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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.

Cool But Not Cold

Sep 25, 2009

 

Market Watch with Alan Brugler

September 25, 2009

 

Cool But Not Cold

 

Corn traders produced a 16 cent per bushel gain for the week, despite small weekly export sales numbers for the previous week and some relief about the lack of a September freeze. Temperatures continue to be cooler than normal over a chunk of the United States, but the forecasts do not show them being cold enough in vulnerable spots to negatively affect production. Nevertheless, December contract posted the highest weekly close since July 31. Lack of farmer selling has been limiting hedge pressure and supporting cash basis bids. This is not totally unexpected, given the lateness of the crop and prices that are down considerably from where they were in June.

 

Wheat had a promising rally going, right up until Friday. Shorts were being chased out, and weekly export sales numbers improved. However, longs headed for the exits on Friday, preferring not to risk their gains over the weekend and into Wednesday morning’s USDA reports. While the more complete surveys aren’t out yet, USDA is expected to raise spring wheat and durum production estimates on Wednesday, and those bushels are likely to go straight to carryover in the October WASDE report. Ability to export wheat is still a question mark, with first quarter shipments under 200 million bushels.

 

The soy complex was lower, with soybeans down 1.6%. Soy oil saw daily export sales announcements totaling more than 200,000 MT, but still couldn’t rally. The Census report confirmed that US inventory on September 1 was still over 3 billion pounds, and that is weighing on prices. Soy meal saw substantial competition from DDGs, but has been supported by a slow crush pace that is limiting tonnage. Census reported monthly crush of 119.83 million bushels. July had been 128.77 million bushels.

 

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

 

Market Watch

 

 

 

 

Weekly

Weekly

 

09/04/09

09/11/09

09/18/09

09/25/09

Change

% Change

December Corn

$3.06

$3.20

$3.18

$3.34

0.16

5.03%

December CBOT Wheat

$4.72

$4.67

$4.57

$4.50

-0.08

-1.64%

December KCBT Wheat

$4.90

$4.78

$4.72

$4.69

-0.03

-0.58%

December MGEX Wheat

$4.99

$4.94

$4.97

$4.87

-0.10

-2.01%

November Soybeans

$9.22

$9.03

$9.41

$9.26

-0.15

-1.59%

October Soy Meal

$287.20

$280.50

$290.00

$289.20

-0.80

-0.28%

October Soy Oil

$33.83

$33.52

$34.68

$34.04

-0.64

-1.85%

October Live Cattle

$86.65

$87.22

$85.55

$86.05

0.50

0.58%

October Feeder Cattle

$98.55

$99.33

$97.03

$96.60

-0.43

-0.44%

October Lean Hogs

$50.50

$52.47

$50.80

$49.95

-0.85

-1.67%

October Cotton

$57.53

$59.31

$63.18

$60.60

-2.58

-4.08%

December Oats

$2.08

$2.08

$2.13

$2.19

0.06

2.82%

November Rice

$14.16

$13.52

$13.47

$13.09

-0.38

-2.82%

 

Cotton futures felt bullish right up until Friday, when a test of the August high at 65.47 found nobody home. After the market stalled at 65.39, bulls headed for the sidelines and provided a massive correction. Fundamentally, not a whole lot changed. Weekly export sales were small, and Turkey was a bigger buyer than China (which is on vacation this coming week). Cold temps in the Lubbock area fueled talk of bolls shutting down cellulose production, but that’s tough to quantify in terms of yield loss. It was also a fairly small area. Some cotton was also likely lost to flooding in the Southeast. The US dollar rallied at mid-week, but was lower on Friday.

 

Cattle futures bulls survived several selling attempts to post a net gain of 50 cents for the week. Cash cattle trade was mostly $84.50 on Friday, about UNCH from the previous week. Packers can’t be happy about that, with wholesale prices down by more than a dollar again on Friday. The choice cutout fell to the lowest price since July 17, putting some pressure on margins.

 

Hogs were lower on the week, mostly because we couldn’t support the wholesale prices. The Cold Storage report showed some progress, but pork belly inventory was larger than expected. Export sales data always lags, but the market acts like we had some good interest in buying hams and then lost it after those orders were filled. Friday afternoon’s Hogs & Pigs report was bullish on paper, with All Hogs, Kept for Breeding and Market Hogs all smaller than the trade average guesses. The breeding herd was down to 96.9% of year ago, confirming some sow liquidation and/or diversion of gilts into the market hog category.

 

Market Watch:  Hog traders will start out reacting to the Hogs and Pigs report. Grain traders will begin Monday by adapting to any surprise exercises from the 9/25 expiration of October grain options. Monday night’s Crop Progress report will again be of interest as we gauge how quickly the risk of frost and freeze losses is diminishing. USDA will provide some fresh grist for the mill on Wednesday morning with the annual Small Grains Production report and the quarterly Grain Stocks report. The latter report will define the final ending stocks for 2008/09 corn and soybeans.

 

There is a risk of loss in futures and options trading.  Past performance is not necessarily indicative of future results.  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 content, or visit the web site @ www.bruglermktg.com.

© 2009 Brugler Marketing & Management, LLC

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COMMENTS (4 Comments)

Anonymous
30 degree reading this morning.
9:00 AM Sep 29th
 
Anonymous
0% mature rating for ND corn. We are no different than most crop behind due to cool summer. Sorry frost will not help our yields. I realize we dont count in the corn production number, I think that is your point.
9:02 PM Sep 28th
 

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