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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.

Full Head of Steam

Apr 17, 2009

 

           

 

Market Watch Summary with Alan Brugler

April 17, 2009

 

Full Head of Steam

 

 

The Soybean complex was the bull leader for the week. Nearby futures were up 44 cents/bushel, and have been rising steadily since before the Intentions and Grain Stocks reports at the end of March. They could not have posted that large gain without help from product value. Meal was up 4.95% for the week, and soy oil gained 3.8%. There is a lot of fundamental news floating around. Soy oil is benefitting from a surge in palm oil, which has been aggressively imported by India due to a window where they don’t have the usual import tariffs. Malaysian production is also down a bit due to a tree replanting program. Chinese interest has been steady, and they’ve paid the higher prices.

 

Meal futures have surged despite normal sized inventory in the United States. A short fall in Argentine output appears to be behind the run up, with end users caught short and scrambling. Open interest has been rising in the May meal futures contract despite having deliveries only two weeks away. The buyers either want to take deliveries, or as speculators are convinced that there won’t be any. In addition to the product driven news, soybeans have seen large scale buying by China, thought to be due to the shrinking estimates for Argentine production and also a bit of a squeeze as the government reserve building program has soaked up a lot of the domestically available beans in China.  Gains were limited at least a little bit because of the potential for these higher prices to attract more US planted acreage than the 76 million projected on March 31.

 

Corn prices ground lower, with the down days larger than the up days. Net loss for the week was 14 cents per bushel. Warmer and drier long term weather forecasts promised more rapid planting progress in the week ahead, while some of the drier areas received welcome moisture over the weekend. Weekly export sales were within the range of trade expectations, but that was the problem. There wasn’t anything bullish to sink your teeth into.

 

Wheat futures were choppy, and had little to shows for the week. CHI and KC May had gains of less than 2/10th of a cent per bushel, while MPLS was down 1.36%. Drier weather offered hope of some spring wheat planting progress, and rain in TX and OK improved the wheat that wasn’t seriously hurt by the freeze. Some areas in OK will definitely need to be torn up once the insurance adjuster has OK’d it, with milo the most likely acreage winner. Export sales continue to be minimal, as the US is still not competitive into the Mediterranean. The price gap has narrowed vs. Russian and Ukrainian offerings, however.

 

Cotton futures rose 3.16% for the week, and also have a 4 week winning streak going for the bulls. USDA’s cut in projected ending stocks the prior week continued to be supported by market activity. The trade once again under estimated the weekly export sales, fueling some buying interest after the report came out on Thursday. Planting weather is a background concern, with wetness in some areas and not enough moisture for good germination in others.

 

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

 

Market Watch

 

 

 

 

 

 

 

 

 

 

 

Weekly

Weekly

 

03/27/09

04/03/09

04/09/09

04/17/09

Change

% Change

May Corn

$3.87

$4.05

$3.90

$3.76

0.14

-3.65%

May CBOT Wheat

$5.07

$5.64

$5.22

$5.23

0.01

0.19%

May KCBT Wheat

$5.50

$6.08

$5.71

$5.72

0.01

0.18%

May MGEX Wheat

$6.08

$6.72

$6.45

$6.36

0.09

-1.36%

May Soybeans

$9.17

$9.96

$10.07

$10.51

0.44

4.37%

May Soy Meal

$283.80

$306.00

$311.20

$326.60

15.40

4.95%

May Soy Oil

$32.42

$35.32

$35.42

$36.77

1.35

3.81%

April Live Cattle

$84.32

$86.05

$87.52

$88.33

0.81

0.92%

April Feeder Cattle

$93.12

$95.40

$98.15

$99.18

1.02

1.04%

June Lean Hogs

$71.40

$73.65

$74.28

$73.63

0.65

-0.88%

May Cotton

$43.34

$47.60

$48.41

$49.94

1.53

3.16%

May Oats

$1.96

$1.99

$1.96

$1.89

0.07

-3.57%

May Rice

$12.38

$12.78

$13.40

$12.84

0.56

-4.18%

  

Cattle futures were up a modest 81 cents for the week, despite a major advance in the value of the beef. The choice cutout was up 7.3% in a week. That fueled a rally of $2 in the cash cattle for the week and futures followed along to a degree. The Cattle on Feed report on Friday night showed that the lots are now current, with March marketings at 99.24% of last year. March placements were up from year ago at 103.8%, with a big 11% year over year rise in placements of steers and heifers over 800 pounds.

 

Hogs lost 65 cents for the week.   Product value was up, and so were the cash hogs. The futures slippage was due to the big premium futures have been carrying to cash. The Board was dreaming more bullish thoughts than the cash hogs could deliver in the daylight, so a little of the futures premium was removed. According to Special Research Reports, the average cash hog rally from January to June has been $8.73 over the past 20 years, with a 5 year move of $11.48. These are live weight quotes, they would be 35% larger on a lean (futures) basis.

 

Market Watch:  The cattle market will begin the week reacting to the Cattle on Feed report from the 17th.  On the 21st USDA will release the monthly Cold Storage report, with Livestock Slaughter scheduled for the 24th. Grain traders will monitor the weekly Crop Progress and Condition reports on Monday night closely for delays. Any deterioration in condition ratings would also get attention. On Thursday, Census will issue the monthly Crush report and the Cotton Consumption report. Friday will also mark the expiration of the May options for grain futures and T-notes.

 

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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