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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.

Twas Another Night Before Christmas

Dec 24, 2009

 

Market Watch with Alan Brugler

December 24, 2009

 

Twas Another Night Before Christmas

 

It was sort of a stealth rally, but corn futures posted the biggest advance among our ag commodities with a gain of 2.7% for the week. With near record corn inventory in the bin, producers all over the US said “Thank You, Santa” for the rally. USDA confirmed that harvest has advanced to 95% of the acreage, with much of the rest in snow pack or soon to be. An estimated 650 million bushels is still “field stored”. On a bullish note, weekly Export Sales through December 17 were the largest of the marketing year.

 

Wheat futures continued to leak lower, as weekly export sales notched for last week were the smallest of the marketing year. When you are staring at a 900 million bushel carryout, that’s the last thing you want to see if you are a bull. Prices would probably be under more pressure if the trade weren’t expecting asset allocation buying in wheat after the first of the year.

 

Soybeans lost 13 cents per bushel for the week after losing 23 cents the previous week and 8 cents the week before. That’s what you call a down trend. Profit taking ahead of the holidays was clearly an element, with open interest in the January contract dropping sharply ahead of options expiration and first notice day on the 31st. After a rally of nearly $2 on the continuation chart, beans have been fading for most of December. A comfort level regarding South American production prospects is undoubtedly keeping buyers conservative, too. Weekly export sales were again quite strong, with China still the biggest buyer. Census crush for November was also record large, with correspondingly record large soybean meal stocks. Soy oil inventories built up, but the poorest soy oil yield in about 8 years kept it from being worse.

 

Below is a table showing the net weekly changes and 4 week history of selected agricultural futures:

 

 

 

         

Market Watch

 

 

 

 

Weekly

Weekly

12/04/09

12/11/09

12/18/09

12/24/09

Change

% Change

March Corn

$3.89

$4.05

$3.98

$4.09

0.11

2.70%

March CBOT Wheat

$5.58

$5.38

$5.28

$5.25

-0.04

-0.66%

March KCBT Wheat

$5.49

$5.28

$5.24

$5.22

-0.03

-0.52%

March MGEX Wheat

$5.63

$5.43

$5.35

$5.32

-0.04

-0.70%

January Soybeans

$10.43

$10.35

$10.12

$10.00

-0.13

-1.24%

January Soy Meal

$310.70

$306.50

$305.40

$301.40

-4.00

-1.31%

January Soy Oil

$40.13

$39.57

$38.33

$38.46

0.13

0.34%

December Live Cattle

$81.00

$80.15

$82.05

$83.07

1.02

1.24%

January Feeder Cattle

$93.35

$91.57

$94.72

$94.62

-0.10

-0.11%

February Lean Hogs

$66.75

$65.42

$65.12

$63.80

-1.32

-2.03%

March Cotton

$73.82

$74.31

$75.28

$73.43

-1.85

-2.46%

March Oats

$2.57

$2.59

$2.60

$2.60

0.00

-0.10%

January Rice

$15.72

$15.66

$14.95

$14.68

-0.27

-1.81%

 

Cotton futures stalled out and gave back 185 points for a 2.46% loss. This again appeared to be profit taking ahead of year end, and on light volume. Weekly export sales were on the upper end of trade estimates. Cotton continued to swing with the travels of the US dollar index. The DX was down on Thursday and Friday, which kept the liquidation from being worse.

 

 Cattle futures posted a second consecutive higher weekly close. They were up 1.24%. The previous Friday’s Cattle on Feed report provided a little bullish lift, and cash cattle responded with gains of $1-2 for the week. The extensive winter storms expected for Christmas supported the market because they tend to interfere with weight gains and occasionally result in some death losses. Wholesale prices didn’t do a whole lot.

 

Hogs were down 2.03% for the week, as pork cutout values backed off with the stronger dollar. Hams dropped $4.28 for the week as the retailers looked past the holiday period and focused on other features for January. With most plants dark on Friday, packers didn’t need as many hogs, but will want to replace throughput this week. The monthly Cold Storage report showed total meat in the cooler down more than 17% from last year, which is supportive to all types.

 

Market Watch:  January futures options expired on Thursday, so there could be some minor position adjustments on Monday, depending on if anyone ended up with a surprise position. Net changes were pretty minor in the pre-holiday trade. This will be another short week, with a number of traders just plain gone. USDA will have the normal Export Inspections report on Monday and Export Sales on Thursday. The main USDA report for the week will be the quarterly Hogs & Pigs report to be released on Wednesday afternoon. December cattle futures will expire on Thursday, which is also New Years Eve. There will be no trading in the US markets on Friday, due to the New Year’s holiday.  Thursday will also be first notice day for January ethanol and soybean complex futures deliveries.

 

There is a risk of loss in futures and options trading.  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, or of any particular risk management technique. 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 more extensive paid subscription content.

 

Brugler Marketing & Management, LLC

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