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February 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.

Commodities? No Thank You!

Feb 22, 2013

Brugler


Market Watch with Alan Brugler & Ryan Palmer

 Commodities?  No Thank You…

…not right now anyway.  That’s the trading and investment mentality as of this week.  Sequestration talk, speculation about rising interest rates, a rising dollar; they all fueled the bearish sentiment towards most commodities that continued this week. Gold and crude oil were hard hit.  Soybeans and Soy meal were higher for the week; oats were up too and cotton snuck out a positive week, but other than that ag commodities continued to lose value. 

Corn futures were off another 1.22% this week after slipping 1.45% the week before.  Major winter storm precipitation throughout much of the Western Corn Belt and Southern Plains put pressure on new crop prices and the old crop went with it.  Exports continued to be perceived as weak until the Friday morning Export Sales came in at 381,900 MT, exceeding pre-report expectations.  Total export commitments are running 10% behind the 5-year average, leaving an open invitation for the USDA to lower their projections in the future unless further progress is made. The EIA reported increased daily average production and slightly lower ethanol stocks than the previous week, but the news was not enough to piece together any type of rally this week as March corn dances on both sides of $7.

The soybean market came back from the long weekend and the Chinese New Year with some fireworks.  The Argentine crop has been hurt by extended periods of heat and dryness and was expected to receive widespread drenching rains last weekend.  By Monday night the trade knew that the rains were not as heavy as expected, and some areas were missed completely. Thus the market gapped higher and ended Tuesday 46¾ cents higher in the March contract.  Yet another reminder that these markets can be explosive with stocks as tight as they are!  The soy market was propelled higher on Thursday night on rumors China was switching orders from Brazil to the US as the Brazilian workers staged a 6-hour strike on Friday. This rally in prices was quickly swept under the rug as port workers agreed to a negotiation period that will last until March 15th. This caused March soybeans to finish with a 57 cent trading range and a bad close on Friday,  but still 37 cents higher on the week. Soy meal was up $17.50 on the week or 4.27%.  Soybean oil however lost $1.27 or 2.46% closing out the week at $50.35.

CBOT wheat had the largest percent decline of the three wheat markets, losing 3.67% which is 27 cents.  Both disappointing export inspections earlier in the week and the winter precipitation events hurt all of the wheat markets this week. Total wheat exports commitments are running 13% behind the 5-year average.  The weekly export sales report on Friday morning, which indicates future shipments rather than wheat already loaded, was bull friendly.  USDA reported 699,300 MT of old crop sales and another vessel (56,600 MT) of new crop were booked in the week ending February 14.  While nobody is looking the gift horse in the mouth (the big snowfall in KS and NE), a lot more precipitation is needed in the Plains to make up the moisture deficit.

Cotton closed the week just .09% higher than last Friday, gaining 7 points to close at $81.39/lb. Weekly exports of Upland cotton were a strong 209,800 RB. Cotton total commitments are running at 87% of the USDA estimate. The USDA, at their annual Outlook Forum, projected further tightening of US cotton ending stocks in 2013/14, to 3.7 million bales. The presentation by Carol Skelley anticipates a rise in the average cash price to 73 cents/pound vs. 71 cents in the current marketing year. Production is seen dropping to 14 million bales from 17 million this year, despite a much smaller proportion of abandoned acres.

  

 

Commodity

 

 

 

 

Weekly

Weekly

Month

02/01/13

02/08/13

02/15/13

02/22/13

Change

% Change

Mar

Corn

$7.36

$7.09

$6.99

$6.90

($0.09)

-1.22%

Mar

CBOT Wheat

$7.65

$7.56

$7.42

$7.15

($0.27)

-3.67%

Mar

KCBT Wheat

$8.23

$8.00

$7.78

$7.50

($0.28)

-3.57%

Mar

MGEX Wheat

$8.52

$8.37

$8.24

$8.03

($0.21)

-2.52%

Mar

Soybeans

$14.74

$14.53

$14.25

$14.61

$0.37

2.58%

Mar

Soybean Meal

$428.20

$422.40

$409.40

$426.90

$17.50

4.27%

Mar

Soybean Oil

$52.99

$51.43

$51.62

$50.35

($1.27)

-2.46%

Feb

Live Cattle

$127.10

$126.45

$126.50

$126.35

($0.15)

-0.12%

Mar

Feeder Cattle

$149.20

$145.00

$143.38

$141.25

($2.13)

-1.48%

Apr

Lean Hogs

$88.75

$86.13

$84.25

$81.65

($2.60)

-3.09%

Mar

Cotton

$82.98

$82.67

$81.32

$81.39

$0.07

0.09%

Mar

Oats

$3.59

$3.86

$3.79

$3.88

$0.09

2.37%

Mar

Rice

$15.56

$16.35

$15.84

$15.59

($0.25)

-1.58%

 

In the cattle markets, the feeders lost $2.13 or 1.48%, but live cattle were off just 15 cents on the week, closing at $126.35. Boxed beef wrapped up the week 94 cents higher, as the trade continues to be concerned over retail demand in grocery stores and restaurants. Beef export sales provided some light at the end of the tunnel with the strongest number since April 2012 at 22,161 MT. Japan took nearly half of the total. US weekly beef production was down -3.8% from the previous week, and down 1.1% from the same week in 2012.  The Friday evening Cattle on Feed report showed total cattle on feed February 1 at 93.4% of year ago. January placements were larger than last year as expected, at 101.6%, while marketings were also larger at 105.6%. The report is supportive because numbers remain down.

Hogs took the hardest hit in the livestock sector this week.  Hog futures found themselves in a boat that was taking on water this week, possibly the same boat that cattle futures have been trying to bail out of. The trade is eyeing up pork demand, as a slide in the carcass cutout values have unveiled a weaker side in pork prices. The pork cutout value gained 1.96% on the week or $1.57, but bear in mind the previous Friday’s cutout value was the lowest in nearly 5-months.  Chinese officials added to the bearish news when they announced that they would begin requiring a third party to test for unacceptable levels of ractopamine in its pork imports.  Their main US supplier indicated a willingness to ensure that pork shipped to China remains free of the additive, which is legal and considered safe in most of the major production countries other than China.  Weekly US pork production was down 3.8% from the previous week and down 3.5% from the same week in 2012. That reduced production should be supportive to the cutout value, but was partially due to weather delays and could potentially be made up next week.

Market Watch:  February ends on Thursday, and along with it the spring pricing period for crop revenue insurance.  USDA goes back to a normal release schedule, with weekly Export Inspections n Monday morning and weekly Export Sales on Thursday. Livestock traders will begin the week dealing with the fallout from the Friday evening release of the Cold Storage and Cattle on Feed reports. Grain traders will be dealing with the loss of March options coverage, as those options expired this past Friday. Thursday will also mark First Notice Day for deliveries against March grain futures and the last trading day for February cattle. March 1 will mark the expiration of the March serial options for cattle.  We have to wait until March 20 for Spring to begin. Daylight Savings time will begin in two weeks, on the 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

Over and Over and Over

Feb 15, 2013

Brugler


Market Watch with Alan Brugler

February 15, 2013

Over and Over and Over

There seemed to be a relentless bearishness to the commodity market this week, with selling just coming in waves. Corn was down for 10 days in a row before bouncing on Friday. Gold sank nearly $28 per ounce on Friday alone. Hogs were under pressure, wheat was down again. You get the picture; on of selling over and over and over. It was broad based, with the CRB Index falling for the week.  Barclays indicated that it was pulling money from hedge funds trading commodities on the bank’s behalf, joining a parade of  financial entities since December that don’t think commodities are a sexy place to be when the stock market is regularly moving to higher levels. Since most of this money plays the long side, when it leaves we do tend to see some price pressure.

 

Corn futures dropped 1.45% this past week. Nearby March futures were down 4 out of 5 days, and ended a streak of 10 consecutive lower closes with a 4 cent gain on Friday. There was a rotation of ownership, with open interest dropping in the March due to index fund roll activity, but total OI saw others taking up the slack. The EIA weekly ethanol report on Wednesday showed larger daily corn use than the previous week. More importantly, ethanol is back to a substantial discount to gasoline. Weekly ethanol stocks dropped 3% despite the larger production and a rise in imports from Brazil. Ethanol plant margins have turned positive in many areas, with some Nebraska plants resuming operation. US corn weekly export sales remain weak.

 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

01/25/13

02/01/13

02/08/13

02/15/13

Change

% Change

Mar

Corn

$7.21

$7.36

$7.09

$6.99

($0.10)

-1.45%

Mar

CBOT Wheat

$7.77

$7.65

$7.56

$7.42

($0.14)

-1.85%

Mar

KCBT Wheat

$8.29

$8.23

$8.00

$7.78

($0.22)

-2.75%

Mar

MGEX Wheat

$8.64

$8.52

$8.37

$8.24

($0.14)

-1.61%

Mar

Soybeans

$14.41

$14.74

$14.53

$14.25

($0.28)

-1.93%

Mar

Soybean Meal

$416.40

$428.20

$422.40

$409.40

($13.00)

-3.08%

Mar

Soybean Oil

$52.10

$52.99

$51.43

$51.62

$0.19

0.37%

Feb

Live Cattle

$126.30

$127.10

$126.45

$126.50

$0.05

0.04%

Mar

Feeder Cattle

$147.95

$149.20

$145.00

$143.38

($1.63)

-1.12%

Apr

Lean Hogs

$88.93

$88.75

$86.13

$84.25

($1.88)

-2.18%

Mar

Cotton

$80.52

$82.98

$82.67

$81.32

($1.35)

-1.63%

Mar

Oats

$3.63

$3.59

$3.86

$3.79

($0.07)

-1.75%

Mar

Rice

$15.48

$15.56

$16.35

$15.84

($0.51)

-3.12%

 

The soybean market was under pressure early in the week from improved weather forecasts for South America, and then had a shot of bad news from the weekly export sales report. The USDA showed net negative old crop sales due to cancellations. Beans dropped nearly 2% for the week, with March futures also hurt by index fund roll selling and other traders exiting before their March options positions expire this coming Friday. Meal prices were down more than 3% on the week, with cheaper corn and expanded US crush both part of the equation. There was also  some oil/meal spreading, with soy oil up by .37% for the week.

Wheat was lower on all three exchanges, with KC the weakest once again. Much improved moisture in the Plains was the bearish story. From some accounts you would think that the ½" of water equivalent from the snow storm was a drought breaker. That would be a stretch with 95% of the Plains still in D0 to D4 drought. The snow was followed by addition precip in the forecasts for the next two weeks, removing a little of the weather premium. USDA weekly wheat export sales were stronger than expected by the trade, but with the bearish momentum that new merely slowed the rate of decline. We did get a delayed reaction, with prices up 7 to 8 cents per bushel on Friday heading into the 3-day weekend.

Cotton prices retreated 1.6% for the week. Weekly export sales were much improved from the previous week, at 357,200 RB of upland for the 2012/13 and 2013/14 marketing year in the week ending February 7.  China bought 97,200 RB. Total export commitments for Upland cotton stand at 86% of the USDA projection compared to the 5-year average of 83%. Net sales of American Pima were 17,600 RB for the 2013/14 marketing year and 23,500 RB for 2012/13. World ending stocks are still seen as very large, at 81.86 million bales.

Cattle futures posted a net gain for the week of exactly 5 cents per hundred pounds. Weekly beef production was 0.8% larger than last week, but down 0.7% from the same week in 2012. Average carcass weights are still an estimated 14 pounds per animal higher than last year at this time. Wholesale prices were down $.17/cwt for Choice boxes, a 0.1% drop. Select beef was up $.78 per cwt, or 0.4%. The choice/select spread dropped down to $1.55. In recent years it has dropped to less than a dollar in February or March, and sometimes goes negative. US weekly beef export sales through February 7 slowed to less than 8,000 MT, but shipments were more than double that.

Hogs were down 2.18% after falling 1.4% the prior week. Estimated weekly slaughter was 2.145 million head, up 6,000 from previous week but 0.3% smaller than the same week in 2012. Pork production was up 0.2% from the previous week and down 0.8% from the same week in 2012. Average weights are now estimated to be two pounds lighter than actual weights a year ago. The pork carcass cutout sank 2.71% for the week, with loins under the most pressure. Cash hog prices were weak on Friday. The IA/MN weighted average was down $.95. The average WCB direct sale was $81.70 vs. $84.55 a week ago. The ECB average was $81.10 vs. $85.56 a week ago.   

Market Watch: Traders tired of 21 hour trading days will get a break on Monday, with the US markets closed for the President’s Day holiday. That will delay the routine  weekly reports from USDA to Tuesday for the Export Inspections and Friday for the weekly Export Sales.  Friday will be first notice day for March cotton futures deliveries.  Friday will also mark the monthly USDA Cattle on Feed report, and both the monthly and annual Cold Storage reports. March grain options will also expire on Friday.

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

Bullish Attitudes Evaporate

Feb 08, 2013

Brugler

Market Watch with Alan Brugler

February 8, 2013

 

Bullish Attitudes Evaporate

 

It was a "down" week for most of the ag commodities, excluding the rice and oats. The latter were up 7.4%, but if the axiom is correct that "oats knows where corn goes", corn hasn’t yet received the memo. The evaporation of bullish attitudes was particularly notable in soybeans, which did an abrupt reversal on Friday. The market was overbought when looking at the sentiment indicators ahead of the report, and that proved fatal to the bulls when USDA pretty much confirmed exactly what everyone was thinking regarding Brazilian and Argentine production.

 

Corn futures dropped 3.67% this past week, erasing three weeks of rising prices. Demand concerns abound, with USDA cutting projected corn exports another 50 million bushels in the Friday WASDE report. The average cash price was dropped 20 cents per bushel, and ending stocks looked just a tad looser at 632 million bushels. Some had expected corn use for ethanol to be trimmed as well, due to the number of plants currently shut down. However, several of those plants are now reportedly making plans to re-start, due to improved margins. The EIA weekly ethanol report on Wednesday showed the larger daily corn use than the previous week, despite additional closure announcements.  Other plants may be moving to fill the gap in production. US corn weekly export sales remain poor, as the bulk of the price rationing has devolved to that portion of the market. USDA did bump up projected world ending stocks to 118 MMT from 116 MMT.

 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

01/18/13

01/25/13

02/01/13

02/08/13

Change

% Change

Mar

Corn

$7.28

$7.21

$7.36

$7.09

($0.27)

-3.67%

Mar

CBOT Wheat

$7.91

$7.77

$7.65

$7.56

($0.09)

-1.14%

Mar

KCBT Wheat

$8.44

$8.29

$8.23

$8.00

($0.24)

-2.88%

Mar

MGEX Wheat

$8.74

$8.64

$8.52

$8.37

($0.15)

-1.76%

Mar

Soybeans

$14.29

$14.41

$14.74

$14.53

($0.22)

-1.48%

Mar

Soybean Meal

$414.40

$416.40

$428.20

$422.40

($5.80)

-1.35%

Mar

Soybean Oil

$51.68

$52.10

$52.99

$51.43

($1.56)

-2.94%

Feb

Live Cattle

$124.95

$126.30

$127.10

$126.45

($0.65)

-0.51%

Mar

Feeder Cattle

$146.35

$147.95

$149.20

$145.00

($4.20)

-2.82%

Feb

Lean Hogs

$85.35

$86.83

$87.65

$86.45

($1.20)

-1.37%

Mar

Cotton

$78.55

$80.52

$83.10

$82.75

($0.35)

-0.42%

Mar

Oats

$3.56

$3.63

$3.59

$3.86

$0.27

7.38%

Mar

Rice

$15.16

$15.48

$15.56

$16.35

$0.78

5.04%

 

 

The soybean market was technically vulnerable to a sell off heading into the report, which was the reason for our additional put option purchases and cash sales ahead of the USDA report. The USDA numbers were about as expected, but in an overbought market no news equals bearish news. USDA cut Argentine soybean production by 1 MMT, but hiked Brazil by 1 MMT. US ending stocks were trimmed to 125 million bushels due to higher product demand and crush. Bears were disappointed that USDA didn’t hike projected exports, with 93% of the current forecast already on the books. However, the message is pretty clear. USDA believes that US exports will drop off sharply after South American supplies become available in March and April. There may also be some cancellation risk on those outstanding sales.

 

Wheat was lower on all three exchanges, with KC the weakest. That re-aligned the spreads, which had been stretched the other way the previous week. Chicago was down 9 cents for the week, but UNCH on Friday. USDA increased projected wheat feeding for the current marketing year, and also increased the projected SRW share of US exports. KC was weaker because of improving precipitation for parts of the HRW growing area, and because HRW export interest has been slowing down. USDA left the average price for US wheat unchanged at $7.90.

 

Cotton prices retreated 0.42% for the week. USDA cut projected US ending stocks to 4.5 million bales, raising projected exports 300,000 bales. The tighter scenario also increased the cash price midpoint to 71 cents. World ending stocks are still seen as very large, at 81.86 million bales. That is 77% of annual use, or a nine month supply. However, the US is making export sales anyway, and 42.61 million of those stocks are expected to be in one country (China). Weekly export sales were down on Thursday, due to the sharp rise in prices over the past two months and some questionable global demand.

 

Cattle futures were down 0.51% for the week after rallying 0.63% the previous week. Weekly beef production was 4.6% smaller than last week, but up 0.4% from the same week in 2012. Average carcass weights are still an estimated 11 pounds per animal higher than last year at this time. Wholesale prices were down $.44/cwt for Choice boxes, a 0.2% drop. Select beef was actually up $1.00 per cwt, or 0.6%. The choice/select spread dropped down to $2.50. In recent years it has dropped to less than a dollar in February or March, and sometimes goes negative. US weekly beef export sales through January 24 slowed to less than 10,000 MT.

 

Hogs were down 1.37% for the week, applying a little pressure to the cattle. Hogs were also seeing pressure from expanding broiler placements and egg sets. Estimated weekly slaughter was 2.139 million head, down 1.7% from the previous week and 1.3% larger than the same week in 2012. Pork production was down 1.8% from the previous week, but up 0.8% from the same week in 2012. Average weights are now estimated to be one pound lighter than year ago. The pork carcass cutout plunged 4.58% for the week, with the pork belly quotes down 12.6% since February 1. Cash hog prices were mixed on Friday in the west, but firmer in the ECB. The IA/MN weighted average was down $1.05 on Friday. The average WCB direct sale was $84.55 vs. $88.34 a week ago. The ECB average was $85.56, vs. $85.91 a week ago.   

 

Market Watch: This is a week with some holidays (Lincoln’s Birthday & Valentine’s Day in the US, Foundation Day in Japan), but only the Chinese get the week off (Chinese New Year, starting the Year of the Snake). The regular USDA reports will be released, including Export Inspections on Monday and Export Sales on Thursday. Monthly NOPA crush is scheduled for Thursday release. Thursday will also be expiration day for February hog and canola.  

 

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

Some Bullish Attitudes

Feb 01, 2013

Brugler

Market Watch with Alan Brugler

February 1, 2013

Some Bullish Attitudes

It was an "up" week for most of the ag commodities, excluding the wheat and oats. The wheat market is all dressed up with nowhere to go. The US offering is cheap vs. most countries right now, but end users appear to be temporarily well covered. India also appears to have a large crop coming on, resulting in discounted sales and lost US opportunities. Fund investors were nibbling at the long side of the market, encouraged by a two week slide in the US dollar index.

Corn futures rebounded 2.1% for the week, and remain comfortably above $7. The EIA weekly ethanol report on Wednesday showed the lowest weekly production since weekly data reporting began in 2010. Ethanol stocks also rose despite smaller weekly imports. Despite those negative trends, profitability at the ethanol plants improved for the week, and RIN values were rising to levels that might stimulate production in areas with available corn. US weekly export sales remain poor, as the bulk of the price rationing has devolved to that portion of the market. World buyers have other corn sources and other feed substitutes and at a high enough price they will use them.

 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

01/11/13

01/18/13

01/25/13

02/01/13

Change

% Change

Mar

Corn

$7.09

$7.28

$7.21

$7.36

$0.15

2.12%

Mar

CBOT Wheat

$7.55

$7.91

$7.77

$7.65

($0.11)

-1.48%

Mar

KCBT Wheat

$8.11

$8.44

$8.29

$8.23

($0.06)

-0.69%

Mar

MGEX Wheat

$8.47

$8.74

$8.64

$8.52

($0.12)

-1.42%

Mar

Soybeans

$13.73

$14.29

$14.41

$14.74

$0.33

2.31%

Mar

Soybean Meal

$404.30

$414.40

$416.40

$428.20

$11.80

2.83%

Mar

Soybean Oil

$49.24

$51.68

$52.10

$52.99

$0.89

1.71%

Feb

Live Cattle

$130.60

$124.95

$126.30

$127.10

$0.80

0.63%

Mar

Feeder Cattle

$151.45

$146.35

$147.95

$149.20

$1.25

0.84%

Feb

Lean Hogs

$84.20

$85.35

$86.83

$87.65

$0.83

0.95%

Mar

Cotton

$75.62

$78.55

$80.52

$83.10

$2.58

3.20%

Mar

Oats

$3.47

$3.56

$3.63

$3.59

($0.04)

-1.03%

Mar

Rice

$15.22

$15.16

$15.48

$15.56

$0.08

0.52%

 

The soybean market picked up another 33 cents per bushel. US export sales were again strong. USDA reported that net export sales for last week were 1.253 MMT. The trade was expecting soybeans sales to come in between 300-600,000 MT of old crop and the actual number was 386,000 MT.  New crop sales were smaller than some had expected based on the daily sales reports. Soybean meal bookings were on the slow side at only 141,700 MT. Soy oil sales were 20,100 MT, comfortably within trade estimates. New crop bean bookings were again larger than old crop sales as South American new crop beans begin to enter the world trade equation. Most of the US old crop is already committed, even if not yet purchased from the producer. Weather in South America remains generally benign, but there has been a drying out trend in a few major production areas over the past two weeks. Soybean meal was up 2.8% for the week, and soy oil also advanced 1.7%. The reduced US ethanol production has constricted supplies of DDG and corn oil, supporting their substitutes in the soy complex. Soybean meal export commitments have also reached 88% of the USDA forecast for the year, with more than seven months for additional sales to occur.  

Wheat was lower on all three exchanges, with Minneapolis and Chicago the weakest. USDA reported weekly export sales for the week ending January 17 totaled 387,900 MT, a disappointment. The largest buyers were Peru and Japan, with Nigeria stepping up for 80,000 MT of new crop. Portions of HRW country saw some snow or rain, mostly on the eastern side of the Plains states. KC futures were better supported than the other two markets, with state level crop condition ratings still suggesting worse than normal abandonment. A 10 year average of harvested vs. planted acres for HRW shows that 21% is an average abandonment for that class.  In drought years it heads down toward 29%.

Cotton prices were up another 3.2% after gaining 2.5% the previous week. US weekly export sales totaled 158,400 RB,   a bit slower than the 264,100 RB from the previous week. That figure included 21,600 RB of pima and only 5,500 RB of upland sold for 2013/14. The rest was old crop upland. Total US export sales commitments are now 85% of the USDA forecast for the year. They would typically be at 80% by mid-January. They need to get to about 110% to allow for yearend carryover of unshipped sales.

Cattle futures rose 0.63% last week. The week started off strong, thanks to the bullish Cattle on Feed report. Then the longs started taking profits. Weekly beef production was 0.9% smaller than last week, but up 6.5% from the same week in 2012. Average carcass weights are still an estimated 11 pounds per animal higher than last year at this time. Wholesale prices were down $4.88/cwt for Choice boxes, a 2.6% slide. Select was also down, but a more orderly 1.8%.  US weekly beef export sales through January 24 slowed to 12,100 MT from 14,200 MT the week before.  On Friday night, USDA released the semi-annual Cattle Inventory report. They showed 89.3 million head, a drop of 1.6% from last year. That was a smaller cut than the trade had expected, but is still the smallest herd since 1952. Beef cow numbers were down nearly 3%, but there were nearly 2% more beef replacement heifers than last year.  Dairy replacements were down year/year for the first time in 4 years.  

Hogs were up just about 1% for the week. Estimated weekly slaughter was 2.176 million head, up 1.1% from the previous week and 2.1% larger than the same week in 2012. Pork production was up 1.2% from the previous week, and up 2% from the same week in 2012. Average weights are now estimated to be equal with year ago. The pork carcass cutout value rose $1.70 for the week, a gain of 2.0% after a rise of 1.8% the previous week. Cash hog prices were mixed on Friday in the west, but firmer in the ECB. The IA/MN weighted average was up 23 cents. The average WCB direct sale was $88.34, down 52 cents on the day but up from $85.64 a week earlier. The ECB average was $85.91, up $2.88 for the week (of which $1.78 was on Friday).  

Market Watch: Monday will be first notice day for February cattle futures, following hard on the heels of Friday’s options expiration and the semi-annual USDA Cattle Inventory report.  We’ll get the usual weekly Export Inspections report on Monday, and weekly Export Sales on Thursday. The main USDA reports will be on Friday morning, with Crop Production and the monthly WASDE supply and demand updates. Friday will also mark the expiration of the March cotton options. Chinese New Year starts on the 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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