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Market Watch

RSS By: Alan Brugler, AgWeb.com

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

Another Red Friday

Jun 04, 2010

                                                                 
                                                                          

Market Watch with Mikki Allen and Sean Privitera

June 4, 2010


European markets continued to sell of on concerns about European banks. The concerns sent the euro to new four year lows and prompted buying in the U.S. dollar and gold as a safe place to park your cash for now. U.S. jobs data added to fuel to the fire with private employers hiring just 41,000 in May, down from 218,000 in April. Total jobs came in at 431,000 below the 513,000 expected by the trade.
 
Corn never really recovered from last Friday’s selloff and continued to erode throughout the week.  Export sales were way below trade estimates at 313,047 MT, nearly 400 MT below the lowest guess. The US dollar closed above the triple top on strong buying after the euro began to drop which will affect export business. Index Funds dropped just over 5,000 contracts from their net long and commercials decreased 26,000 net short corn positions from last week. Managed Money has about the same net long as the previous week at 80,743 contracts.
 
Wheat futures started selling off last Friday and continued a gradual decline throughout the week finishing down 22 cents on the Chicago wheat, 17 cents on KC and 13 cents on MGEX wheat. Harvest is underway and headed north. Protein levels are at the 12% mark so far and recent warmer temperatures have put the rust problems to the background. Egypt bought wheat from Russia and France this week. The EU granted export licenses for 298,000 MT of soft wheat, bringing the total for the marketing year to 16.4 MMT. The cheaper euro should keep EU wheat very competitive in the world market. One area of global concern is dryness in the southern parts of Buenos Aires province, accounting for near half of the country’s wheat crop which is slowing wheat sowing. The USDA forecasts the 2010/11 Argentine wheat crop at 12 MMT.
 
Soybeans were down 3 cents for the week with huge moves over the past couple of days in both directions. It looked like someone may have been short bought yesterday and purchased what they needed overnight, but then the outside markets had a major impact on commodities today. Commercials have been exiting short positions for the past six weeks and show a net 88,124 net short contracts down from 168,231 contracts. Export sales this week were disappointing and came in under the already discounted trade guesses at 148,142 MT with shipments the past two weeks also lower. China has had a backlog at their ports which has presented a problem for about three weeks.
 
Cotton continues to be volatile. This week, it lost 3.74%, with only rice a “bigger loser” for the week at 6.88%. The downside pressure was driven by a couple of different factors. The huge move up in the dollar due to continued Euro concerns, a decline in the broad stock market, planting that was well ahead of last year, and the disappointing jobs data that came out this morning. The jobs data is important to cotton because cotton has a tight connection with the economy and retail.
 
Hog futures were down 3.42% for the week, pulled down with the rest of the ag space. Lean Hog futures were under pressure from the declining stock indices and a down day Friday in the rest of the ag space. The DJIA was under pressure from disappointing jobs data creating uncertainty in the economy about a recession recovery. Midwest cash trade is mostly lower. Iowa/Minnesota carcass base price average is $76.19, $1.11 higher. Eastern cornbelt is 1.11 higher and Western cornbelt is $.97 lower. Prices are supported by a 4% decrease in pork production in 2010 compared to 2009. Pork trading is slow with light demand and moderate offerings. FI Slaughter was up 2.7% for the week ended May 22nd.
 
Cattle futures prices dropped hard, mostly on outside markets and lower beef prices. Beef prices have been declining this week and got hit hard yesterday afternoon with more downward pressure this morning. Cash trade was active Thursday with feedlots getting their asking price of $95 to $95.50 in the South. Beef exports were 7,924 MT, down about 10,000 MT from last week. Shipments were on steady with the past several weeks.
 

 
Market Watch
 
 
 
 
Weekly
Weekly
Month
05/14/10
05/21/10
05/28/10
06/04/10
Change
% Change
July
Corn
$3.63
$3.69
$3.59
$3.40
0.19
5.29%
July
CBOT Wheat
$4.72
$4.72
$4.58
$4.36
0.22
4.81%
July
KCBT Wheat
$4.91
$4.95
$4.82
$4.65
0.17
3.43%
July
MGEX Wheat
$5.13
$5.15
$5.06
$4.93
0.13
2.62%
July
Soybeans
$9.54
$9.41
$9.38
$9.35
0.03
0.29%
July
Soybean Meal
$276.80
$275.60
$273.50
$277.20
3.70
1.35%
July
Soybean Oil
$37.54
$36.96
$37.61
$36.78
0.83
2.21%
June
Live Cattle
$93.25
$91.37
$90.52
$90.95
0.43
0.48%
Aug
Feeder Cattle
$112.98
$110.15
$108.42
$108.87
0.45
0.42%
June
Lean Hogs
$83.55
$81.45
$81.85
$79.05
2.80
3.42%
July
Cotton
$80.72
$82.97
$80.05
$77.06
2.99
3.74%
July
Oats
$1.96
$1.96
$1.91
$1.94
0.03
1.57%
July
Rice
$11.81
$12.20
$11.64
$10.84
0.80
6.88%


Market Watch: The main focus of next week will be the crop production and WASDE reports out on the 10th. Export sales, and crop progress reports will be back to their normal days. The Euro and concerns about the overall economy will continue to be the spotlight next week as speculators and hedgers alike decide what their next move is. 
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