Market Watch with Alan Brugler
March 7, 2014
He Keeps on Rollin’ Along
In the 1920’s song Old Man River by Paul Robeson the second stanza says (referring to the river)
He don' plant taters,
He don't plant cotton,
An' dem dat plants'em
is soon forgotten,
But ol'man river,
He jes keeps rollin'along.
There were a lot of similarities to the river in the ag markets this week, if the name of the waterway was Bull River. Cattle and meal were a little tired, and the longs were bailing out of March oats before they got stuck there. However, there were relentless uptrends in corn, wheat, soybeans, cotton and hogs that just kept on rolling along.
Corn futures gained 23 cents for the week, 5.14%. Most contracts notched a new high close for the move. Daily average ethanol production slowed to 894,000 bpd last week, but ethanol stocks tightened to only 16.6 million barrels. Plant margins continue to be excellent. Weekly corn export sales were much larger than the past two weeks, at 1.682 MMT. USDA shows that 92% of the projected corn sales for the year are already on the books. We would typically only be 72% by now. The largest commitment in recent years has been 83%. The CFTC Commitment of Traders report tonight showed managed money added another 70.606 contracts to their net long position in corn last week, giving them a net long position of 158,122 contracts. This is the largest net long position in corn for speculators since March 26, 2013.
Soybean futures were up 3.06% this week after a 3.17% advance the prior week. Soybean meal was lower, but soy oil surged 6.2% to pump up the product value. Weekly US soybean export sales were 1.029 MMT for the week ending Feb 27. Total US export Commitments for 2013/14 are now at 107% of the USDA forecast for the year. The 5 year average for this point in the marketing year would be 90%. Thus, there are expectations for USDA to raise projected exports on Monday. Of those commitments 90.5% have already been shipped. As of the close on this past Tuesday, CFTC shows managed money accounts increased their net long position for soybeans from the previous week by 5,497contracts bringing their overall net long position to 208,493 contracts. That is 1.04 billion bushels of paper ownership!
Wheat futures were up sharply in all three classes. Chicago was up 7.9%, KC gained 5.6% and the very thinly traded and soon to expire March MPLS contract was up 12.1% in 5 trading days! Weekly wheat export sales reported this week were 600,500 MT, up from 564,900 MT. Export commitments are 90% of the USDA forecast for the year, vs. the 5 year average of 92%. The Russian invasion of Crimea and agitation in eastern Ukraine are a threat to future wheat and corn export sales out of the region even though efforts are being made to fill all contracts normally. As of the close on last Tuesday, managed money accounts decreased their short position in CBT wheat from the previous week by 14,271 contracts bringing their overall net short position to only 6,040 contracts. The big spec funds are already net long 28,197 contracts in KC.
Cotton futures jumped 4.7% this week. US Export commitments improved to 73% of the USDA forecast for the year. This compares to 74% for this point last year, and the 5 year average of 72%. Export shipments were the largest of the year at 363,800 running bales. The weekly Commitment of Traders report showed managed money accounts building up their net long position by 1,135 contracts bringing their current overall net long position to 54,337 contracts.
Cattle futures were down 1.2% after their huge 5.12% last week. Cash cattle trade was $147-150, with most of it at $147-148. That was down $2 from the previous week, but still above the April board. Wholesale prices were strong all week. Choice boxes gained 4.7%, and Select boxes were 5.5% higher than last Friday. Weekly estimated slaughter at 548,000 head ended up being down 3.9% from last week and down 8.4% from year ago. The CFTC Commitment of Traders report showed managed money accounts adding to their net long position in live cattle by 3,839 contracts, bringing their overall net long position to 132,073 contracts.
Hog futures were up 5.8% this week after a 7.55% gain the previous week. Estimated weekly slaughter was only 2.072 million head, down 3.9% from the previous week. That was also down 5.7% from the same week in 2013 and supportive to pork prices. The shortfall magnified concerns about PDF virus losses. The pork carcass cutout gained 6.55% from Friday to Friday. The picnic and pork butt primal were up the most. USDA weekly export sales for pork were down 27% from the previous week at only 9,500 MT. High prices do tend to slow exports. The managed money accounts (per CFTC) increased their net long position by 4,136 contracts bringing their total net long position to 69,642 contracts.
We’ll start the week with the monthly USDA Supply/Demand report at 11 am CDT on Monday morning. Yes, that is CDT, as Daylight Savings Time kicks in on Sunday morning. Turn your clock an hour ahead. We will also get the usual weekly Export Inspections report on Monday, and weekly Export Sales on Thursday. Friday will mark the expiration of the March grain contracts. Spring officially starts 6 days after that!
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.
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