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December 2012 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.

Low Prices Cure Low Prices

Dec 28, 2012

 

Brugler

Market Watch with Alan Brugler

December 28, 2012

Low Prices Cure Low Prices

 

There is a very old market axiom (I’ve been using it for 30 years and I don’t think I started it) that the cure for low prices is low prices. While grain prices are still much higher than they were a couple years ago, they have also come down quite a bit since late August and September. Wheat is the latest example of the axiom in action. Due to a sharp drop in price during December, US wheat is the cheapest in the world right now, and the most available wheat until new crop Aussie and Argentine wheat reaches the world market in larger quantities. Actually Argentine wheat may not be that available, with exporters being asked to give back export allocations because of a lack of wheat to ship out. But, I digress. Wheat prices dropped to the lowest levels since July 3 on the continuation chart. Weekly wheat export sales topped the 1 MMT level for the first time since February 2011. It will take a few more weeks of that to make a serious run at the USDA forecast for the year, but it is a start.

 

Corn futures lost 1.14% this week. About all that can be said is that the rate of loss slowed from the previous two weeks. There was yet another poor weekly export sales report on Thursday. Old crop bookings were only 104,300 metric tonnes. Cumulative commitments are now 44% of the USDA forecast for the year. They would usually be around 57% by this time. A USDA cut in the export projection for the year is anticipated in the January WASDE report.

The soy complex was down 0.47% this past week. Export sales were still positive, but a Chinese cancellation announced the previous week limited the incremental gain in commitments. The sales pace is still well ahead of that needed to meet the USDA forecast, with 83% of the export bushels already committed. The 5 year average for this date would be only 72%. Weekly soybean meal sales were 124,700 MT, a bit of a slowdown from recent weeks. Despite the 50% hike in projected soy oil exports in the last monthly WASDE estimate, it appears that they are being conservative. Commitments are 77% of the revised number. The 5 year average is only 44%.  It is no secret that shipments are expected to slow dramatically next spring and summer. Brazilian growing weather continues to be mostly favorable for vegetative growth. Argentina remains on the wet side.

KC and CHI wheat futures continued to leak lower, down 1.9 and 1.7% respectively. Minneapolis was also 1.6% lower. The ongoing drought in the central US is a threat to US production in 2013, but soil moisture did improve as some snow and rain made its way into the central US. Old crop export sales for the week ending December 21 were much larger than expected at 1.004 MMT.

KC showed 5-6 cent pushes in protein basis bids for anything over 12.8% protein on Friday.

 

Cotton prices were down 2.05% for the week, giving up all of last week’s advance, and most of the week before. Cotton export sales were within trade expectations at 283,300 RB of upland cotton in 2012/13 and another 3,900 running bales for 2013/14. Pima sales hit 14,700 running bales. US cotton export sales commitments are 78% of the USDA projection for the year. That is running ahead of the 72% average for this date. Sales are doing well considering the rise in US prices over the past month and the record large global ending stocks forecast. US cotton acreage is expected to decline in 2013/14 due to comparatively high prices for competing field crops.

 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

12/07/12

12/14/12

12/21/12

12/28/12

Change

% Change

Mar

Corn

$7.37

$7.31

$7.02

$6.94

($0.08)

-1.14%

Mar

CBOT Wheat

$8.61

$8.14

$7.92

$7.79

($0.13)

-1.67%

Mar

KCBT Wheat

$9.10

$8.64

$8.42

$8.26

($0.16)

-1.93%

Mar

MGEX Wheat

$9.18

$8.85

$8.82

$8.68

($0.14)

-1.59%

Jan

Soybeans

$14.72

$14.96

$14.31

$14.24

($0.07)

-0.47%

Jan

Soybean Meal

$450.50

$460.10

$433.80

$427.70

($6.10)

-1.41%

Jan

Soybean Oil

$50.82

$49.63

$48.71

$48.94

$0.23

0.47%

Dec

Live Cattle

$125.88

$126.90

$129.28

$129.40

$0.13

0.10%

Jan

Feeder Cattle

$148.78

$153.08

$152.15

$152.03

($0.13)

-0.08%

Feb

Lean Hogs

$83.48

$85.40

$86.98

$86.38

($0.60)

-0.69%

Mar

Cotton

$73.79

$75.13

$76.22

$74.66

($1.56)

-2.05%

Mar

Oats

$3.98

$3.90

$3.65

$3.49

($0.16)

-4.32%

Jan

Rice

$15.27

$15.42

$15.21

$14.96

($0.25)

-1.64%

 

Cattle futures were up 13 cents for the week.  Weekly beef export sales were a strong 23,700 MT, with 11,000 MT to be shipped in the last 10 days of December and the balance for 2013. Weekly estimated slaughter was 476,000 head, compared to 633,000 head the previous week. Estimated carcass weight this week was 17 pounds larger than the actual number from last year, offsetting part of the reduction in slaughter numbers. Wholesale prices were higher this week, supported by the improved export interest. Choice boxes were up 40 cents, and Select was up $2.50 on a Friday/Friday basis. The Choice/Select spread narrowed $2.10 to $13.20.  In recent years it has dropped close to zero in the March time frame. Weekly beef production was up 9.9% from the same week in 2011, with total YTD production 1.3% smaller and broadly price supportive.

Hogs were down 0.69% this past week. Estimated weekly slaughter is 1.755 million head, down 25% from the preceding week. Weekly pork production was down more than 24% from the week before, due to holiday closures. It was also down 11.3% from the same week in 2011. YTD pork production is now only 1.8% larger than in 2011. Estimated carcass weights for this week were 2 pounds lower than last year’s 209 pound actual figure. The pork carcass cutout dropped 1.86% for the week. The USDA quarterly Hogs & Pigs report on Friday afternoon showed larger than expected hog numbers. The breeding herd was 100.2% of year ago, with All hogs at 100%. There was a dip in the lightest weight group, with the <50 pound pigs at 99.6% of year ago. USDA made several revisions to previous quarters to reconcile the numbers with slaughter data.

 

Market Watch:

 

Grain traders will begin the week looking at January futures deliveries or the lack thereof, for soybeans, soybean meal and soybean oil. USDA will be back to its regular weekly Export Inspections report on Monday, barring another executive order giving them the day off like the one issued for Christmas Eve. Futures will be closed on Tuesday in the US for New Years Day.  Weekly export sales, and likely the weekly EIA ethanol report, will be delayed until Friday release because of the holiday early in the week. Hog traders will be reacting to Friday afternoon’s Hogs and Pigs report, which included revisions of up to 1.5% in the summer numbers as well as new December 1 figures.

 

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

Scrooged!

Dec 21, 2012

 

Brugler

Market Watch with Alan Brugler

December 21, 2012 

Scrooged!

Charles Dickens is best known (at least in the 21st Century) for his novella A Christmas Carol, featuring Tiny Tim, Bob Cratchit and Ebenezer Scrooge. Scrooge was famously tight fisted until seeing the ghosts of Christmas past, present and "Yet to Come". For most of this week, it seemed like Scrooge was trading the grain markets, with January soybeans down a full $1 per bushel in three days. Gold (a Scrooge favorite) was down pretty hard as well. By Friday, it looked like maybe Scrooge had had his famous conversion and switch to a more generous nature. Soybeans bounced 1.5% on Friday, and corn was also higher.

Corn futures lost 3.9% this week after being down 1.9% the prior week. There was yet another poor weekly export sales report on Thursday. Old crop bookings were only 134,400 metric tonnes. Weekly ethanol production fell back 2,000 bpd from the previous week. However, ethanol stocks and imports rose. A Memphis based firm threw out a 2013 acreage estimate of 99 million, which would be the largest since the 1930’s. At trendline yields, that would likely create a couple billion bushel surplus, so the market took it badly.

The soy complex was down 4.36% this past week, as some of the bloom came off of the export rose. The sales pace is still well ahead of that needed to meet the USDA forecast, with 83% of the export bushels already committed. The problem was the 540,000 MT of cancellations announced by the Chinese in the press several weeks ago and finally showing up in the official USDA reports. Even with the cancellations, commitments would be over 81% of the USDA forecast for the year. Weekly soybean meal sales were strong once again. Unfortunately, soy oil export sales were net negative, due to a 27,000 MT cancellation. Brazilian growing weather continues to be mostly favorable for vegetative growth. Argentina remains on the wet side, but planting there is now estimated to be 77% complete vs. last year’s 81%.

KC and CHI wheat futures continued to leak lower, down 2.5 and 2.7% respectively. Minneapolis was also lower, but supported by expectations for larger corn plantings in traditional spring wheat areas in 2013. The ongoing drought in the central US is a threat to US production in 2013, but heavy snows closed I-80 and made it hard to be bullish in the near term. Old crop export sales for the week ending December 13 were larger than the trade expected. Low prices also cure low prices, with the US successful in a number of export tenders this week. There is a fairly narrow window for the US to make big sales before new crop Argentine and Australian wheat become common in the world market. The US is competitive right now. The drop in prices this week should help move some additional business forward.

 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

11/30/12

12/07/12

12/14/12

12/21/12

Change

% Change

Mar

Corn

$7.53

$7.37

$7.31

$7.02

($0.29)

-3.93%

Mar

CBOT Wheat

$8.64

$8.61

$8.14

$7.92

($0.22)

-2.70%

Mar

KCBT Wheat

$9.13

$9.10

$8.64

$8.42

($0.22)

-2.55%

Mar

MGEX Wheat

$9.19

$9.18

$8.85

$8.82

($0.03)

-0.34%

Jan

Soybeans

$14.39

$14.72

$14.96

$14.31

($0.65)

-4.36%

Jan

Soybean Meal

$442.40

$450.50

$460.10

$433.80

($26.30)

-5.72%

Jan

Soybean Oil

$49.41

$50.82

$49.63

$48.71

($0.92)

-1.85%

Dec

Live Cattle

$126.73

$125.88

$126.90

$129.28

$2.38

1.87%

Jan

Feeder Cattle

$145.63

$148.78

$153.08

$152.15

($0.93)

-0.60%

Feb

Lean Hogs

$86.93

$83.48

$85.40

$86.98

$1.57

1.84%

Mar

Cotton

$73.91

$73.79

$75.13

$76.22

$1.09

1.45%

Mar

Oats

$3.79

$3.98

$3.90

$3.65

($0.25)

-6.41%

Jan

Rice

$15.27

$15.27

$15.42

$15.21

($0.22)

-1.39%

 

 Cotton prices were up 1.45% for the week, adding to a 1.8% gain from the prior week. Cotton export sales were within trade expectations at 330,900 RB in 2012/13. China was by far the biggest customer with increases of 171,700 RB. China, Turkey, and Mexico were the top destinations. US cotton export sales commitments are 76% of the USDA projection for the year. That is running ahead of the 71% average for this date. 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. The group in Memphis estimated US acreage would be just over 10 million, compared to more than 12 million this past season.

Cattle futures were up 0.8% for the week, with most of the gain on Friday. Weekly beef export sales for the week ending December 6 slowed. Weekly estimated slaughter was 633,000 head including Saturday. That would be 1,000 head larger than the previous week, and 36,000 larger than the pre-Christmas week in 2011. Estimated carcass weight this week was 21 pounds larger than the actual number from last year. Wholesale prices were mixed this week. Choice boxes were down $1.60, but lower quality Select was up $2.45/cwt. for the week on a Friday/Friday basis. The Choice/Select spread narrowed from $19.35 to $15.30.  In recent years it has dropped close to zero in the March time frame. Weekly beef production was up 8.9% from the same week in 2011, but total YTD production has still been 1.2% smaller and broadly price supportive. Cash cattle trade on Thursday was mostly $126, about $1.50-2.00 higher than the previous week. Friday night’s Cattle on Feed report showed larger November placements than expected and thus we had the larger Dec 1 on feed totals. The latter was 93.9% of year ago, so we are still talking smaller beef supplies in 2013. The Cold Storage report showed beef in the cooler 1% below year ago.

Hogs were down 0.36% this week. Estimated weekly slaughter is 2.348 million head, up 44,000 from the previous week.  Weekly pork production was up an estimated 2.2% from the light week before it. YTD pork production has been up 2.1% from 2011. Estimated carcass weights are now even with year ago, thanks mostly to declining corn costs. The pork carcass cutout rose 0.77% from last week. Ribs and loins showed the largest gains for the week. The Cold Storage report showed pork supplies in the cooler had dropped 8% from last month, but were still 13% larger than in 2011. Pork belly stocks typically rise this time of year, and were up 30% vs. October. They were still 8% smaller than year ago.

Market Watch:

Cattle traders will start off the week reacting to the Cattle on Feed and Cold Storage report numbers from Friday afternoon. Grain traders will be reacting to any surprise positions acquired as a result of the January options expiration. Grain trading will begin as normal on Sunday night, but end at noon CST on Monday for the Christmas holiday. Volume is expected to be light, with many traders making it either a 4 day weekend or taking off for the rest of the year. USDA Grain Inspections will be delayed until Wednesday as President Obama issued an executive order giving the agencies Monday off. Weekly Export Sales will be delayed until Friday by the Christmas holiday. The main reports this week will be in the livestock sector, with USDA releasing Milk Production on Wednesday, and both Cattle on Feed and Cold Storage on Friday. The USDA quarterly Hogs & Pigs report will be released on Friday, December 28.

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

Too Many Feed Grains?

Dec 14, 2012

 

Brugler

Market Watch with Alan Brugler

December 14,2012

 

Too Many Feed Grains?

 

The global stocks/use ratio is record tight for corn, and the tightest in 4 years for wheat. You couldn’t have guessed that from the price action this week. Prices were very bearish in wheat after the WASDE report on Tuesday and we saw corn dragged down by association. It felt like there was too much feed available for the number of animals consuming it. A little drop in wheat prices triggered ideas of more wheat feeding. That would mean less corn feeding, and thus lower corn prices. USDA recognized lower than expected wheat export sales, while deferring any move in corn until January.  Of course, any surplus of corn supplies is contingent on USDA leaving production UNCH in the January crop report. There are still potential surprises in both production and 1Q feed use, but we won’t get that data until January.

Corn futures lost 1.9% this week after being down more than 2% the prior week. There was yet another poor weekly export sales report on Thursday. Old crop bookings were 258,900 MT, with another 13,700 MT of new crop (about a fourth of one Panamax ship). Weekly ethanol production fell back from the previous week, as did imports. However, ethanol stocks rose to 20 million barrels due to narrow blending margins and weak gasoline demand. Ethanol blend gasoline (E-10) dropped below $3.00 per gallon in Council Bluffs, IA.

The soy complex was up 1.6% this week, thanks to another very strong weekly export sales report that raised questions about US ending stocks for next summer. The sales pace is well ahead of that needed to meet the Tuesday USDA forecast, with 81% of the bushels already committed. USDA also increased projected domestic crush use by 10 million bushels. USDA increased projected US soy oil exports by 50% in one shot on Tuesday, reflecting the heavy sales made in mid-November. Weekly soybean meal sales were strong for the third week in a row. Soybean export bookings for the week ending December 6 were much larger than trade expectations, over 1.3 MMT. Total commitments are now 81% of the USDA forecast for the full year. The marketing year runs until August 31.

KC and CHI wheat futures both fell more than 5% as their December contracts moved to expiration on Friday. 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.  Old crop export sales are definitive, and they haven’t been very good. USDA cut projected US exports by 50 million bushels on Tuesday, and those all flowed into leftover ending stocks. There is a fairly narrow window for the US to make big sales before new crop Argentine and Australian wheat become common in the world market. The US is competitive right now, finally making sales to Egypt and picking up some volume with Japan. The drop in prices this week should help move some other business forward.

 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

11/23/12

11/30/12

12/07/12

12/14/12

Change

% Change

Dec

Corn

$7.46

$7.48

$7.33

$7.19

($0.14)

-1.91%

Dec

CBOT Wheat

$8.48

$8.45

$8.44

$8.01

($0.43)

-5.12%

Dec

KCBT Wheat

$8.78

$8.97

$8.97

$8.52

($0.45)

-5.02%

Dec

MGEX Wheat

$9.14

$9.19

$9.18

$8.85

($0.33)

-3.60%

Jan

Soybeans

$14.19

$14.39

$14.72

$14.96

$0.24

1.61%

Dec

Soybean Meal

$428.60

$442.40

$450.50

$460.10

$9.60

2.13%

Dec

Soybean Oil

$49.04

$49.41

$50.82

$49.63

($1.19)

-2.34%

Dec

Live Cattle

$128.95

$126.73

$125.88

$126.90

$1.03

0.81%

Jan

Feeder Cattle

$147.88

$145.63

$148.78

$153.08

$4.30

2.89%

Dec

Lean Hogs

$82.48

$84.08

$82.30

$82.00

($0.30)

-0.36%

Mar

Cotton

$71.43

$73.91

$73.79

$75.13

$1.34

1.82%

Dec

Oats

$3.69

$3.61

$3.75

$3.75

$0.00

0.00%

Jan

Rice

$15.04

$15.27

$15.27

$15.42

$0.15

1.02%

 

 Cotton prices were up 1.8% this past week. Weekly export sales were softer than the week before, but USDA trimmed projected US production and increased projected exports for the 2012/13 marketing year by 200,000 bales. The projected ending stocks dropped to 5.4 million bales from 5.8 million. China is active in the market, despite holding major stockpiles of domestic production and imported Indian cotton. 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 up 0.8% for the week, with most of the gain on Friday. Weekly beef export sales for the week ending December 6 slowed. The consumer will be focused on ham and turkey in the next couple weeks, less so on beef. Weekly estimated slaughter was 632,000 head including Saturday. That would be 7,000 head below the previous week and 12,000 below year ago. We would appear to be backing up a few cattle in the lots. Estimated carcass weight this week was 24 pounds larger than the actual number from last year. Wholesale prices were stronger this week. Choice boxes were up 0.2% and Select was up 1.14% for the week on a Friday/Friday basis. Weekly beef production was 1.3% larger than the same week in 2011, but total YTD production has still been 1.4% smaller and broadly price supportive. Cash cattle trade on Friday afternoon was $124-124.50, about 50 cents higher than the previous week.

Hogs were down 0.36% this week. Estimated weekly slaughter is 2.304 million head, down 45,000 from the same week in 2011. Weekly pork production was down 2.3% from the post-holiday week, and also down 2.5% from the same week a year ago. Estimated carcass weights are down 1# from last year, having risen less rapidly than usual out of the fall low. Pork production YTD has still been 1.9% larger than last year, but is declining on a relative basis each week because average carcass weights are lower this year. The pork carcass cutout rose 0.27% from last week. Strength in picnics and bellies was countered by weakness in pork loins.

Market Watch:

The main reports this week will be in the livestock sector, with USDA releasing Milk Production on Wednesday, and both Cattle on Feed and Cold Storage on Friday. Friday will also mark the expiration of a huge number of options contracts in the financial sector, and also the January options for corn, wheat, soybeans, meal, oil, canola, rice and oats. Weekly export sales will also be of interest on Thursday morning, as well as the weekly Export Inspections numbers on Monday. The futures market will be open on Monday December 24 in an orphan session, closing at 12 or 12:15 pm for the Christmas Eve and Christmas holidays.

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

Over The River and Through the Woods

Dec 07, 2012

 

Brugler

Market Watch with Alan Brugler

December 7, 2012

 

Over The River and Through the Woods

 

A popular old Christmas song talks about riding a sleigh over the river and through the woods to Grandmother’s house. There is enough white and drifted snow to allow the sleigh, a carriage on runners to slide along on one horsepower. The whole thing would be a little foreign to US farmers in the Plains and western Corn Belt this year. The rivers are dried up or very shallow (see barge freight) and the satellite maps show almost no snow cover to run the thing on. It is too early to talk drought for summer 2013 crops, but the situation is definitely supporting prices because of the uncertainty. New crop Dec corn futures are only 4% below their life of contract high set back in the heart of the summer drought market. KC July wheat came within 4 cents of the LOC high on November 29, and is certainly within striking distance.

Corn futures were down more than 2% this week, with most of the loss on Friday, but beginning with yet another poor weekly export sales report on Thursday. Net weekly export sales were less than 50 thousand MT, due to most of the reported buyers just confirming purchases of sales already recorded to "unknown destinations". In other words, there was negligible new business, and there were some cancellations. Last week we said "Weekly export sales for this coming week could also be light, as they will include the Thanksgiving weekend." That was indeed the case, but we were looking for at least 2 full vessels to be sold and that didn’t happen.  Weekly ethanol production was up to 835,000 bpd , which was a 22-week high. Imports flooded in at a rate of 92,000 barrels per day, adding to total supply. Consumption was so-so, and ethanol stocks rose by 1.04 million barrels.

The soy complex was as strong as the corn market was weak. Nearby January beans were up 2.33% for the week, aided by a 1.83% rise in soybean meal values. Soy oil lagged due to profit taking and some aggressive deliveries made by crushers against the December futures contract. Weekly soybean meal sales were strong for the second week in a row. Soybean export bookings for the week ending November 30 were much larger than trade expectations, over 1.1 MMT. Total commitments are now 78% of the USDA forecast for the full year made in November. The marketing year runs until August 31. Soybean oil export commitments are now 109% of the USDA forecast for the year, so USDA is expected to increase projected exports in the December WASDE report. CONAB issued what was seen as a bearish Brazilian production estimate for 2013 of 82.6 MMT. The November USDA figure was 81 MMT.

KC wheat futures were fractionally higher. 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.  Old crop consumption is the main price driver, with exports the most visible component. The weekly export sales report showed net export sales were 353,100 MT, with 511,000 MT needed each week to reach the USDA forecast. Japan purchased a larger than expected 196,383 MT of western white, northern spring, and hard red winter wheat for bulk shipment under the weekly MOA tender.

 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

11/16/12

11/23/12

11/30/12

12/07/12

Change

% Change

Dec

Corn

$7.27

$7.46

$7.48

$7.33

($0.15)

-2.04%

Dec

CBOT Wheat

$8.38

$8.48

$8.45

$8.44

($0.00)

-0.06%

Dec

KCBT Wheat

$8.76

$8.78

$8.97

$8.97

$0.00

0.03%

Dec

MGEX Wheat

$9.10

$9.14

$9.19

$9.18

($0.01)

-0.08%

Jan

Soybeans

$13.83

$14.19

$14.39

$14.72

$0.34

2.33%

Dec

Soybean Meal

$424.60

$428.60

$442.40

$450.50

$8.10

1.83%

Dec

Soybean Oil

$47.05

$49.04

$49.41

$50.82

$1.41

2.85%

Dec

Live Cattle

$126.15

$128.95

$126.73

$125.88

($0.85)

-0.67%

Jan

Feeder Cattle

$145.60

$147.88

$145.63

$148.78

$3.15

2.16%

Dec

Lean Hogs

$80.33

$82.48

$84.08

$82.30

($1.78)

-2.11%

Mar

Cotton

$72.64

$71.43

$73.91

$73.79

($0.12)

-0.16%

Dec

Oats

$3.65

$3.69

$3.61

$3.75

$0.14

3.88%

Jan

Rice

$14.85

$15.04

$15.27

$15.27

($0.00)

-0.03%

 

Cotton prices were down 0.16% in the actively traded March contract. December expired, seeing steady transfer of warehouse cert stocks from Dreyfus/Term Commodities to two other firms throughout the delivery process. Weekly export sales were strong at 415,700 running bales for 2012/13 of upland cotton, up 38 percent from the previous week. China was the largest purchaser, with a reported increase of 254,600 running bales. Net American Pima sales were 27,300 RB for the 2012/13 marketing year. The ICAC is expecting global mill use to increase by 3 percent to 24.2 million tons or 111.15 million bales, with a modest reduction from record world ending stocks in the current marketing year.

Cattle futures were down 85 cents for the week. Weekly beef export sales for the week ending November 30 were improved, at 14,000 MT. However, we’re into larger cattle supplies between now and yearend. The consumer will be focused on ham and turkey, less so on beef. Weekly estimated slaughter was 639,000 head including Saturday. That would be 4,000 head above the previous week, but still 7,000 below year ago. Wholesale prices were lower this past week.  Choice boxes were down 1.1% for the week while Select boxes were down 1% on a Friday/Friday basis. Weekly beef production was 1.3% larger than the same week in 2011, but total YTD production has still been 1.5% smaller and broadly price supportive. Cash cattle trade on Friday started to happen $1-2 lower than last week, but volume was still light as feedlots were asking $126. The few confirmed trades were at $124.

Hogs were down 2.1% this week, erasing a similar percentage gain from the previous week. Estimated weekly slaughter was 2.364 million head, up 1.3% from the same week in 2011. Weekly pork production was down 1.3% from the post-holiday week, but was up 0.2% from the same week a year ago. Estimated carcass weights are down 2# from last year, having risen less rapidly than usual out of the fall low. Pork production YTD has still been 2.0% larger than last year. The pork carcass cutout rose 0.27% from last week. Strength in picnics and bellies was countered by weakness in pork loins.

 
Market Watch:

Cattle traders will begin the week adjusting to any surprise positions occurring from the expiration of the December options on Friday. Monday will also be first notice day for physical deliveries against December cattle futures positions. The main USDA reports for the week will be on Tuesday, including Crop Production and the WASDE Supply/Demand report. The Fed Open Market Committee is also expected to meet. The regular weekly USDA Export Sales report will be out on Thursday morning.  NOPA is expected to release an updated monthly soybean crush report on Friday. Friday will also be the last trading day for December grain futures contracts and December Lean Hogs.

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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