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RSS By: Alan Brugler, AgWeb.com

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

The More the Merrier?

Nov 02, 2012

 Brugler

 

 

 

Market Watch with Alan Brugler

November 2, 2012

 The More the Merrier???

 

Corn futures eked out a gain of 2 cents for the week. Ongoing poor export sales have limited price advances, along with competition from feed wheat and Brazilian corn.  Brazilian corn exports during October were record large at 3.6 MMT. US Weekly export sales were again very weak at only 167,900 MT. China also cancelled another 60,900 MT. Unknown destinations also cancelled 124,500 MT. Average US daily ethanol production rose last week, but demand was not up to the combination of increased production and imports. Ethanol stocks rose to 19.215 million barrels.

 

Soybeans lost about 2% for the week, all of that on Friday. They posted several strong days but again gave back a little on Friday due to profit taking and also some "risk off" selling that came through most of the commodity markets on Friday. Weekly export sales were stronger than expected at 741,200 MT, stirring talk once again about overselling available supplies. China is still the dominant soybean buyer, taking 382,600 MT of the weekly total. US export shipments are ramping up sharply, as has been expected since the extent of the South American drought became obvious back in the spring. Export shipments have been over 60 million bushels for each of the past two weeks. The bears had the upper hand on Friday, in part due to larger US crop production estimates from FC Stone and Informa. The latter was at 2.952 billion bushels.   

Chicago wheat futures were higher 1 cent higher for the week, while the two hard wheat exchanges finished nearly unchanged in the nearby December contracts. Weekly export sales were smaller than the previous week, at only 362,900 MT. The US is still a little too expensive to compete with EU wheat into the North African and Middle East markets after freight is included. Egypt bought 300,000 MT of wheat for late December and early January shipment, but sourced it from Russia, Romania and France rather than the US. The Dow Jones- UBS index indicated that it will include KC hard wheat futures in the index for 2013.  Winter wheat condition ratings were worse than last year for the first report of the growing season, and the poorest in 20 years or more depending on how you compare the data. There is, however, a fairly weak correlation between fall conditions and spring yields.

Cotton futures sank nearly 3% on the reality of burdensome global cotton supplies. A little less than half of the global projected ending stocks will be located in China, and thus presumed to be out of world trade. However, at current usage rates the Chinese don’t have to be back in the market for quite some time. US export sales reflect that reality. Weekly export sales for the week ending October 25 were a net 96,800 RB for upland in 2012/13 and another 3,700 RB for 2013/14 to Mexico and Thailand.

 

Commodity

 

 

 

 

Weekly

Weekly

Month

10/12/12

10/19/12

10/26/12

11/02/12

Change

% Change

Dec

Corn

$7.53

$7.62

$7.38

$7.40

$0.02

0.24%

Dec

CBOT Wheat

$8.57

$8.73

$8.64

$8.65

$0.01

0.09%

Dec

KCBT Wheat

$8.90

$9.06

$9.09

$9.09

($0.00)

-0.05%

Dec

MGEX Wheat

$9.24

$9.38

$9.40

$9.40

$0.00

0.03%

Nov

Soybeans

$15.23

$15.34

$15.61

$15.27

($0.34)

-2.19%

Dec

Soybean Meal

$465.20

$463.80

$483.40

$475.90

($7.50)

-1.55%

Dec

Soybean Oil

$50.67

$51.58

$50.96

$49.26

($1.70)

-3.34%

DEC

Live Cattle

$125.50

$127.28

$125.25

$125.43

$0.17

0.14

NOV

Feeder Cattle

$144.23

$148.38

$145.33

$144.90

($0.42)

-0.29%

Dec

Lean Hogs

$78.37

$79.63

$78.90

$77.75

($1.15)

-1.46%

Dec

Cotton

$71.36

$76.88

$72.42

$70.35

($2.07)

-2.86%

Dec

Oats

$3.92

$3.94

$3.90

$3.67

($0.23)

-5.84%

Nov

Rice

$15.03

$15.02

$14.80

$14.71

($0.08)

-0.57%

 

Cattle futures finished higher for the week. The cash cattle market was mostly steady on light demand. Wholesale beef prices were higher initially, but ran into resistance as the Choice quote neared the $200 mark. They then sold off and ended the week lower. Choice boxed beef was down 2.1%. Select product was down 0.4% on a Friday/Friday basis. Estimated beef production for the week was up 2.0% from the same week in 2011, and tonnage for 2012 YTD is 1.9% below last year. Weekly export sales at 14,600 MT were lower than the previous week.

 

Hog futures were $1.15 lower for the week. Estimated pork production for the week was down 0.6% from the previous week, and down 1.4% from the same week in 2011. Pork production YTD is up 2.3%. Estimated carcass weights are rising seasonally, but still down 3 pounds from last year. The pork carcass cutout value gained 0.46% for the week on a Friday/Friday basis, with gains in bellies and losses in pics. The CME Lean Hog Index is $83.52, a $5.77 premium to nearby futures. The spread had been $6.32 last week, so some convergence is in fact taking place.

 

Market Watch:

 

The main USDA reports for the week will be the monthly NASS Crop Production and WASDE Supply/Demand reports, both to be issued on Friday morning, November 9. With most of the US crop now harvested, emphasis is shifting to demand, so the weekly Export Inspections on Monday and the Export Sales report on Thursday will also get attention. Harvest progress will be reported on Monday night in the Crop Progress report, with corn expected to be in the 95-98% complete range. Winter wheat condition ratings will also be of interest since they have been so poor thus far. Friday will also mark the last trading day for December cotton options.

 

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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