Jul 26, 2014
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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.

March Madness Persists

Mar 28, 2014

 Brugler

Market Watch with Alan Brugler

March 28, 2014

March Madness Persists

 

The ag commodity markets are having their own flavor of March Madness, with big price swings driven by meat scarcity, drought issues/sudden showers affecting winter wheat, and skittishness ahead of the March 31 USDA reports (which have often yielded big price moves). For the NCAA, the weekend resolves the Sweet Sixteen and gets us to the Final Four. For the grain and livestock markets, the 4 day period (Friday Hogs report to Monday Grain Stocks and Intentions) will have the same affect. We’ll know who the hot bullish teams are for the month of April, and who has had a "nice run and done".

Corn futures posted the highest front month close since September this week, and were up 2.71% for the week. Strong weekly corn export sales were the main driver for the old crop rally, with USDA showing 1.437 MMT of total sales for the week.  Daily average ethanol production slowed to 885,000 bpd last week, and ethanol stocks rose by 400,000 barrels amidst very high cash ethanol prices. Imports have been zero for 25 weeks in a row. East Coast firms claim to be losing 10 cents per gallon on every gallon of E10 they sell. The CFTC Commitment of Traders report on Friday afternoon confirmed that spec fund buying continues. The Managed Money reporting category added another 11,427 contracts to their net long, which reached 239,287 contracts as of March 18.

Soybean futures were up 1.97% this week, aided by a 2.74% advance in soybean meal. Soy oil lost 1.32% on top of a 3% slide the prior week. Weekly US soybean export sales slowed to 546,800 MT, with only 11,900 MT of old crop booked. There shouldn’t be any additional old crop booked, because the US doesn’t have the beans. Total US export Commitments for 2013/14 are now at 107% of the USDA forecast for the year. The trade average guess for March 1 soybean stocks is around 989 million bushels, with planted acreage expectations at 81.5-82 million. As of the close on this past Tuesday, CFTC shows managed money accounts backing off of their net long position for soybeans from the previous week by 13,243 contracts bringing their overall net long position to 185,429 contracts.

 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

03/07/14

03/14/14

03/21/14

03/28/14

Change

% Change

May

Corn

$4.89

$4.86

$4.79

$4.92

$0.13

2.71%

May

CBOT Wheat

$6.54

$6.87

$6.93

$6.96

$0.02

0.32%

May

KCBT Wheat

$7.21

$7.52

$7.71

$7.64

($0.08)

-0.97%

May

MGEX Wheat

$7.05

$7.34

$7.43

$7.40

($0.03)

-0.44%

May

Soybeans

$14.58

$13.89

$14.09

$14.37

$0.28

1.97%

May

Soybean Meal

$457.80

$444.00

$455.90

$468.40

$12.50

2.74%

May

Soybean Oil

$44.32

$42.29

$41.02

$40.48

($0.54)

-1.32%

April

Live Cattle

$143.25

$145.25

$144.00

$146.50

$2.50

1.74%

Apr

Feeder Cattle

$173.65

$177.25

$175.28

$178.35

$3.07

1.75%

April

Lean Hogs

$113.00

$119.30

$125.68

$125.58

($0.10)

-0.08%

May

Cotton

$91.27

$92.19

$93.31

$93.74

$0.43

0.46%

May

Oats

$4.46

$4.44

$4.15

$4.02

($0.13)

-3.13%

May

Rice

$15.31

$15.36

$15.43

$15.51

$0.08

0.55%

 

Wheat futures were mixed this week. Chicago was up 0.32%, KC slipped 0.97% and the MPLS May contract was off 1.3%. Weekly wheat export sales reported this week were 728,000 MT, up from 597,000 MT the previous week. That got the bulls running, even though export commitments are 94% of the USDA forecast for the year and would typically be 97% by now.  The EU approved another 810,000 MT of wheat for export, taking total commitments for the year over 24 MMT. They are allowing more corn imports and exporting wheat that would have been fed. As of the close on March 25, managed money accounts were still expanding their new net long in CBT wheat to 36,492 contracts. The big spec funds were already net long and expanded that position to 42,952 contracts in KC wheat.

Cotton futures rose another .46% this week after a 1.2% gain last week.  US Export commitments improved to 92% of the USDA forecast for the year. This occurred despite fairly slow weekly export sales of 157,600 RB of upland and pima cotton.  The weekly Commitment of Traders report showed managed money accounts building up their net long position by 4,607 contracts to take their overall net long position to 67,576 contracts.

Cattle futures were up 1.74% this week. Futures were supported by a strong cash cattle trade at $152+ and $244+ in the north. The CME is still at a big discount to that level of cash prices, with April options expiring a week from now. Wholesale prices turned weaker at midweek.  On a Friday/Friday basis, Choice boxes lost 2.4%, and Select boxes were 2.7% lower. Weekly estimated slaughter at 585,000 head was up 1.74% from the prior week but 2.17% smaller than the same week last year. USDA weekly beef export sales totaled 13,300 MT, down from 16,300 MT the prior week.

 

April Lean Hog futures lost 10 cents this week after more than three weeks in a row with gains of 5% or more.  Estimated weekly slaughter was 2.033 million head, down 9000 head from the previous week. That was down 7% from the same week in 2013 and thus supportive to pork prices. The pork carcass cutout lost 0.14% this week. USDA weekly export sales for pork were still slow at 6,600 MT. High prices do tend to slow exports and that is the goal of this entire hog rally. The Friday afternoon USDA Hogs & Pigs report showed March 1 All Hogs at  96.6% of last year. The breeding herd was 100.3% and the market hogs were 96.3%.  Of key concern, the <50# weight bracket was 96.02% below year ago and the  50-120# group was 96.71%.  The market had priced in more bullish numbers than it received in the report!

 

 Market Watch

 

Livestock traders will begin the week reacting to the USDA Hogs and Pigs report from Friday night. Grain traders will get the usual USDA Export Inspections report on Monday morning at 10 am CDT, but the focus will be clearly on the Grain Stocks and Planting Intentions reports to be released at 11 am. USDA will issue the usual weekly Export Sales report on Thursday morning. April cattle options will expire on Friday, April 4.

 

 http://www.bruglermarketing.com, find our iPad app "AgMarket" in the app store, or call 402-697-3623 for more information on our consulting and advisory services for farm family enterprises and agribusinesses.

 

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.                  

 

Copyright 2014 Brugler Marketing & Management, LLC

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