Sep 16, 2014
Home| Tools| Events| Blogs| Discussions| Sign UpLogin


Market Watch

RSS By: Alan Brugler, AgWeb.com

Alan Brugler is the President of Brugler Marketing & Management, and the primary analyst and advisor.

Not a Cloud in the Western Sky

Jul 13, 2012

Market Watch with Alan Brugler

July 13, 2012

Not a Cloud in the Western Sky

 

The crop weather situation is mixed, with the WCB warmer and dryer than normal and above normal precipitation forecasted for the Ohio River Valley, Great Lakes and eastern Seaboard. The US model and the European model lean drier in the long term forecasts. Highs in the ECB for the next week should culminate in the mid 80s which will give the crop some moderate relief. Nighttime minimums will be mostly in the 60s with a few nightly lows over the next week in the 70s.  Grain futures this past week advanced significantly, then the USDA confirmed the yield numbers the market was already trading and sent the market into a sideways trading pattern, at least for the rest of the week.

 

The weather is also having an impact on livestock by driving grain prices higher and deteriorating pasture conditions. The Indiana FSA office approved 22 Indiana counties for emergency grazing on CRP acres because of the severe drought over much of the state. Cattle were down $2.00 and Feeder Cattle were down $7.53 for the week.  July Lean Hogs were up $1.00 while August Lean Hogs were down $2.90 for the week.  July corn futures went off the board 15 ½ cents lower today and were up 13 cents for the week.  Soybean meal was up $17.30 for the week. We are also seeing corn demand decline for ethanol along with export demand.  Mexico changed their corn tender for 120,000 MT of corn from "U.S. and optional origin" to "non-U.S." origin. A 550,000 MT purchase by Mexico announced in the weekly Export sales report was "optional origin". While the US has a big freight advantage to Mexico, cheaper South American corn would also work in there. Weekly ethanol production slowed last week by 36,000 barrels per day to only 821,000 bpd. That equates to the smallest weekly corn use since July 2010 for that industry. In other words we continue to see usage rationed by the current prices.

 

If no rain materializes over the weekend we could see grain prices move above this week’s consolidation pattern and move below the pattern if rains or forecast for rains develop.

 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

06/22/12

06/28/12

07/06/12

07/13/12

Change

% Change

July

Corn

$5.91

$6.73

$7.43

$7.56

$0.13

1.68%

July

CBOT Wheat

$6.73

$7.39

$7.91

$8.42

$0.51

6.41%

July

KCBT Wheat

$6.86

$7.39

$7.90

$8.41

$0.52

6.52%

July

MGEX Wheat

$8.59

$8.64

$9.14

$9.35

$0.22

2.35%

July

Soybeans

$14.43

$15.13

$16.20

$16.42

$0.22

1.37%

July

Soybean Meal

$422.00

$436.00

$471.60

$488.90

$17.30

3.67%

July

Soybean Oil

$49.74

$52.21

$53.27

$53.57

$0.30

0.56%

Aug

Live Cattle

$116.90

$120.45

$119.20

$117.20

($2.00)

-1.68%

Aug

Feeder Cattle

$152.80

$151.45

$146.53

$139.00

($7.53)

-5.14%

July

Lean Hogs

$94.93

$96.63

$96.23

$97.23

$1.00

1.04%

July

Cotton

$74.17

$72.16

$70.78

$71.76

$0.98

1.38%

July

Oats

$3.29

$3.36

$3.52

$3.65

$0.14

3.91%

July

Rice

$14.47

$14.19

$14.77

$14.86

$0.09

0.64%

 

Corn was 13 cents higher for the week but had a wide range of $7.94 to $7.32 with much of that taking place Wednesday following the monthly USDA crop report. USDA surprised the market by lowering yields 20 bushels per acre from the June report. USDA has occasionally lowered yields on the July report but in the past never more than 3 to 4 BPA. The trade had already built that yield into the price so after the initial impact from the report corn sold off. The crop is deteriorating daily with weather forecasts showing not much change from above normal heat and below normal rainfall. Condition ratings are expected to decline on next week’s crop progress report.

 

Soybeans were up 22 cents for the week after being up $1.07 the prior week. Weekly soybean export sales were larger than expected for the reporting week ending July 5th with new crop sales above the last several years for this week. Chinese buying is still there. US export commitments (shipments plus open contracts) fully cover the USDA export estimate for the year. Outstanding new crop sales totaled 14.28 MMT as of July 5th which compares to 8.271 MMT a year ago. There are reports of soybean leaves turning yellow and curling under but August is historically the critical month for development. A South American analytical firm projects Brazil soybean production will outpace the U.S. in 2012/13. They are projecting U.S. soybean production at 80 MMT compared to this week’s WASDE of 83.01 MMT.  The Brugler500 index for soybean crop conditions dropped to 309 from 322. Ratings are now the lowest since 1988.

 

The three wheat markets finished the week 22 to 52 cents higher with the July contracts all expiring at noon today. The next contract month prices were at a premium to the expiring contracts of 6 cents (CBT), 10 cents (KC) and 14 cents (MGEX). Winter wheat harvest was 75% complete as of Sunday and should be wrapping up with little weather interruptions accept for the northern wheat areas. Weekly export sales for the week ending July 5th were 311,758 MT a marketing year low dipping from the previous week which is atypical for the previous four marketing years for that week. India published an export tender for 240,000 MT of wheat in an effort to move burgeoning stocks with grain storage at capacity.

 

Nearby cotton futures were up 240 points on the day and up 1.38% for the week. The USDA reduced Global cotton ending stocks to 72.39 million RB from 74.51 million RB on the June report. USDA also reduced U.S. cotton ending stocks buy by a mere 0.10 million RB. China remains the largest importer of Upland cotton at 5.2 million RB as of July 5th.  Total Upland exports were at 9.3 million RB and Pima sales at 0.552 million RB with USDA cotton projections at 11.6 million RB for 2011/12 with roughly 3 weeks and 3 days left in the marketing year. Cotton prices have moved into a sideways price range since the end of May.  

 

Cattle futures were down 1.68% this past week. Wholesale beef prices were under pressure all week ending at $183.94, down $8.71 from Friday to Friday for Choice beef. The Economic Research Service published May beef and veal exports at 207.6 million pounds compared to 234.8 million pounds a year ago. Prices were much lower a year ago however. USDA published their monthly world supply demand estimates this week and raised annual beef production by 90 million pounds. Feeder cattle were really under price pressure this week with high corn prices and lower cash auction prices dropping prices $7.53 for the week.

 

Lean Hog futures were $1.00 or 1.04% for the week on the July contract which will expire on Monday. The upcoming August spot contract is at a near $7.00 discount to the expiring July which will have an impact on the weekly chart unless the spread narrows on Monday. The Economic Research Service put May Pork exports at 448.2 million pounds, the highest export number since 2008 for the month of May. The monthly WASDE lowered pork production by 70 million pounds. The Index and futures are working towards each other with IA/MN direct average hog price at $91.86, down $4.32 this afternoon. The Carcass cutout has been steadily dropping since June 28th. The Carcass value was $89.49 this afternoon with the June 28th value at $96.15.

 

Market Watch:

The main USDA reports this coming week will fall on Friday, with Cold Storage and Cattle on Feed to be released at 2 pm CDT. There will of course be interest in the Crop Progress report on Monday afternoon at 3:00 pm. The expiration of the July Lean Hog contract is also Monday with the spread between the CME Lean Hog Index and futures expected to converge. Thursday will include the weekly USDA Export Sales report which should further demonstrate declining export price rationing. Financial reports include Housing Starts, CPI, Capacity Utilization and Industrial Production early in the week and Existing Home Sales and EIA Gas Storage on Thursday.

 

 

 

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

Log In or Sign Up to comment

COMMENTS

No comments have been posted, be the first one to comment.

Receive the latest news, information and commentary customized for you. Sign up to receive Beef Today's Cattle Drive today!. Interested in the latest prices for cattle in your area? See highlights of the latest for-sale cattle in the Cattle-Exchange eNewsletter.

Hot Links & Cool Tools

    •  
    •  
    •  
    •  
    •  
    •  
    •  

facebook twitter youtube View More>>
 
 
 
 
The Home Page of Agriculture
© 2014 Farm Journal, Inc. All Rights Reserved|Web site design and development by AmericanEagle.com|Site Map|Privacy Policy|Terms & Conditions