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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.

Mixed Bag

Mar 13, 2009

 

           

 

Market Watch with Alan Brugler

March 13, 2009

 

Mixed Bag

 

Corn was the bull leader this week, with most producers saying “It’s about time!” We won’t get the official USDA Grain Stocks numbers until March 31, but producers appear to be holding a large percentage of the cash corn that is out there, and have been waiting for a rally to sell. That requires demand from either the spec community or the real world end users. Corn got a little help on all fronts this week. Weekly export sales were back above 1 MMT after several slow weeks. Ethanol prices were higher due to a rally in the energy market, allowing the industrial sector to be a bidder. On Friday, two private analysts issued corn acreage estimates for 2009 that were smaller than last year’s crop. Informa was by far the most bearish, at 81.419 million acres. This was smaller than their previous estimate. Brokerage firm Allendale released a 2009 acreage estimate of 85.4 million, down about 576 thousand from last year.

 

Wheat futures were lower in CHI and MPLS, but higher in KC. The dryness in the southern Plains is getting more attention as we go further into the spring without meaningful relief. That accounted for the gain in KC, along with some potential winterkill as temps dipped into the low teens at mid-week for areas that didn’t have snow cover and may have had wheat actively growing. Weekly export sales were deemed neutral. It was actually a moral victory for the bulls to close any of the wheat contracts higher after USDA boosted projected US ending stocks from 655 million bushels to 712 million bushels while also hiking projected world ending stocks.

 

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

 

Market Watch

 

 

 

 

 

 

 

 

 

 

 

Wkly

Wkly

 

02/20/09

02/27/09

03/06/09

03/13/09

Change

% Change

March Corn

$3.50

$3.51

$3.53

$3.75

0.22

6.31%

March CHI Wht

$5.19

$5.11

$5.16

$5.07

0.10

-1.89%

March KC Wht

$5.56

$5.52

$5.68

$5.70

0.02

0.35%

March MGE Wht

$6.22

$6.26

$6.31

$6.30

0.01

-0.16%

March Soybeans

$8.63

$8.75

$8.79

$8.83

0.04

0.40%

March Soy Meal

$270.00

$275.80

$274.25

$286.00

11.75

4.28%

March Soy Oil

$30.22

$30.85

$30.76

$29.80

0.96

-3.12%

Apr Live Cattle

$83.42

$85.92

$82.45

$84.65

2.20

2.67%

March Feeder Cattle

$88.38

$92.60

$90.50

$91.95

1.45

1.60%

Apr Lean Hogs

$57.95

$60.90

$62.50

$63.20

0.70

1.12%

May Cotton

$44.10

$43.26

$41.43

$42.83

1.40

3.38%

March Oats

$1.69

$1.85

$1.74

$1.78

0.04

2.30%

March Rice

$11.99

$12.37

$12.12

$11.50

0.62

-5.12%

 

 

 

Soybeans eked out a 4 cent gain for the week, thanks mostly to the decision by Argentine farmers to go back on strike. Shipping won’t be totally shut down unless the strike and road blockages last for a while, but it becomes less predictable and importers will shift more of their business to Brazil and/or the US. Meal futures were up sharply for the week, while soy oil was down. Crude oil posted the highest weekly close since January. Informa put projected 2009 soybean plantings at a whopping 81.502 million acres, an all time record. This could easily result in a 400-500 million bushel carryout in 2010 if normal yields are achieved and farmers actually plant all of those fields to soybeans. It will take much lower prices than we are currently seeing to gin up enough demand to shrink that pile.

 

Cotton futures rallied 3.4% for the week, primarily because of the rally in the financial markets and hopes that the economic weakness had been overdone. Retail sales data for furniture and apparel wasn’t as bad for February as had been feared, and imports in general were down. Weekly export sales were 294,500 RB, up 23% from last week. China is still a marginal buyer, taking 56,500 RB.

 

Cattle were up $2.20, or 2.7%. Wholesale beef prices rallied, thanks to tightening supplies of ready cattle and evidence that perhaps consumers weren’t cutting back spending quite as much as it appeared in December and January. Lower retail fuel prices may be the missing variable in the equation, although gasoline has gone back up in recent weeks as refiners switch over to their summer blends. Cash cattle traded mostly $1 lower than the previous week, keeping a lid on the futures rally. Weekly beef export sales were the largest of the marketing year, with Mexico the biggest single buyer.

 

Hogs were up 1.1% for the week. Pork cutout values rose, and cash hogs were also higher. The CME Lean Hog index started with a major discount to the April contract, but ended the week breathing down its neck. Index fund position rolling resulted in a lot of open interest moving from April to June, but was effectively neutralized by other spread traders positioned to work in the opposite direction. Slaughter hog numbers are also dropping seasonally, which is supportive to the pork market.

 

Market Watch:  We’ll start the week with the NOPA crush report, along with the weekly export inspections report form USDA. Some state NASS offices are also reporting winter wheat crop conditions on Monday nights, but the full reporting won’t begin until April. Tuesday is St. Patrick’s Day, with some of the Chicago and NY traders making a half day of it in order to share a little green beer. Officially the exchanges are open all day, and the computers won’t care. USDA will release weekly Export Sales on Thursday morning. On Friday, USDA will give us updated Cattle on Feed and Cold Storage report data. Please hold the applause, but Friday is also the official first day of Spring!

 

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 (1 Comments)

Anonymous
The acreage number is important, but the big number that nobody can put a number on is the input usage compared to normal. Many farmers in my area of central Indiana are discussing keeping the surface for corn near the same, but lowering their input amount by 15 to 20% figuring that "Mother Nature" can influence by too hot/cold or too dry/wet more than 50% of the crop's good or bad performance. The credit issue is today and by the time the "stimulus" money makes its way into agriculture may be too late for us to change our input amounts. Right or wrong, if the money is not there then there must be reasonable shifts made to keep the banker happy. It use to be in our house "If mom's not happy, nobody is happy." But today "If the banker's not happy, then mom's not happy, and guaranteed nobody is happy."
11:22 AM Mar 16th
 

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