Sep 18, 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.

Rest for the Weary

Aug 29, 2014

 Brugler

Market Watch with Alan Brugler

August 29, 2014

Rest for the Weary

 

There are a number of competing claims as to who originated the idea for a Labor Day holiday. It is clear that some local versions were in place as early as 1882 and that it became a federal holiday in 1894. The day is dedicated to, as Wikipedia puts it "the social and economic achievents of workers". In practice, it is an informal holiday to mark the end of summer, a day off for US workers, and a national shopping day. Don’t overlook the latter, given the importance of consumer retail purchases to US GDP. For the ag markets, it is for most a pre-harvest ritual (yes, I know some of you in the south have been combining since July). I would argue Labor Day is also a chance for a little break from the relentless downward mental pressure that bumper crops and declining prices generate. There is some psychological exhaustion out there in ag land, with clinical depression symptoms in some cases such as the inability to make a decision (pull the trigger on sales), hopelessness, etc. Even if you are self employed and the cows have to be milked or the hogs have to be fed, give yourself the day off mentally. The re-charge will do you good!

Corn ended the week 1.78% below the prior Friday. Old crop export commitments total 100% of the USDA forecast for the year, but would typically be 107% heading into the last week of the marketing year.  The International Grains Council hiked projected world production 4 MMT to 973 MMT. That is still below the 982 MMT from year ago, but things continue to look less and less tight. The weekly new crop exports sales of 695,600 MT were on the low end of estimates and did little to stir up ideas about demand matching the rising production estimates.

 

8/29/2014

           

 

Commodity

 

 

 

 

Weekly

Weekly

Month

08/08/14

08/15/14

08/22/14

08/29/14

Change

% Change

Sept

Corn

$3.52

$3.66

$3.66

$3.59

($0.0650)

-1.78%

Sept

CBOT Wheat

$5.49

$5.51

$5.52

$5.50

($0.0175)

-0.32%

Sept

KCBT Wheat

$6.29

$6.19

$6.34

$6.26

($0.0725)

-1.14%

Sept

MGEX Wheat

$6.19

$6.11

$6.27

$6.15

($0.1175)

-1.87%

Sept

Soybeans

$11.14

$11.03

$11.66

$10.90

($0.7650)

-6.56%

Sept

Soybean Meal

$367.90

$388.30

$433.30

$439.50

$6.2000

1.43%

Sept

Soybean Oil

$35.52

$32.87

$32.36

$32.04

($0.3200)

-0.99%

Aug

Live Cattle

$152.55

$150.60

$151.85

$155.90

$4.0500

2.67%

Sept

Feeder Cattle

$214.73

$215.10

$210.90

$218.65

$7.7500

3.67%

Oct

Lean Hogs

$99.33

$94.95

$92.88

$98.13

$5.2500

5.65%

Oct

Cotton

$63.81

$63.60

$67.46

$67.60

$0.1400

0.21%

Sept

Oats

$3.58

$3.65

$3.84

$3.62

($0.2175)

-5.66%

Sept

Rice

$12.66

$12.91

$12.83

$12.59

($0.2400)

-1.87%

 

 Soybean futures were down 76 cents this week after gaining 64 cents per bushel the previous week. There were no registered receipts for September bean delivieries, which panicked the shorts, but then left the longs wanting to take profits ahead of the Labor Day weekend and selling into a vacuum.  Basis is strong, with one plant bidding $4 over November for immediate delivery. Apparently several plants have been unable to access the Brazilian beans USDA told us were being imported into the US this summer. US new crop export sales bookings are now more than 2 MMT larger than last year at this time. Meal export bookings are up 2.6 MMT.

 

Wheat futures all three markets lower by Friday night after midweek strength evaporated. The regular "Russians shooting in Ukraine" report propped up prices mid-week, with columns of Russian tanks along the Sea of Azov coast inside Ukraine. The willingness of the West or Far East to cut off Russian exports/imports through credit or other means is still in question. The International Grains Council revised their estimated global production sharply higher (+11 MMT) to 713 MMT. That makes it as large as last year. The upward revisions were primarily in Russia, EU and China.

October Cotton futures crawled 0.21% higher, holding onto the 6.07% for the prior week. The gain was notable given the strength of the US dollar for the week. USDA reported US export sales for the week ending August 21 totaled 264,400 RB of upland cotton and 2,900 RB of pima.  The largest buyer was China, at 92,800 RB. US export commitments (sales plus bales already shipped) are 50% of the full year forecast vs. the average of 41%.

Cattle futures were up $4.05 for the week. Wholesale beef prices were weaker this week, being dragged down by the pork market and larger weekly slaughter. Choice boxes were 1.4% lower on the week. Select boxes dropped 2.2%. Weekly estimated slaughter was 6.1% smaller than the same week in 2013. Beef production YTD is down 6.2%, with slaughter down 7%. Higher carcass weights make up the difference. Weekly beef export sales were improved from the prior week, but typically decline in the last third of the year from where they are in the spring and early summer.

Hog futures were up a stout 5.65% this week. It is a futures market, looking past current weakness in cash hogs toward tight 4th quarter meat supplies overall. Thus far in 2014, hog slaughter is off 5.2% from the same point in 2013.  Slaughter this past week was down 5.9% vs. year ago. Pork production is only down 1.4% YTD, due to substantially higher carcass weights. Carcasses are currently running 10# above year ago.  Pork carcass cutout values continued to slip this week, with the average price reported at $101.72 on Friday, a weekly loss of 1.81%.  Prices were up $1.10 on Friday. Hams were up 1.5% after a severe slide following the Russian sanctions prohibiting US imports. Bellies and picnics were lower, however. On Thursday, USDA also confirmed cancellation of more than 15 thousand MT of unshipped pork sales to Russia, all of the known outstanding business.

 Market Watch

 

The US markets will be closed on Monday for the Labor Day holiday. The usual USDA Export Inspections and Crop Progress reports will be delayed until Tuesday, with the weekly Export Sales report deferred until Friday. The latter will cover sales through August 28, and thus will not technically be a year end report even though the marketing year ends on August 31. The September serial options for Live Cattle will expire on Friday, September 4.

 

Visit our Brugler web site at http://www.bruglermarketing.com, find our iPad app "AgMarket" in the Apple 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. Past performance is not necessarily indicative of future results.

Copyright 2014 Brugler Marketing & Management, LLC

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