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December 2009 Archive for Market Watch

RSS By: Alan Brugler, AgWeb.com

Alan Brugler is the President of Brugler Marketing & Management, and the primary analyst and advisor.

End of the Aughts

Dec 31, 2009

 

Market Watch with Alan Brugler

December 31, 2009

 

End of the Aughts

 

Experience tells me it is hard to accomplish some of my “oughts”, as in “I ought to give more compliments to my wife” or “I ought to change those tires before all the tread is gone”. It is easier to end the “aughts”, as in the decade of years with zeros in them since we passed the “double aught” known as the year 2000 or Y2K. With this column, we end the decade of the aughts and replace it with the decade of the teens, eventually. After we get used to saying “twenty ten” or something like that.

 

Some, perhaps most, will be glad that the aughts are over. After all, this was the decade of the World Trade Towers, and Hurricane Katrina, and the worst recession in decades. There were some real milestones reached by commodities during the aughts, however, and we pause to note a couple of them. First and foremost, we finally traded beans in the teens! This elusive price had been talked about in the 70’s, and hoped for in the 80’s and 90’s. It took the index fund and hedge fund led rally that began in 2006 to get the deed done. January 14, 2008 was the first day when front month soybean futures topped the $13 mark. Not to be forgotten, Minneapolis wheat hit $24.30 in February 2008, a feat for which we are still paying the price in terms of excess world production. And, of course, crude oil got into the $150 neighborhood, which most of us would prefer not to experience again.

 

Coming back to the present, all of the commodities in our basket with the exception of rice were higher for the week. The biggest gainer was the oats market, up 6.54%. Since this is a family column, we won’t discuss that market further. Soy oil came in second at 4.91%, trailed closely by soybean meal and soybeans. The soy complex continues to see strong demand from China for veg oil, and that in turn demands soybeans. Brazil reported some limited new crop supplies being harvested in the north, but for the moment the US has the bulk of the world market to itself. We know that large South American crop is going to put pressure on prices eventually, but the tipping point has yet to be reached, or at least confirmed.

 

Corn futures posted a second weekly gain, another 6 cents per bushel. For the year, corn was up 1.8% despite what appears to be the second or third largest crop in history. Net weekly export sales for the week were 772,510 MT. Commitments for the marketing year to date are 25.01 MMT, compared to 21.04 MMT a year ago. That’s an 18.8% improvement, even if most of the extra business has yet to be shipped.

 

Wheat futures also posted gains of 2.5-3.2% for the week. Traders were puzzled by the rally, given US ending stocks that have grown as large as those at the beginning of the aughts, and world ending stocks/use ratios that are looser than they have been for several years. From the broad perspective the market did what it needed to do. For the year as a whole, December to December, the Chicago wheat was down 11.3%, KC was down 14.9%, and MPLS was down 16.8%.

 

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

 

           

Market Watch

 

 

 

 

Weekly

Weekly

12/11/09

12/18/09

12/24/09

12/31/09

Change

% Change

March Corn

$4.05

$3.98

$4.09

$4.15

0.06

1.47%

March CBOT Wheat

$5.38

$5.28

$5.25

$5.42

0.17

3.24%

March KCBT Wheat

$5.28

$5.24

$5.22

$5.36

0.15

2.83%

March MGEX Wheat

$5.43

$5.35

$5.32

$5.45

0.14

2.54%

January Soybeans

$10.35

$10.12

$10.00

$10.40

0.40

4.03%

January Soy Meal

$306.50

$305.40

$301.40

$313.90

12.50

4.15%

January Soy Oil

$39.57

$38.33

$38.46

$40.35

1.89

4.91%

December Live Cattle

$80.15

$82.05

$83.07

$86.00

2.93

3.53%

January Feeder Cattle

$91.57

$94.72

$94.62

$95.87

1.25

1.32%

February Lean Hogs

$65.42

$65.12

$63.80

$65.60

1.80

2.82%

March Cotton

$74.31

$75.28

$73.43

$75.60

2.17

2.96%

March Oats

$2.59

$2.60

$2.60

$2.77

0.17

6.54%

March Rice

$15.94

$15.23

$14.97

$14.89

-0.08

-0.53%

 

Cotton futures gained 2.96% for the week. Weekly export sales were stronger than anticipated and hopeful data on retail sales and employment supported ideas of stronger demand in 2010. Tightening ending stocks are also fueling talk of cotton re-entering the acreage war in 2010. Wheat has surrendered, but ending stocks are low enough for both corn and soybeans to have a vested interest in keeping cotton from grabbing any major chunks of ground.

 

 Cattle futures posted a third consecutive higher weekly close. December futures expired with a bang, jumping to $86 ahead of expiration on the back of higher cash cattle trade for the week. The wholesale market was a reluctant participant, and was down 29 cents on Friday after also being down on Thursday. Placed against data suggest a couple more weeks of fairly abundant cattle supplies, and then a tightening for the rest of the quarter. USDA is projecting 1Q10 beef production to be at a 4 year low.

 

Hogs kept pace with the cattle, up 2.82%. It was another short kill week, due to the New Years holiday. Despite much gloom and doom and red ink, a loss of several months of  export sales due to H1N1, and a consumer who was retrenching, nearby hog futures were 7.8% higher on December 31 than they were a year earlier. That’s a bigger advance than those in meal and corn, so there are some reasons to be cautiously optimistic heading into 2010. Wednesday’s Hogs & Pigs report showed a little less herd reduction than had been hoped for, but the herd in fact has been downsized in both the US and Canada, and if consumer incomes pick up in 2010 there will be a need for even higher prices to ensure expansion.

 

Market Watch:  There was no trading activity on Friday, due to the New Years holiday. There’s not a lot on the USDA docket for the first week of January, just the regular weekly export inspections and export sales reports, and broiler hatchery numbers. That’s the calm before the storm, with the mega-report day of January 12 looming just over the horizon. Traders will also be looking for signs of fresh money being allocated to commodities in 2010. Index fund re-allocation buying could be seen in corn, soybeans, wheat, et al, but those moves have been widely disseminated. The wildcard is fresh money coming in (or not) through conventional CTA’s, pools and hedge funds. Delivery mechanics will also influence the soybean complex and rice.

 


 

 

There is a risk of loss in futures and options trading.  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, or of any particular risk management technique. 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 subscription content.

 

Brugler Marketing & Management, LLC

Twas Another Night Before Christmas

Dec 24, 2009

 

Market Watch with Alan Brugler

December 24, 2009

 

Twas Another Night Before Christmas

 

It was sort of a stealth rally, but corn futures posted the biggest advance among our ag commodities with a gain of 2.7% for the week. With near record corn inventory in the bin, producers all over the US said “Thank You, Santa” for the rally. USDA confirmed that harvest has advanced to 95% of the acreage, with much of the rest in snow pack or soon to be. An estimated 650 million bushels is still “field stored”. On a bullish note, weekly Export Sales through December 17 were the largest of the marketing year.

 

Wheat futures continued to leak lower, as weekly export sales notched for last week were the smallest of the marketing year. When you are staring at a 900 million bushel carryout, that’s the last thing you want to see if you are a bull. Prices would probably be under more pressure if the trade weren’t expecting asset allocation buying in wheat after the first of the year.

 

Soybeans lost 13 cents per bushel for the week after losing 23 cents the previous week and 8 cents the week before. That’s what you call a down trend. Profit taking ahead of the holidays was clearly an element, with open interest in the January contract dropping sharply ahead of options expiration and first notice day on the 31st. After a rally of nearly $2 on the continuation chart, beans have been fading for most of December. A comfort level regarding South American production prospects is undoubtedly keeping buyers conservative, too. Weekly export sales were again quite strong, with China still the biggest buyer. Census crush for November was also record large, with correspondingly record large soybean meal stocks. Soy oil inventories built up, but the poorest soy oil yield in about 8 years kept it from being worse.

 

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

 

 

 

         

Market Watch

 

 

 

 

Weekly

Weekly

12/04/09

12/11/09

12/18/09

12/24/09

Change

% Change

March Corn

$3.89

$4.05

$3.98

$4.09

0.11

2.70%

March CBOT Wheat

$5.58

$5.38

$5.28

$5.25

-0.04

-0.66%

March KCBT Wheat

$5.49

$5.28

$5.24

$5.22

-0.03

-0.52%

March MGEX Wheat

$5.63

$5.43

$5.35

$5.32

-0.04

-0.70%

January Soybeans

$10.43

$10.35

$10.12

$10.00

-0.13

-1.24%

January Soy Meal

$310.70

$306.50

$305.40

$301.40

-4.00

-1.31%

January Soy Oil

$40.13

$39.57

$38.33

$38.46

0.13

0.34%

December Live Cattle

$81.00

$80.15

$82.05

$83.07

1.02

1.24%

January Feeder Cattle

$93.35

$91.57

$94.72

$94.62

-0.10

-0.11%

February Lean Hogs

$66.75

$65.42

$65.12

$63.80

-1.32

-2.03%

March Cotton

$73.82

$74.31

$75.28

$73.43

-1.85

-2.46%

March Oats

$2.57

$2.59

$2.60

$2.60

0.00

-0.10%

January Rice

$15.72

$15.66

$14.95

$14.68

-0.27

-1.81%

 

Cotton futures stalled out and gave back 185 points for a 2.46% loss. This again appeared to be profit taking ahead of year end, and on light volume. Weekly export sales were on the upper end of trade estimates. Cotton continued to swing with the travels of the US dollar index. The DX was down on Thursday and Friday, which kept the liquidation from being worse.

 

 Cattle futures posted a second consecutive higher weekly close. They were up 1.24%. The previous Friday’s Cattle on Feed report provided a little bullish lift, and cash cattle responded with gains of $1-2 for the week. The extensive winter storms expected for Christmas supported the market because they tend to interfere with weight gains and occasionally result in some death losses. Wholesale prices didn’t do a whole lot.

 

Hogs were down 2.03% for the week, as pork cutout values backed off with the stronger dollar. Hams dropped $4.28 for the week as the retailers looked past the holiday period and focused on other features for January. With most plants dark on Friday, packers didn’t need as many hogs, but will want to replace throughput this week. The monthly Cold Storage report showed total meat in the cooler down more than 17% from last year, which is supportive to all types.

 

Market Watch:  January futures options expired on Thursday, so there could be some minor position adjustments on Monday, depending on if anyone ended up with a surprise position. Net changes were pretty minor in the pre-holiday trade. This will be another short week, with a number of traders just plain gone. USDA will have the normal Export Inspections report on Monday and Export Sales on Thursday. The main USDA report for the week will be the quarterly Hogs & Pigs report to be released on Wednesday afternoon. December cattle futures will expire on Thursday, which is also New Years Eve. There will be no trading in the US markets on Friday, due to the New Year’s holiday.  Thursday will also be first notice day for January ethanol and soybean complex futures deliveries.

 

There is a risk of loss in futures and options trading.  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, or of any particular risk management technique. 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 subscription content.

 

Brugler Marketing & Management, LLC

A Little Santa Red Ink

Dec 18, 2009

 

Market Watch with Alan Brugler

December 18, 2009

 

A Little Santa Red Ink Before Christmas

 

Corn futures were up early in the week, but dropped hard on Thursday in a “buying vacuum” and were unable to recover much on Friday. USDA reported stronger than expected weekly export sales for the reporting week ending December 10, but that wasn’t much of a market factor. The US dollar was rising, and ethanol prices were sliding despite strength in crude oil. There was also a tendency for traders to head for the sidelines, intending to re-enter after the first of the year.  On Friday, a private firm projected 2010 acreage would grow to 89.5 million from 86.35 million this year. Some had expected an even larger number, although current price relationships favor soybeans in some parts of the country.

 

Wheat futures were also down .6% to 1.8% for the week. The bear story is well established in wheat, with USDA projecting 900 million bushels in ending stocks for May 31. That’s roughly 40% of a typical US crop already in the bin. Export sales popped up to Iraq, Japan and others, but the volume of bookings is still too light to make a dent in the pile. Argentine and Australian harvest activity is proceeding pretty much on schedule, and some Australian business with Japan has been recorded.

 

Soybeans lost 23 cents per bushel for the week after losing 8 cents the previous week. A 3.1% drop in soybean oil prices for the week took 13 cents per bushel out of bean value, and meal was also down $1.10/ton for the week. China was very active in the export market, with USDA making sale announcements under the daily reporting system on 4 different days. Some of the business was for 2010/11, which is interesting given the presumed bearish influence of the oncoming South American harvest.

 

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

 

Market Watch

 

 

 

 

Weekly

Weekly

11/27/09

12/04/09

12/11/09

12/18/09

Change

% Change

March Corn

$4.14

$3.89

$4.05

$3.98

-0.07

-1.67%

March CBOT Wheat

$5.70

$5.58

$5.38

$5.28

-0.09

-1.77%

March KCBT Wheat

$5.59

$5.49

$5.28

$5.24

-0.03

-0.62%

March MGEX Wheat

$5.71

$5.63

$5.43

$5.35

-0.07

-1.34%

January Soybeans

$10.53

$10.43

$10.35

$10.12

-0.23

-2.22%

January Soy Meal

$314.50

$310.70

$306.50

$305.40

-1.10

-0.36%

January Soy Oil

$40.52

$40.13

$39.57

$38.33

-1.24

-3.13%

December Live Cattle

$83.20

$81.00

$80.15

$82.05

1.90

2.37%

January Feeder Cattle

$92.50

$93.35

$91.57

$94.72

3.15

3.44%

February Lean Hogs

$67.32

$66.75

$65.42

$65.12

-0.30

-0.46%

March Cotton

$73.84

$73.82

$74.31

$75.28

0.97

1.31%

March Oats

$2.69

$2.57

$2.59

$2.60

0.01

0.48%

January Rice

$15.40

$15.72

$15.66

$14.95

-0.72

-4.57%

Cotton futures continued to advance, tacking on another 1.31% for the week. Improving economic indicators are keeping the longs interested in owning cotton in anticipation of a pickup in consumer buying of clothing. Retailers are trying to avoid heavy discounting of clothing ahead of Christmas, keeping a much tighter rein on inventory than in 2008. Early estimates for 2010 have upland cotton acreage rising 10%, but producers suggest that not all areas can grow it for 75 cents and be consistently above breakeven.

 

Hogs continued to move higher on the weekly continuation charts and the cash charts, but the February contract itself was down for the third week in a row and giving up a little of the premium it had to the cash hog market. Pork cutout prices drifted 20 cents lower for the week, quoted at $69.89. Hams dropped about $10 as Christmas holiday pipeline filling ended and the industry looked ahead to January retail business. Pork loin prices were up $6.80, however.

 

Live Cattle finally pulled out of their dive, posting a seasonal gain of $1.90 for the week. Cash cattle prices were quoted $1-2 higher for the week. Wholesale prices were higher, with choice quoted $2.04 higher on the week. Select boxes were $.90 higher for the week. Friday’s Cattle on Feed report was a little bullish on paper, with placements during November smaller than the average trade guess, and November slaughter above estimates. The bottom line is a feedlot population on December 1 that was 99.4% of last year.

 

Market Watch:  Monday is the first day of Winter, although most of the Midwest has already looked that way for a couple weeks! USDA is done with crop progress reports, but will still update us on Export Inspections at 10 am CST on Monday morning. The monthly USDA Cold Storage report is due to be released on Tuesday afternoon. USDA weekly export sales will be out Thursday morning. Janury grain options also expire on Thursday. The CBOT and CME stop trading at 12:00 CST on Christmas Eve, with the usual exceptions for mini-contracts, options, etc. All US markets are closed on Friday for Christmas, with trading resuming electronically on Sunday night.

 

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

Getting a Divorce?

Dec 11, 2009

 

Market Watch with Alan Brugler

December 11, 2009

 

Getting A Divorce?

 

The US dollar has been inversely (or perversely) related to a number of asset classes this fall. Typically the dollar dropped and commodities like grain, gold, crude oil and the stock market indices would rally. And vice versa. As we’ve approached year end, the relationships seem to be weakening a bit, trumped by yearend tax considerations, vacations for the wealthier traders, and some adjustments in expectations if in fact the economy is growing at a faster pace. We probably won’t know for a month or more whether this is just a trial separation or a divorce.

 

Corn futures were down early in the week, but staged a classic “sell the rumor, buy the fact” rally on Thursday and Friday after the USDA report on Thursday morning. The USDA raised projected US ending stocks by 50 million bushels due to slow exports, but projected world coarse grain ending stocks were tightened to 176.52 MMT, and are seen dropping more than 6% from year ago.

 

Wheat futures were unable to follow corn higher, losing 3.26 to 3.74% for the week. USDA hiked projected 2010 ending stocks to 900 million bushels from 885 million bushels in the November report. Projected exports were not cut despite lagging the anticipated pace. However, USDA trimmed domestic food use because of higher flour yields at the mills. World ending stocks also continue to creep higher, and are now estimated at 190.91 MMT as of May 31, 2010.

 

Soybeans lost 8 cents per bushel for the week. Crush margins were pressured, with both soybean meal and bean oil lower. USDA raised projected US exports by another 15 million bushels, and cut projected August ending stocks to 255 million bushels. Futures were lower on some profit taking type selling, rolling of the January index fund positions to March, and the squeeze on crush margins. USDA disappointed bulls by leaving Argentine production UNCH at 53 MMT, and disappointed bears by not raising the Brazilian estimate to be in line with 64-64.7 MMT figures trotted out by several Brazilian government and private entities ahead of the USDA report.

 

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

     

 

     

Market Watch

 

 

 

 

Weekly

Weekly

11/20/09

11/27/09

12/04/09

12/11/09

Change

% Change

December Corn

$3.91

$3.97

$3.74

$3.89

0.16

4.15%

December CBOT Wheat

$5.60

$5.49

$5.37

$5.19

-0.18

-3.26%

December KCBT Wheat

$5.57

$5.43

$5.36

$5.17

-0.19

-3.50%

December MGEX Wheat

$5.64

$5.54

$5.48

$5.28

-0.21

-3.74%

January Soybeans

$10.46

$10.53

$10.43

$10.35

-0.08

-0.77%

December Soy Meal

$317.10

$326.50

$320.90

$314.50

-6.40

-1.99%

December Soy Oil

$39.71

$40.10

$39.76

$39.22

-0.54

-1.36%

December Live Cattle

$83.95

$83.20

$81.00

$80.15

-0.85

-1.05%

January Feeder Cattle

$92.68

$92.50

$93.35

$91.57

-1.78

-1.91%

December Lean Hogs

$57.60

$59.02

$61.15

$64.00

2.85

4.66%

December Cotton

$70.41

$69.74

$70.21

$74.31

4.10

5.84%

December Oats

$2.58

$2.55

$2.43

$2.48

0.05

1.95%

January Rice

$15.17

$15.40

$15.72

$15.66

-0.05

-0.35%

 

Cotton futures rose sharply this week, with the largest percentage gains of anything on the list that we track. USDA raised projected US production slightly, but lower projected US ending stocks via a more ambitious export forecast.

 

Hogs continued to rally, adding another 4.66% as they headed into expiration on Monday. Pork cutout values have risen sharply, not just the expected holiday hams but the loins, butts and other primal as well. Export business is expected to be a part of the equation, but of course the reporting lags. Census pork exports for October (the freshest official data) were down 5.9% vs. last year, but up from September.

 

Live Cattle have been in a dive, and didn’t find the bottom of the pool. The market attention shifted back to ham and turkey for Christmas and there were no indications of a suddenly renewed interest in prime rib at restaurants.  The cash cattle market is wrestling with a rise in ready cattle numbers compared to November, and packers also appeared to be slow to buy them due to an interest in propping up wholesale prices. The cold and snowy weather in the Plains interfered with cattle movement, and might has slowed rates of gain slightly. Because of the number of cattle available, it was difficult to translate that potential into higher prices. Cash cattle were down $3 for the week at $80 in the south and mostly $79 in the north. Official October exports were down 2.6% from October 2008. South Korea was down 60% year/year despite a relaxing of the old BSE era restrictions.

 

Market Watch:  The December grain and hog futures contracts expire on Monday. NOPA is also expected to release its monthly soybean crush estimate for November on Monday.  The Fed is expected to meet on Tuesday, with the trade currently expecting no change in the target interest rates.  USDA will issue a special Crop Progress report on Monday night to track the much delayed corn and cotton harvest progress. Normally, they are done with those reports for the year.  The main USDA reports for the week are on Friday afternoon, with Cattle on Feed and Milk Production.

 

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.

© 2009 Brugler Marketing & Management, LLC

Good News for the Economy, Bad News for Grains

Dec 04, 2009

 

Market Watch Summary with Alan Brugler & Kyung Ra

December 4, 2009

 

Good News for the Economy, Bad News for Grains

 

Corn futures were down sharply this week after trading in a fairly narrow range over the past three week. The largest daily rally in the US dollar index since June caused unwinding of some carry trades in the currency market, and the stronger dollar drove a little profit taking by the grain longs. The cash market has also been sending out some distress signals recently, with too much corn being dumped into the elevator and freight system at one time due to moisture and quality problems. That showed up in basis bids that were 12 to 16 cents weaker than a year ago at this time. Weekly export sales were also on the low side after a promising jump the week ahead of Thanksgiving. Some of the selling was also likely position squaring ahead of the December USDA reports and maybe even a little year end book squaring.

 

Wheat futures were down 1 to 2% at the three exchanges, with Chicago the weakest as it was the most exposed to the currency trade crowd. Export sales continue to run below the weekly pace needed to meet USDA projections for the year, and Egypt once again passed on US origin wheat at its buying tender. The trade broadly expects USDA to find that up to 1 million acres of SRW was not planted due to the fall weather, but the Winter Wheat Acreage report won’t be out until January. Stats Canada found more spring wheat in Canada than had been expected, which hurt MPLS a little.

 

Soybeans fared better than the feed grains, slipping less than 1% for the week. There were a number of cross currents at work, including China’s indication that they would phase out the crusher subsidies on beans if prices got too far above the reserve price. This was an effective cap on the market. Lower product prices in the US also limited crusher interest a little. Brazil is more than 80% planted, with Mato Grosso 100% done. Argentina has more to go, but better soil moisture due to some El Nino rains. Bulls are talking about conditions being too wet in parts of southern Brazil, but time will tell. The main support to the market is the need to originate LOTS of bushels from producers to load on the boats destined for China, and the need for US crushers to intercept some of those beans to use here.

 

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

 

Market Watch

 

 

 

 

Weekly

Weekly

 

11/13/09

11/20/09

11/27/09

12/04/09

Change

% Change

December Corn

$3.91

$3.91

$3.97

$3.74

-0.235

-5.92%

December CBOT Wheat

$5.39

$5.60

$5.49

$5.37

-0.120

-2.19%

December KCBT Wheat

$5.41

$5.57

$5.43

$5.36

-0.067

-1.24%

December MGEX Wheat

$5.56

$5.64

$5.54

$5.48

-0.057

-1.04%

January Soybeans

$9.87

$10.46

$10.53

$10.43

-0.100

-0.95%

December Soy Meal

$301.10

$317.10

$326.50

$320.90

-5.600

-1.72%

December Soy Oil

$38.61

$39.71

$40.10

$39.76

-0.340

-0.85%

December Live Cattle

$83.32

$83.95

$83.20

$81.00

-2.200

-2.64%

January Feeder Cattle

$91.83

$92.68

$92.50

$93.35

0.850

0.92%

December Lean Hogs

$55.00

$57.60

$59.02

$61.15

2.130

3.61%

December Cotton

$67.10

$70.41

$69.74

$70.21

0.470

0.67%

December Oats

$2.27

$2.58

$2.55

$2.43

-0.118

-4.61%

January Rice

$14.86

$15.17

$15.40

$15.72

0.315

2.05%

 

Cotton futures were actually up 0.67% for the week, showing no ill effects of the US dollar rally. The bulls were greatly aided by a strong weekly export sales report for the last week of November. Ongoing concerns over yield quality and crop supply in US, China and India due to weather lent support to futures for the week.  A bullish report by the ICAC on Tuesday was seen as supportive.  The International Cotton Advisory forecast 2009/10 world cotton production 5.13% down compared to the previous year due to weaker crop yields, while world consumption is forecasted at a 2.59% increase, reflecting a 6.52% increase in global imports. These figures would bring world cotton ending stocks at a 13.01% decrease from 2008/09.

 

Hogs were up 3.61% for the week, the biggest gainer on our list this week. Wholesale prices rose smartly on Thursday, with ham interest most notable.  For the week the average wholesale pork cutout price rose $3.27 a 5.29% increase.  Wholesale cutout value for hams in Friday afternoon trading gained $12.38, a 20.7% increase from Monday’s value.  Since Monday, cash hogs sold for the week $2.47 higher, a 4.38% increase by Friday in direct market trading. China’s announcement that it has lifted its ban on US pork exports on Monday and talk of increased hams exports this week added to the supportive tone to lean hog futures.

 

Live Cattle posted the biggest weekly loss in quite a while. Futures appeared to be in a death spiral of long liquidation ahead of the December options expiration on Friday. Options traders appeared to be aiming for a “pin” of the $80 strike price, but couldn’t get it done. Wholesale boxed beef prices were sharply lower for the week, where cutout values from Monday to Friday showed for Choice a 3.11% loss and Select had a 2.30% decline, as the market attention shifted back to ham and turkey for Christmas and there were few indications of a suddenly renewed interest in prime rib at restaurants.  The cash cattle market is wrestling with a rise in ready cattle numbers compared to November, and packers also appeared to be slow to buy them due to an interest in propping up wholesale prices.

 

Market Watch:  Next Monday weekly export inspections will be released and is the first day of delivery notices against the December live cattle contracts.  Tuesday will be the last trading day for December cotton futures.  The USDA on Thursday will release its monthly WASDE and Crop production reports, and its weekly export sales report. No changes are expected for US corn or soybean yields, as USDA usually defers that to the January report. With more unharvested corn than usual, they have every incentive to do so again in 2009.

 

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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