demands that South America hold up their end of the two season global marketing year. Dryness in parts of Brazil and Argentina are concerning, because parts of those countries are usually dry in a La Niña weather pattern such as the one currently in place. Some of the buying interest in beans may be the market’s hidden way of trying to entice more Brazilian soybean planting to ensure supplies.

Corn was lower earlier in the week but finished strong bringing it positive for the week. Corn was lower on news of low export sales and looked like it was going to continue lower for the week but the market changed its sentiments. The dollar was influential on corn this week: due to uncertainty about the dollar and continued quantitative easing. Adding to that were concerns of delayed harvest from Midwestern rains.

Wheat was under pressure for much of the week. Technically, the market failed to close overhead chart gaps, leaving an island top. That attracted new selling interest. Some managed money and index traders were also liquidating longs at the end of the calendar quarter. A number of cancellations in the weekly Export Sales report also showed confusion in the market place as global users attempt to replace missing Russian and Ukrainian supplies. Egypt did buy four cargoes of US hard wheat at a mid-week tender, suggesting that they’re still not done buying. For the week, Chicago futures were down the most of the 3 wheat contracts but off of their lows thanks to Friday’s price action. KC and MPLS were down as well.

Cotton futures posted 15 year highs on front month contracts, and then sold off sharply at midweek. They staged a comeback on Friday with assistance from a sharply lower US dollar. They ended up 3.78% positive for the week. Cotton export potential continues to be outstanding, with over 8 million bales already committed. That’s more than half of USDA’s forecast for the entire year. Pakistan was hurt badly by the flooding during the summer. India is apparently trying to keep tight controls on exports, leaving room for US sales.  The Census Cotton Consumption report shows a rebound in U.S. mill use, with use up year over year in 8 of the past 9 months.

Hogs were firmer for the week, with shorts covering positions ahead of the Friday evening USDA Hogs and Pigs report. Futures continue to trade below the cash hogs and below the values implied by the pork cutouts. The cutout was down 2.44% for the week on a Thursday/Thursday basis. The Hogs and Pigs report showed All Hogs on September 1 at 97.4% of year ago. The breeding herd was down, at 98.2% of last September. Hogs kept for market were at 97.1% of last year. These were all in line with trade estimates.

Below is a table showing the net weekly changes and 4 week history of selected agricultural futures:

 

Commodity

 

 

 

 

Weekly

Weekly

Month

09/03/10

09/10/10

09/17/10

09/24/10

Change

% Change

Dec

Corn

$4.65

$4.78

$5.13

$5.22

0.09

1.66%

Dec

CBOT Wheat

$7.41

$7.37

$7.39

$7.20

0.19

2.60%

Dec

KCBT Wheat

$7.58

$7.59

$7.68

$7.58

0.11

1.40%

Dec

MGEX Wheat

$7.58

$7.57

$7.73

$7.63

0.11

1.39%

Nov

Soybeans

$10.35

$10.31

$10.69

$11.26

0.57

5.33%

Oct

Soybean Meal

$301.50

$291.25

$304.70

$313.20

8.50

2.79%

Oct

Soybean Oil

$40.47

$41.36

$41.91

$44.48

2.57

6.13%

Oct

Live Cattle

$94.45

$97.15

$99.40

$96.02

3.38

3.40%

Oct

Feeder Cattle

$115.08

$111.83

$111.85

$109.50

2.35

2.10%

Oct

Lean Hogs

$77.20

$77.25

$77.70

$79.02

1.32

1.70%

Oct

Cotton

$90.95

$90.87

$97.61

$101.30

3.69

3.78%

Dec

Oats

$2.95

$3.24

$3.56

$3.52

0.04

1.12%

Nov

Rice

$11.72

$11.79

$12.08

$12.36

0.28

2.32%

 

Cattle futures sold off hard following the monthly Cattle on Feed report and it’s larger than expected August placements.  The cutout values have also ground lower. Cold storage numbers showed a drop in ground beef during August, but were not a major market factor. USDA’s weekly export sales report was bull friendly, as the weakening US dollar made prices look even more attractive to foreign buyers. The cutout was mixed on a Thursday/Thursday basis, up .33% on the Choice and down .95% on the select, spreading out the two.

 Looking for professional help with your agricultural marketing decisions? Consider subscribing to our daily Ag Marketing Professional service or Special Research Reports. Call our office for details at 402-697-3623, or visit www.bruglermarketing.com.

 Market Watch:  October grain options expired on Friday, so there is potential for a few folks to be surprised by futures positions they are now holding. The hog market will also be reacting to Friday’s Hogs & Pigs report. Grain traders and producers will start the week looking once again at USDA weekly crop progress and condition reports, trying to determine if yield prospects are deteriorating from those shown in September. That report is on Monday night. The main grain reports for the week are on Thursday, with USDA releasing a much anticipated Quarterly Grain Stocks report that will be the official ending stocks for old crop corn and soybeans. The Small Grains report will also be out on Thursday, firming up production numbers for wheat, oats, barley, etc.  Weekly export sales will be out on Thursday morning. Thursday is also the last trading day for September feeder cattle futures. 

Keep on Truckin

Sep 17, 2010

 brulogomed

Market Watch

September 17, 2010

Keep on Truckin’

 The impact of last weeks USDA supply demand report kept the corn rocket ignited and despite a less than expected weekly export sales number corn closed 35 cents higher for the week. Weekly export sales were down 88% from the previous week attributed to the roll of the next marketing year sales to the current marketing year and so to put it in perspective sales at 584,241 MT were average for what the market has been doing since right before the June crop report. China has been a return customer after being absent from the corn market for a few years and purchased 1,157,500 MT in the 2009/10 marketing year. Corn closed above the $5.00 mark for the first time since September of 2008. Corn has rallied $1.88 since the June 30th crop report after consolidating for a year and half between $2.90 and $4.50.  

 Wheat ended the week with a 17 to 20 cent jump to day but with only small gain in Chicago, KC and MPLS for the week. The US really doesn’t have much soft wheat to export, and the hard wheats are seeing what USDA believes could be record buying interest. Egypt was in the market for wheat this week and purchased 55,000 MT of Soft White Winter from the US a bit disappointing to the trade considering the tender was for 295,000 MT. The balance of that tender was filled by
France and Canada. Export sales fell behind last weeks big surge at 484,600 MT. Egypt decreased their 2010/11 commitment by 263,700 MT and decreased their 2011/12 commitment by 110,000 MT for the week ending September 9th. There was no new news on the Russian wheat ban so the policy remains "a wait and see what we get" before making any further export decisions.

Opposite from last week Soybeans were double digits higher on Friday, resulting in a net gain of 38 cents for the week. Although, not a new high for the weekly charts, this was the highest price November soybeans have traded at since October of 2008. A 2010 crop that has increased in size has pushed the soybean market into consolidation since early August with price and supply juggling for balance in the last six week trading range; until today. Weather forecasters are keeping a watchful eye on the waning El Nino and developing La Nina and how those weather anomalies might impact the Argentine and Brazilian soybean production in 2010/11. The world demand for soybeans and soybean products has been on the rise with the developing populace wanting to add more animal protein to their diet creating an increased need for feed.  Export sales this week were 668,600 MT with China showing back up in a big way after being on the down low the last month. China took 339,700 MT of this week’s reported sales. 

Cotton futures posted 15 year highs on front month contracts, and are creeping on their contract highs. The week started out with follow through buying from last Friday’s WASDE report, a sharply higher dollar and weather concerns in Southern and Eastern Asia which comprises most of the world cotton. India delayed exports 2 weeks to Oct 1st. The week finished off strong with a total increase of 7.42%, which was only rivaled by corn but cotton still won that match. Strong export sales and on call mill buying pushed cotton up even further.

Hogs ended up flat after bouncing around a bit. Pork exports for July were reported down from June and in line with last year’s behavior. Analysts are expecting a reduction in numbers of 2.5% on the Hogs and Pigs report based on hog slaughter supplies since the June report. Fund buying helped to support hogs while cash prices did not. Russia limiting pork imports from two US plants had some impact on price but another could be the recent change in policy for the Japanese currency.

Below is a table showing the net weekly changes and 4 week history of selected agricultural futures:

 

Commodity

 

 

 

 

Weekly

Weekly

Month

08/27/10

09/03/10

09/10/10

09/17/10

Change

% Change

Dec

Corn

$4.36

$4.65

$4.78

$5.13

0.35

7.32%

Dec

CBOT Wheat

$6.95

$7.41

$7.37

$7.39

0.03

0.34%

Dec

KCBT Wheat

$7.14

$7.58

$7.59

$7.68

0.09

1.19%

Dec

MGEX Wheat

$7.13

$7.58

$7.57

$7.73

0.16

2.15%

Nov

Soybeans

$10.27

$10.35

$10.31

$10.69

0.38

3.69%

Oct

Soybean Meal

$299.10

$301.50

$291.25

$304.70

13.45

4.62%

Oct

Soybean Oil

$40.39

$40.47

$41.36

$41.91

0.55

1.33%

Oct

Live Cattle

$98.10

$94.45

$97.15

$99.40

2.25

2.32%

Sep

Feeder Cattle

$116.27

$114.17

$111.70

$111.82

0.12

0.11%

Oct

Lean Hogs

$74.82

$77.20

$77.25

$77.70

0.45

0.58%

Oct

Cotton

$89.03

$90.95

$90.87

$97.61

6.74

7.42%

Dec

Oats

$2.79

$2.95

$3.24

$3.56

0.32

9.88%

Nov

Rice

$11.49

$11.72

$11.79

$12.08

0.29

2.46%

 

Cattle futures ended up higher for the week after being mixed. The cattle on feed report came in with Cattle on feed as of Sept 1 at 103% of last year which was well above estimates, fed cattle marketed at 107%, and placed on feed during August 107%, well above estimates. This is likely because of the high prices cattle continue to get. It should put pressure on the supply side of the equation if all of those extra placed cattle make it to market. Packers paid steady to $1 higher for cash cattle yesterday. Prices are said to be held up right now on the idea that there will be fewer cattle in feedlots next year due to feed costs.

Looking for professional help with your marketing decisions? Consider subscribing to our daily Ag Marketing Professional service or Special Research Reports. Call our office for details at 402-697-3623, or visit www.bruglermarketing.com.

Looking to enhance your existing Ag Marketing Professional subscription? Add free futures market quotes sent to your cell phone via our Market Monitor service. Or "push" the daily recommendations out to your phone as they happen with Market Messenger 2. Call in consulting service with Alan is also available for a limited number of customers in our Ag Marketing Professional Premium package.

Market Watch:  We’ll start next week off with the winding down of Crop Progress reports and continue the week with Energy Stocks reports, the Cold Storage report, Census Crush, Census Cotton Consumption and Stocks and wrap up the week the quarterly Hog and Pig report on Friday.

Will The Well Run Dry

Sep 10, 2010

brulogomed

Market Watch with Alan Brugler

September 10, 2010

Will The Well Run Dry? 

We ran out of adjectives for a smoking hot corn market, but you do use a lot of water in fighting a fire. The water level in the well analogy is appropriate since the projected level of ending stocks for 2011 continues to decline.  USDA reduced projected production to 13.16 billion bushels on Friday, while also tweaking demand.  Ending stocks are seen dropping to only 1.116 billion bushels by next August. The stocks/use ratio under current assumptions would be the tightest since 1995/96 (The $5 corn, HTA rally year). There are a few cracks developing in the bullish façade, with USDA reporting a slowdown in weekly export sales through September 2. Higher prices doubtless are having an impact.

 

Wheat ended the week with a small loss in Chicago, while the hard wheat markets in KC and MPLS posted gains. The US really doesn’t have much soft wheat to export, and the hard wheats are seeing what USDA believes could be record buying interest. USDA reported very strong weekly export sales for wheat of more than 1.6 MMT on Friday morning. That was easily 500,000 MT above the trade average guess. The big surprise was 660,000 MT of 2011/12 bookings. Russia indicated that the export ban was likely to be extended until the fall of 2011 after new crop supplies were assured. That drove those who had been hoping for deferred shipment of August Russian orders to go to other sources. USDA did not, however, cut projected Russian exports to zero as a few brokerage analysts had been anticipating. They really can’t, since Russia was in fact shipping wheat from June 1 to August 15 and that period is part of the standardized 2010/11 marketing year.

Soybeans were double digits lower on Friday, and that resulted in a net loss for the week. Pundits looking for USDA to increase the national average yield estimate in August were correct, with USDA going to a new record level of 44.7 bushels per acre. Pod counts in the objective yield plots were increased to record levels after very conservative numbers were used in August. Fortunately for soybean producers, world demand for soybeans is phenomenal. USDA now sees U.S. soybean exports for the year exceeding last year’s record. This comes despite a record high world carryover projection, and basically says the U.S. has a freight and availability advantage to some of the major Asian buyers. Strong basis levels in Brazil and decisions by some processors there to shut down early suggest that perhaps last year’s crop was overestimated. USDA made no change in projected Brazilian or Argentine production for the crop they are just now beginning to plant.

Cotton futures posted the highest prices since 2008 on their daily charts, and the highest prices since October 1995 on the front month continuation charts. However, the net gain for the week was negligible. The U.S. crop is still looking to be a big one, with USDA putting production at 18.84 million bales on Friday morning. However, the balance sheets show most of it being used or more accurately shipped out of the country. Projected ending stocks shrank to only 2.7 million bales by July 31, 2011.

Hogs digested their advance from the previous week, but were able to gain only 5 cents this week.  The cash hog market was volatile, with several $2-3 swing days. Producers are anxious to move hogs before they get bogged down in harvest. Packers are looking at favorable margins, but concerned about a seasonal slowdown in product values as we get into late September and October.  On a Thursday/Thursday basis the pork carcass value dropped 2.3%. On Friday morning, USDA cut projected 2010 U.S. pork production by 35 million pounds from the August estimate.  They also trimmed 15 million pounds off of 2011. Higher feed costs are expected to dampen expansion plans. USDA did raise the estimated average cash hog price for 2010 by $1 per cwt.

Below is a table showing the net weekly changes and 4 week history of selected agricultural futures:

 

Commodity

 

 

 

 

Weekly

Weekly

Month

08/20/10

08/27/10

09/03/10

09/10/10

Change

% Change

Sep

Corn

$4.21

$4.21

$4.50

$4.64

0.14

3.17%

Sep

CBOT Wheat

$6.79

$6.63

$7.08

$7.05

0.03

0.49%

Sep

KCBT Wheat

$7.06

$7.00

$7.44

$7.47

0.04

0.50%

Sep

MGEX Wheat

$7.00

$7.07

$7.42

$7.43

0.01

0.10%

Sep

Soybeans

$10.09

$10.22

$10.30

$10.24

0.06

0.61%

Sep

Soybean Meal

$300.80

$307.80

$308.20

$297.20

11.00

3.57%

Sep

Soybean Oil

$39.52

$40.20

$40.32

$41.25

0.93

2.31%

Oct

Live Cattle

$99.25

$98.10

$94.45

$97.15

2.70

2.86%

Sep

Feeder Cattle

$116.65

$116.27

$114.17

$111.70

2.47

2.16%

Oct

Lean Hogs

$77.20

$74.82

$77.20

$77.25

0.05

0.06%

Oct

Cotton

$87.15

$89.03

$90.95

$90.87

0.08

0.09%

Sep

Oats

$2.72

$2.66

$2.83

$3.17

0.34

12.01%

Sep

Rice

$10.91

$11.22

$11.51

$11.58

0.07

0.65%

 Cattle futures staged a nice 2.86% comeback from the nasty sell off the previous week. Cash cattle prices pretty much ignored the Board in both weeks, with cash trade mostly in the $97-98 area. USDA raised projected 2010 beef production for the U.S. by 60 million pounds from their August figure. The increased tonnage is seen having zero effect on the average steer price for the year, which they put at $93-95. The Choice beef wholesale price was down 2.2% for the week on a Thursday/Thursday basis. Select beef is seeing more competition from chicken and hamburger, and lost 2.5%.

Looking for professional help with your marketing decisions? Consider subscribing to our daily Ag Marketing Professional service or Special Research Reports. Call our office for details at 402-697-3623, or visit www.bruglermarketing.com.

Market Watch:  We’ll start next week off with the NOPA crush report, and Retail sales numbers. We’ll end the week with USDA Cattle on Feed and CPI data on Friday. Next week will see an expansion of harvest activity and this will give traders more data to consider as they further digest The September 10  USDA report. 

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.

 Copyright 2010 Brugler Marketing & Management, LLC

Still Going Strong

Sep 03, 2010

 brulogomed

Market Watch with Alan Brugler
September 3, 2010
Still Going Strong
 
Corn futures broke through their old high from last December, totally erasing the bearish impact of the January crop reports and looking ahead to tighter stocks in the year ahead. Private yield estimates and production estimates for September are almost universally smaller than USDA’s August total. Informa’s 164.8 bpa estimate was not a bearish influence on Friday, as they suggested that the final number would be a lot lower. Corn gained 29 cents/bushel for the week, up 6.83%. Export sales are also running ahead of trade expectations. Shipping logistics are a concern due to the strong export interest. Rail freight rates have gone up sharply.
 
Wheat gapped higher on Friday. USDA reported strong weekly export sales on Thursday, above the trade average guess. There were additional sales reported under the daily reporting system. Russia indicated that the export ban was likely to be extended until the fall of 2011 after new crop supplies were assured. That drove those who have been hoping for deferred shipment of August orders to go to other sources. Chicago futures were up 6.9% for the week. MPLS dragged at 4.95% because it is still in the middle of harvest, but it did get a lift from poor weather in Canada and a sale to Germany.
 
Soybeans posted double digit gains on Friday, but managed only an 8 cent advance for the week. Informa projected an increase in USDA yield to 44.1 bushels per acre vs. the 44.0 figure in August. That was pretty much ignored by the trade. Soy oil and meal posted fractional gains to support the beans, but the rally is undoubtedly stimulating additional South American plantings this fall, and likely discouraging livestock feed use.
 
Below is a table showing the net weekly changes and 4 week history of selected agricultural futures:
 

 
Commodity
 
 
 
 
Weekly
Weekly
Month
08/13/10
08/20/10
08/27/10
09/03/10
Change
% Change
Sep
Corn
$4.12
$4.21
$4.21
$4.50
0.29
6.83%
Sep
CBOT Wheat
$7.03
$6.79
$6.63
$7.08
0.46
6.91%
Sep
KCBT Wheat
$7.24
$7.06
$7.00
$7.44
0.43
6.18%
Sep
MGEX Wheat
$7.15
$7.00
$7.07
$7.42
0.35
4.95%
Sep
Soybeans
$10.44
$10.09
$10.22
$10.30
0.08
0.76%
Sep
Soybean Meal
$302.70
$300.80
$307.80
$308.20
0.40
0.13%
Sep
Soybean Oil
$42.52
$39.52
$40.20
$40.32
0.12
0.30%
Oct
Live Cattle
$95.08
$99.25
$98.10
$94.45
3.65
3.72%
Sep
Feeder Cattle
$111.30
$116.65
$116.27
$114.17
2.10
1.81%
Oct
Lean Hogs
$74.65
$77.20
$74.82
$77.20
2.38
3.18%
Oct
Cotton
$87.49
$87.15
$89.03
$90.95
1.92
2.16%
Sep
Oats
$2.74
$2.72
$2.66
$2.83
0.18
6.59%
Sep
Rice
$11.00
$10.91
$11.22
$11.51
0.29
2.59%

 
 
 
Cotton futures posted the highest prices since 2008 on their daily charts, and the highest prices since October 1995 on the front month continuation charts. Net gain for the week was 2.16%. The U.S. crop is still looking to be a big one, but the balance sheets show most of it being used or more accurately shipped out of the country. Pakistan’s flooding was partially picked up in the August USDA report, but traders are anticipating further tightness in the world ending stocks.
 
Hogs jumped 3.18% for the week. The quotes for pork loins were sharply lower early in the week, as the trade got past the Labor Day pipeline filling. However, that cut, and most others, was firmer later in the week. With the carcass value holding above $92, it is very difficult to argue that October hogs should be $77, and futures rallied to narrow the spread a little bit. Pork production YTD is down 4.4%, and estimated production this past week was up only 0.2% from the prior week. It was down 7% vs. the prior year.
 
Cattle futures were the sole red number for the week, down 3.72%. Beef production YTD is down ½%. Prices got support from the macro economy, where numbers were “less bad” than the gloom and doom crowd had expected. Carcass weights are still running about 10-12 pounds below year ago. Weekly export sales were still running ahead of their 4 week average, with South Korea in particular much better than a year ago. The bear story came from a drop of .8-.9% in the wholesale prices, and a corresponding drop in the cash cattle market.
 
Looking for professional help with your marketing decisions? Consider subscribing to our daily Ag Marketing Professional service or Special Research Reports. Call our office for details at 402-697-3623, or visit www.bruglermarketing.com.
 
Looking to enhance your existing Ag Marketing Professional subscription? Add free futures market quotes sent to your cell phone via our Market Monitor service. Or “push” the daily recommendations out to your phone as they happen with Market Messenger 2. Call in consulting service with Alan is also available for a limited number of customers in our Ag Marketing Professional Premium package.
 
 Market Watch:  We’ll start the trading week on Monday evening with Globex, with U.S. markets closed on Monday for the Labor Day holiday. The regular Monday USDA reports will be delayed until Tuesday, including Export Inspections and Crop Progress. The main issue for the market will be the USDA reports on Friday morning, including Crop Production and WASDE supply/demand. Weekly export sales data will also be delayed until Friday morning.
 
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.
 
   Copyright 2010 Brugler Marketing & Management, LLC
 
 
 
 
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