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Market Watch

RSS By: Alan Brugler,

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

The Patient is Not Dead

Jun 11, 2010


Market Watch with Mikki Allen and Sean Privitera

June 11, 2010

The Patient is Not Dead

This week was a little calmer, even though there were some wild price spikes due to short covering. The Euro-drama mellowed out a bit and left us looking at ag fundamentals like the WASDE report which came out Thursday and was very friendly for corn due to increased ethanol use. The report was neutral for Soy and wheat.

Corn futures finished the week on the plus side, up 10 cents for the week, thanks to a decrease in ending stocks for both 2009/10 and 2010/11 marketing years. USDA increased ethanol and food, seed and industrial usage and decreased feed and residual which lowered ending stocks for 2009/10 to 1.603 billion bushels on the June report down 135 million bushels from the May report. USDA also increased domestic usage for 2010/11 by 100 million bushels for ethanol and 110 million bushels for food, seed and industrial bringing the 2010/11 ending stocks projections to 1.573 billion bushels with a 13.37 billion crop. Export sales were descent with old crop sales at 1,018,838 MT and new crop sales at 143,512 MT. An unknown destination is claiming 85,400 MT of the new crop bushels. The majority of the corn producing areas of the country have been getting rain with some areas wishing they weren’t. Above normal rainfall is forecast for the Northern Plains for the next 6 to 14 days, through June 24th.

Wheat futures finished the week on the plus side, 5 cents higher for the week on the CBOT, 2 cents higher on the KC and 9 cents higher on the MGEX.  Most of the up move occurred post crop report. USDA is projecting a 20 million bushel decrease in ending stocks by raising export estimates for 2009/10 by 20 million bushels. USDA raised 2010/11 wheat production by 24 million bushels which was offset by 20 million bushels of usage and the decreased beginning stocks dropping ending stocks from the May report by 6 million bushels. Above normal rainfall is predicted for the Northern Plains over the next couple of weeks but the spring wheat has been planted. Unusually heavy rains have delayed Canadian wheat and barley planting and wheat acreage could fall as much as 12.5 million acres. A normal Canadian crop would be 60 million acres. Areas most affected are Saskatchewan and Alberta. The U.S. oat futures were up 33 cents for the week.

Soybeans were up 11 cents for the week with some concerns for planting delays because of the weather in the areas are behind. Missouri and Ohio have had the roughest time getting the beans in the ground due to excessive moisture. The USDA monthly WASDE was rather insignificant for soybeans with the corn getting all the attention. Domestic crushing increased usage by 5 million bushels, which in turn dropped ending stocks for 2009/10 and beginning stocks for 2010/11. Nothing changed from the May report for the 2010/11 crop except for beginning stocks which reduced the carryout by 5 million bushels to 360 million, almost double this year’s ending stocks. USDA raised world soybean ending stocks for the last three years by .62 MMT for 2008/09, 1.71 MMT for 2009/10 and .90 MMT for 2010/11 from the May report. China was back in the market this week for U.S. soybeans and U.S. soybean oil. Private exporters reported to the USDA the sale of 240 TMT of soybeans for 2010/11 delivery and 40 TMT of soybean oil for 2009/10 delivery.

Cotton started the week off with a huge swing on Monday with a close near the highs of the day which set the pace for the rest of the week. This week, cotton gained 5.81%, even after a 97 point drop on Friday. The total range for the week from low to high was 819 points. Cotton planting was ahead of average with a high rating. The monthly USDA WASDE reported 2010/2011 World cotton ending stocks at 49.59 million bales, down from 50.13 on the May report. U.S. ending stocks came in at 2.8 million bales down .20 million bales from the May report. USDA’s estimate for 2009/10 ending stocks on this mornings report was 2.9 million bales. Certificated stocks had a total decrease of over 284k bales in the first 4 days of the week.

Hog futures were down 1.62% for the week. Trading was slow to moderate with very light retail demand and moderate offerings, and processing cuts experiences moderate demand and light offerings. The monthly WASDE report released this week showed a decrease in second and third quarter hog production from the May report, dropping annual hog production to 22,122 million pounds from 22,237 million pounds and putting 2010 ending stocks at 500 million pounds.

Cattle futures prices dropped again this week, down 1.62%. Boxed beef got killed: choice was down $7.28 or 4.54% and select was down $7.17 or 4.7%. Moderate demand and moderate to heavy offerings Friday for Boxed beef. September Cattle Crush closed at $107.94, October at $107.01, and November at $127.21. Beef exports were 6,400 MT and shipments were 10,400 MT mostly to Mexico, Japan and South Korea. U.S. beef production increased 10 million pounds for the third quarter of 2010 on this mornings monthly WASDE report and decreased 110 million pounds for the fourth quarter from the May report.


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Market Watch: What to look out for next week: NOPA crush, crop progress, CPI, and Cattle on Feed.

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