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June 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.

Run Those Planters Ragged

Jun 28, 2013

 Brugler

Market Watch with Alan Brugler

June 28, 2013

Run Those Planters Ragged 

It was a wet spring, with planting running behind for corn, soybeans, spring wheat and even cotton. Some Iowa producers were still taking a chance on soybeans this week. You sure couldn’t tell that there were planting issues from the USDA Planted Acreage report. Corn acreage was above intentions at 97.379 million acres, soybeans were above intentions at 77.728 million, and cotton was above intentions at 10.3 million. Spring wheat lost some ground to corn and beans, at 12.3 million vs. 12.7 million in the March Intentions report.  Overall, it looks like upgraded equipment did allow producers to do more with fewer suitable field days, running those planters ragged to use an old expression.  There are still legitimate questions about final acreage, since "intended to be planted" on June 5 might not have actually been planted. Only the FSA data in September (and the cleaned up version incorporated into the NASS production estimate in October) will clear up the issue. In case you were wondering, here is the official NASS policy on planted acreage revisions:

Revision policy: Estimates of planted acres for spring planted crops are subject to revision in the August Crop Production report if conditions altered the planting intentions since the mid-year survey. Planted acres may also be revised for cotton, peanuts, and rice in the September Crop Production report each year; spring wheat, Durum wheat, barley, and oats only in the Small Grains Annual report at the end of September; and all other spring planted crops in the October Crop Production report. Revisions to planted acres will only be made when either special survey data, administrative data, such as Farm Service Agency program "sign up" data, or remote sensing data are available. Harvested acres may be revised any time a production forecast is made if there is strong evidence that the intended harvested area has changed since the last forecast.

Corn futures continued its bullish ways, up 18 cents per bushel in the July contract after gaining 7 cents the week before. Such was not the case for December futures, which lost 45 ¼ cents for the week.  The main news for the week was out on Friday morning. USDA showed a bullish old crop stocks number of 2.764 billion bushels. Western Corn Belt stocks on June 1 were the tightest since 1996, also the case for Eastern Corn Belt (OH, IN,IL) states. This should be supportive to old crop cash prices, with basis doing most of the work. At some point in July or early August, end users typically decide they have enough to last until harvest and then the flat price will break. New crop news was bearish, with a shocking corn acreage number of 97.379 million. See our acreage comments back on the first paragraph.

Nearby July Soybeans gained 71 cents per bushel this week. Old crop stocks are tight, and the shorts remember the delivery squeeze in May. They are buying their way out. There are currently no bushels registered for delivery against July. USDA confirmed the tightness in old crop supplies, showing June 1 stocks at 435 million bushels. A $42.60/ton jump in July meal futures (and the cash meal behind that) supported product value. November lost 21 ½ cents for the week, all of it on Friday. USDA showed planted acreage of 77.728 million. That was smaller than the average trade estimate, but still larger than the March intentions. It also implies record double crop acreage, with the lower average yield expected on those acres.

 

Commodity

 

 

 

 

Weekly

Weekly

Month

06/07/13

06/14/13

06/21/13

06/28/13

Change

% Change

July

Corn

$6.66

$6.55

$6.62

$6.79

$0.18

2.64%

July

CBOT Wheat

$6.96

$6.81

$6.98

$6.49

($0.50)

-7.09%

July

KCBT Wheat

$7.35

$7.12

$7.37

$6.76

($0.60)

-8.18%

July

MGEX Wheat

$8.20

$8.04

$8.14

$7.85

($0.29)

-3.56%

July

Soybeans

$15.28

$15.17

$14.93

$15.65

$0.71

4.77%

July

Soybean Meal

$452.50

$450.70

$447.70

$490.30

$42.60

9.52%

July

Soybean Oil

$48.53

$48.48

$48.02

$46.42

($1.60)

-3.33%

Aug

Live Cattle

$119.23

$118.33

$121.60

$122.03

$0.43

0.35%

Aug

Feeder Cattle

$143.63

$143.40

$146.93

$149.45

$2.53

1.72%

July

Lean Hogs

$96.20

$98.03

$99.75

$101.28

$1.53

1.53%

July

Cotton

$84.73

$91.29

$85.32

$82.71

($2.61)

-3.06%

July

Oats

$4.07

$4.00

$3.96

$4.01

$0.06

1.45%

July

Rice

$15.82

$16.51

$15.91

$15.74

($0.17)

-1.07%

 

Wheat futures were down hard in Chicago and KC this week, with less damage in MPLS. Chicago lost 7.1%, and KC July was down 8.2% on harvest pressure. Hedge selling on the close was a problem all week, and speculative buying interest was non-existent in the face of glowing SRW yield reports and a much larger Black Sea export program expected for 2013/14. USDA put All Wheat plantings at 56.503 million, which is above the 56.44 million from the March surveys. The drop in Other Spring wheat was smaller than expected, roughly the 3% of the crop not yet planted. FSA data will be used to determine if adjustments are needed.

Cotton ran into major resistance two weeks ago, and continued to sell off this week. July was down 3.06% for the week. The USDA showed 10.251 million acres planted, up from the March intentions but still down from 12.314 million last year. US weekly export sales were the slowest of the year for old crop. The US dollar index rallied all week, and won’t help boost those exports much. The higher stock market might help consumer confidence a bit. Total Commitments YTD are now 101% of the revised USDA forecast for the year. That now lags the 109% average pace over the past 5 years.

Cattle futures were 43 cents higher this week, a second up week in a row. Choice beef prices are reverting to the mean after their record levels in May. Wholesale beef prices were mixed this past week, with Choice down 0.9% and Select up 0.5% on a Friday/Friday basis. Cash cattle trade was slow to develop on Friday, with modest volume reported at $121. US beef production YTD is 0.9% smaller than last year. Weekly slaughter was down 0.6% vs. 2012. Estimated carcass weight is 4# below last year’s actual of 794#.

Hog futures were up $1.53 for the week, a continuation of the multi-month rally. Weekly export sales were the largest since the first report was issued back in March, at 18,600 MT. Estimated weekly slaughter was 2.018 million head. That was up 1.9% from the previous week and 0.6% larger than last year. Weekly pork production was up 1.8% from the prior week. Pork production YTD is 0.7% below last year at this time.  The pork carcass cutout value was up 1.83% for the week, with hams up 6.8%. The Hogs & Pigs report on Friday afternoon showed 100% of the hogs we had a year ago. Market hog numbers were 99.9% of year ago. Mar-May farrowings were smaller than expected at 98% of year ago, but Kept for Breeding was larger than the average trade guess at 100.3%. 

 Market Watch

This will be one of those "interrupted" weeks, with the July 4th holiday on Thursday. CBT trading will halt at midday on Wednesday, and not resume until Friday morning. We suspect a large contingent of traders will take Friday off, which could mean high volatility or no volatility in prices depending on the mid-July weather forecasts coming out at that time. The regular Monday Crop Progress report will get scrutiny, with most expecting an improvement in the crop condition ratings for corn and soybeans. USDA export inspections will be out on Monday morning. Weekly Export Sales will be delayed until 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.  Visit our web site at https://www.bruglermarketing.com or call 402-697-3623 for more information on our consulting and advisory services for farm family enterprises and agribusinesses.               

 

Copyright 2013 Brugler Marketing & Management, LLC

Ready for Some Early Fireworks

Jun 21, 2013

Brugler

 Market Watch with Alan Brugler

June 21, 2013

Ready For Some Early Fireworks

It is that time of year again. I don’t mean the first day of summer, although that was today.  I mean time for fireworks. As a child, that meant July 4th.  For the grain markets, that means the June 1 Grain Stocks report, scheduled to be issued on June 28. We expect early fireworks from that report, just like the kids in town who had a vacation out of state and started lighting those firecrackers weeks ahead of the actual holiday.

Corn futures returned to their winning ways, up 7 cents per bushel in nearby July after losing 11 cents per bushel the week before. Ethanol plant margins have slipped, but are still positive. Weekly ethanol stocks crept up to 16.5 million barrels, due primarily to imports brought into both PADD1 (East Coast) and PADD4 (West Coast). Corn used by ethanol was about 92 million bushels for the week, depending on your assumed product yield. Corn export interest was poor. Since USDA lowered expected sales for the year to 700 million bushels, commitments YTD are now 99% of the forecast, and ahead of the 98% average pace for this date.

Soybeans lost 23 cents per bushel after being down 12 cents the prior week. Meal futures were also down $3.00/ton in cautious pursuit of the corn market. Soybean meal export sales activity continues strong, with 141,200 MT booked in the most recent reporting week. Meal commitments are now 99% (typically only 93% by now) of the USDA forecast for the year, with soybean commitments at 101%.  The strong export sales pace for meal is raising concerns about availability of old crop beans for crushing in July and August. The NOPA monthly crush report was larger than some folks had been expecting, at 122 million bushels.

Wheat futures were higher on all three exchanges this week. US weekly export sales totaled 434,700 MT including 2,000 MT of 2014/15. USDA did report that 11% of the winter wheat crop has now been harvested. The average would be 25%. Our Brugler500 index dropped to 270 from 271 for winter wheat. USDA reported larger than expected winter wheat production last week at 1.509 billion bushels. Projected world stocks were trimmed 5 MMT to 181.25 MMT. That isn’t stopping wheat feed use, and in fact there was some bargain hunting going on. Japan bought its usual quantity of HRW and DNS wheat, but is still avoiding US white wheat until USDA will certify the crop to be GMO free.

Cotton ran into resistance and reversed course this week. After gaining 656 points the prior week, nearby futures were down 597 points this week. The US dollar rallied sharply after becoming technically oversold. The US stock market was also down hard, particularly on Thursday. US weekly export sales were 152,400 RB, of which 1,200 RB was the pima variety. Total Commitments YTD are now 101% of the revised USDA forecast for the year. That now lags the 110% average pace over the past 5 years.

 

Commodity

 

 

 

 

Weekly

Weekly

Month

05/31/13

06/07/13

06/14/13

06/21/13

Change

% Change

July

Corn

 $     6.62

$6.66

$6.55

$6.62

$0.07

1.03%

July

CBOT Wheat

 $     7.06

$6.96

$6.81

$6.98

$0.17

2.53%

July

KCBT Wheat

 $     7.51

$7.35

$7.12

$7.37

$0.25

3.51%

July

MGEX Wheat

 $     8.20

$8.20

$8.04

$8.14

$0.10

1.24%

July

Soybeans

 $   15.10

$15.28

$15.17

$14.93

($0.23)

-1.53%

July

Soybean Meal

 $ 447.20

$452.50

$450.70

$447.70

($3.00)

-0.67%

July

Soybean Oil

 $   48.38

$48.53

$48.48

$48.02

($0.46)

-0.95%

June

Live Cattle

 $ 121.30

$120.13

$119.00

$121.25

$2.25

1.89%

Aug

Feeder Cattle

 $ 144.33

$143.63

$143.40

$146.93

$3.53

2.46%

July

Lean Hogs

 $   93.45

$96.20

$98.03

$99.75

$1.72

1.76%

July

Cotton

 $   79.36

$84.73

$91.29

$85.32

($5.97)

-6.54%

July

Oats

 $     3.74

$4.07

$4.00

$3.96

($0.04)

-1.00%

July

Rice

 $   15.30

$15.82

$16.51

$15.91

($0.59)

-3.60%

 

Cattle futures were 1.9% higher this week, with most of the gain on Friday. Choice beef prices are reverting to the mean after their record levels in May. Wholesale beef prices were mixed this past week, with Choice down 0.1% and Select up 1.3% on a Friday/Friday basis. Cash cattle trade was slow to develop on Friday, with a few sales reported at $121 but most owners asking $122 or higher. US beef production YTD is 1.0% smaller than last year. Weekly slaughter was up 0.8% vs. 2012. Estimated carcass weight is 2# below last year’s actual of 788#. The USDA Cattle on Feed report on Friday showed slightly larger than expected May placements and smaller than expected May marketings, leaving June 1 On Feed numbers at 96.9% of year ago.

Hog futures were up $1.72 for the week, a continuation of a multi-month ally. Weekly export sales were slower than the 12,100 MT the previous week. Estimated weekly slaughter was 1.981 million head. That was up 1.6% from the previous week and 1.1% larger than last year. Weekly pork production was up 1.5% from the prior week. Average carcass weights were estimated to be 1 to 3 pound higher than year ago. Pork production YTD is 0.8% below last year at this time.  The pork carcass cutout value was up 3.5% for the week, with all of the primal cuts higher, and hams up 8%.

 Market Watch

The grain trade will start the week reacting to any ‘surprise’ positions inherited through July futures expirations on Friday. The two options strikes with the most surprise potential were the 660 strike in corn and the 700 strike in July CBT wheat.  The standard USDA crop progress report on Monday and Export Sales on Thursday will deserve scrutiny, but the big event will be on Friday morning with the release of the USDA quarterly Grain Stocks and Planter Acreage reports. USDA will also release a quarterly Hogs & Pigs report at 2 pm CDT.  Coming as they do at the end of the month and the end of the quarter, the Grain Stocks reports have earned a reputation for generating limit moves in corn.  Friday will also mark first notice day for July grain futures deliveries, should the shorts have any extra old crop corn or soybeans they wish to get rid of.....

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.  Visit our web site at https://www.bruglermarketing.com or call 402-697-3623 for more information on our consulting and advisory services for farm family enterprises and agribusinesses.

Copyright 2013 Brugler Marketing & Management, LLC

A Touch of Red

Jun 14, 2013

 

Brugler

Market Watch with Alan Brugler

June 14, 2013

A Little Bit Red

You can turn red from embarrassment, red from sunburn, or red from a paintball accident. The grain futures turned red this week, with corn, wheat, and the soy complex all posting negative net changes. It can be argued that they got a little sunburn, with the NWS 6-10 and 8-14 day forecasts consistently showing above normal temps for the bulk of the nation out through the end of June. That offers needed GDD accumulations for corn, and potentially drier fields to wrap up soybean plantings and allow more widespread wheat harvesting. Cotton might have rallied out of embarrassment, surging 7.7% after USDA confirmed that US ending stocks may only be 2.6 million bales. Hogs looked more like they had been shot out of that paintball gun, with June rallying to $102.30 before expiration on Friday. That was the highest trade in front month hogs since August 2011.

Corn futures lost 11 cents per bushel this week, a 1.7% loss which ended a string of 4 up weeks in a row. Ethanol plant margins are positive, although diminished by a retreat in futures prices. Weekly ethanol stocks dropped to 16 million barrels as consumption exceeded the net of production, imports and exports. Corn used by ethanol was about 95 million bushels for the week, depending on your assumed product yield. Corn export interest was poor. Since USDA lowered expected sales for the year to 700 million bushels, commitments YTD are now 98% of the forecast, and ahead of the 97% average pace for this date. Planting is still not completed. It should be around 98% on Sunday. The largest area of concern is the Dakotas, SE MN, Eastern IA, western IL and WI.

Soybeans lost 12 cents per bushel, after three up weeks. Meal futures were also down $1.80/ton in cautious pursuit of the corn market. Soybean meal export sales activity continues strong, with 144,800 MT booked in the most recent reporting week. Meal commitments are now 98% (typically only 92% by now) of the USDA forecast for the year, with soybean commitments at 101%.  The strong export sales pace for meal is raising concerns about availability of old crop beans for crushing in July and August. USDA did increase projected soybean imports another 5 million bushels in the Wednesday WASDE report. They left both old crop and new crop ending stocks UNCH, preferring to wait for better data from the June 28 reports.

 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

05/24/13

05/31/13

06/07/13

06/14/13

Change

% Change

July

Corn

 $     6.57

 $     6.62

$6.66

$6.55

($0.11)

-1.69%

July

CBOT Wheat

 $     6.98

 $     7.06

$6.96

$6.81

($0.16)

-2.23%

July

KCBT Wheat

 $     7.46

 $     7.51

$7.35

$7.12

($0.23)

-3.20%

July

MGEX Wheat

 $     8.06

 $     8.20

$8.20

$8.04

($0.16)

-1.92%

July

Soybeans

 $   14.76

 $   15.10

$15.28

$15.17

($0.12)

-0.77%

July

Soybean Meal

 $ 428.20

 $ 447.20

$452.50

$450.70

($1.80)

-0.40%

July

Soybean Oil

 $   49.24

 $   48.38

$48.53

$48.48

($0.05)

-0.10%

June

Live Cattle

 $ 120.58

 $ 121.30

$120.13

$119.00

($1.13)

-0.94%

Aug

Feeder Cattle

 $ 144.55

 $ 144.33

$143.63

$143.40

($0.22)

-0.16%

July

Lean Hogs

 $   93.30

 $   93.45

$96.20

$98.03

$1.83

1.90%

July

Cotton

 $   81.53

 $   79.36

$84.73

$91.29

$6.56

7.74%

July

Oats

 $     3.65

 $     3.74

$4.07

$4.00

($0.07)

-1.72%

July

Rice

 $   15.72

 $   15.30

$15.82

$16.51

$0.68

4.33%

 

Wheat futures were lower on all three exchanges, with Chicago down 2.21% and MPLS down "only" 1.9%. US weekly export sales for the first week of the new marketing year were 427,200 MT. MPLS was supported by ongoing wet weather. The last 5-10% of the crop may be too late to safely assume a yield if planted. USDA did report that 5% of the winter wheat crop has now been harvested. Our Brugler500 index was UNCH for winter wheat at 271 this week. USDA reported larger than expected winter wheat production at 1.509 billion bushels. Projected world stocks were trimmed 5 MMT to 181.25 MMT due to reduced expectations for Russia, Ukraine and the EU-27.

Cotton surged 656 points for a two week gain of 11.93 cents per pound. The US dollar continued to drop, and that made cotton cheaper in terms of importer currencies. USDA cut projected old crop ending stocks to a very snug 2.6 million bales on Wednesday. Global surplus supplies are still historically large at 92.49 million bales, but much of that inventory (58.93 million bales by August 2014) is in China and not available to global trade.  US weekly export sales were 198,400 running bales of upland and 3,500 RB for pima. Commitments YTD are now 100% of the newly revised USDA forecast for the year. That now lags the 109% average pace over the past 5 years.

Cattle futures lost $1.13 per cwt this week, about the same decline as the $1.18 from the previous week. Choice beef prices are reverting to the mean after their record levels in May. Wholesale beef prices were mixed this week, with Choice down 1.00% and Select up 0.2% on a Friday/Friday basis. There have been scattered cash cattle sales at $121, which would be $2 lower than last week. There is some resistance to the lower bids. US beef production YTD is 1.1% smaller than last year. Weekly slaughter was down 1.7% vs. 2012. Estimated carcass weight is 3# below last year’s actual of 788#.

Hog futures were up $.75 for the week, a continuation of a month long rally. Weekly export sales were much improved at 12,100 MT vs 6,600 MT the previous week. Estimated weekly slaughter was 1.949 million head. That was up 8.1% from the previous holiday week, and 0.6% larger than last year. Weekly pork production was down 3.5% from the prior week, and 10,000 head smaller than year ago. Average carcass weights were estimated to be a pound higher than year ago. Pork production YTD is 0.8% below last year at this time.  The pork carcass cutout value was up 8.09% for the week, with all of the primal cuts up by at least 3% and most up 10% or more.

 Market Watch

The main USDA reports for the week will be on the 21st, with Cattle on Feed and Cold Storage on tap. There is of course good interest in the Crop Progress report on Monday afternoon, both for planting progress and for crop condition ratings. Export sales data will come on Monday (Inspections) and Thursday (Export Sales). For flavor, the Fed Open Market Committee meets on Tuesday and Wednesday. July grain options expire on Friday as well. And, don’t forget, Friday will be the first official day of Summer!

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.  Visit our web site at https://www.bruglermarketing.com or call 402-697-3623 for more information on our consulting and advisory services for farm family enterprises and agribusinesses.

Copyright 2013 Brugler Marketing & Management, LLC

 

More of the Same

Jun 07, 2013

Brugler

Market Watch with Alan Brugler

June 7, 2013

 More of the Same

The weather was still too dry in the Plains and WCB, and too wet in states along the Missouri River. Cattle prices were still under pressure, and hog prices were still rising. It was more of the same. The one big change was in the value of the US dollar, which dropped sharply. In theory that raises prices of commodities in dollar terms, and facilitates export sales to countries whose currencies gained at the dollar's expense.

Corn futures rallied 4 cents per bushel this week, a 0.64% gain. That makes 4 up weeks in a row, even if progress is glacial. Ethanol plant margins are positive. Weekly ethanol production rose to a daily average of 885,000 bpd, the largest since June 2012. Corn use was about 95 million bushels for the week, depending on your assumed product yield. Corn export interest was poor, less than half of the trade estimate going into the report. However, we don’t think the trade had made an allowance for the Memorial Day holiday. Planting is still not completed. It should be around 95-96% on Sunday. The largest area of concern is the Dakotas, SE MN, Eastern IA, western IL and WI. There will definitely be a number of producers taking Prevented Planting in northern IA and SE MN, based on client conversations this week.  

 

Soybeans gained another 18 cents per bushel, and are up 79 cents in 3 week. Weekly soybean export sales were about as expected at 638,300 MT. Old crop bookings were stronger than expected at 48,400 MT. Soybean meal export sales activity continues strong, with 271,300 MT booked in the most recent reporting week. Meal commitments are now 102% (typically only 90% by now) of the USDA forecast for the year, with soybean commitments at 100%.  The strong export sales pace for meal is raising concerns about availability of old crop beans for crushing in July and August. Some South American beans may be available if logistics improve, but protein levels on Argentine beans appear to be below normal and thus unattractive for import if your plant needs to sell 48 pro meal.

 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

05/17/13

05/24/13

05/31/13

06/07/13

Change

% Change

July

Corn

$6.53

 $     6.57

 $     6.62

$6.66

$0.04

0.64%

July

CBOT Wheat

$6.83

 $     6.98

 $     7.06

$6.96

($0.09)

-1.31%

July

KCBT Wheat

$7.37

 $     7.46

 $     7.51

$7.35

($0.16)

-2.13%

July

MGEX Wheat

$8.04

 $     8.06

 $     8.20

$8.20

($0.00)

-0.03%

July

Soybeans

$14.49

 $   14.76

 $   15.10

$15.28

$0.18

1.21%

July

Soybean Meal

$425.10

 $ 428.20

 $ 447.20

$452.50

$5.30

1.19%

July

Soybean Oil

$49.52

 $   49.24

 $   48.38

$48.53

$0.15

0.31%

June

Live Cattle

$119.40

 $ 120.58

 $ 121.30

$120.13

($1.18)

-0.97%

Aug

Feeder Cattle

$143.38

 $ 144.55

 $ 144.33

$143.63

($0.70)

-0.49%

June

Lean Hogs

$91.53

 $   94.88

 $   95.63

$98.13

$2.50

2.61%

July

Cotton

$86.41

 $   81.53

 $   79.36

$84.73

$5.37

6.77%

July

Oats

$3.76

 $     3.65

 $     3.74

$4.07

$0.32

8.62%

July

Rice

$15.24

 $   15.72

 $   15.30

$15.82

$0.53

3.43%

 

Wheat futures were lower on all three exchanges, with Chicago down 1.31% and MPLS down only a fraction of a cent to again lead the market. US weekly export sales were a solid 631,700 MT, with rollovers of 33,200 MT out of old crop. MPLS was supported by ongoing wet weather. The last 5-10% of the crop may be too late to safely assume a yield if planted. Winter wheat heading is also running behind the average pace.

 

Cotton surged 537 points for the week after losing 217 points the previous week. The US dollar dropped more than 4% from the May 23 high to the low this week. That made cotton cheaper in terms of importer currencies. US export sales last week were excellent at 322,600 RB of upland. Total US export commitments are now 102% of the USDA forecast for the year. The 5 year average for this date is 106% (some sales are always carried over into the next marketing year). The marketing year ends July 31.

 

Cattle futures lost $1.18 per cwt this week.  Choice beef prices were weaker in the post-Memorial Day period. Wholesale beef prices were weaker, with Choice down 2.38% and Select down 2.27% on a Thursday/Thursday basis. There have been scattered cash cattle sales at $122, which would be $2 lower than last week, but feedlots know that numbers are tightening and packer margins are still good. There is some resistance to the lower bids. US beef production YTD is 1.1% smaller than last year. Weekly slaughter was down 2.47% vs. 2012. Estimated carcass weight is 1# below last year’s actual of 788#.

 

Hog futures were up $.75 for the week, a continuation of a month long rally. Weekly export sales were poor at 6,600 MT after a jump to 15,100 MT the week before Memorial Day. Estimated weekly slaughter was 2.018 million head. That was up 8.1% from the previous holiday week, and 0.6% larger than last year. Weekly pork production was up 7.9% from the prior week because of the holiday, but 0.6% larger than the same week in 2012. Average carcass weights were estimated to be a pound lighter than year ago. Pork production YTD is 0.9% below last year at this time.  The pork carcass cutout value was down 0.9% for the week despite a 1.2% rise in pork belly prices (Thurs/Thurs basis).

 

 Market Watch

 

The main event for the week will be the USDA WASDE supply/demand update on Wednesday. More changes are expected for the global numbers than for the US, but it is fresh insight ahead of the key June 28 Planted Acreage and Grain Stocks reports. USDA will also update Crop Production for winter wheat. Cattle traders will begin the week reacting to any surprise futures positions resulting from the expiration of June cattle options on the 7th. Index funds will be rolling long positions out of July and into September or December for the first found days of the week. This can occasionally affect the spreads, but is well advertised and to a degree those who would be most impacted have insulated themselves through options and pre-roll futures adjustments.

 

The market will also be interested in the weekly Crop Progress report on Monday evening, and in the weekly export Inspections report on Monday morning. That will be the final inspections total for old crop wheat, although not the official annual exports. That figure comes from the Commerce Department in July and will be adopted by USDA after release. USDA will also post weekly Export Sales on Thursday, with traders curious whether the 4% plunge in the US dollar index over a two week period has stirred up more buying interest.

 

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.  Visit our web site at https://www.bruglermarketing.com or call 402-697-3623 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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