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April 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.

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

Still Moving But In Both Directions

Apr 10, 2009

 

           

 

Market Watch with Alan Brugler

April 10, 2009

 

Still Moving, But in Both Directions

 

Soybeans continued their march higher, as did the soybean meal and oil. Tightening world stocks estimates are a big part of this, with USDA reducing the Argentine crop estimate to 39 MMT and leaving Brazil UNCH at 57 MMT. The cut in projected US ending stocks to 165 million bushels on Thursday morning was also supportive to the beans. Forecasts for China were UNCH for beans, meal and oil. Argentine producers appear to be focused on harvest and some negotiations, but not blocking traffic. World buyers are still leery of disruptions and long waits at port, giving the US and Brazil more business than they might otherwise see.

 

Wheat futures prices closed lower at all three exchanges this past week, with Chicago down more than 8% from the previous week. It was a classic case of “buy the rumor, sell the fact”. The trade had gone home the previous Friday looking for freeze damage in HRW and SRW growing areas. Temps definitely got low enough to do some damage, but most of the estimates were in the 100 million bushel range. With a carryover of 696 million bushels from the previous year, the market isn’t nearly as excitable as it was after the 2007 April freeze. There are other variables, of course, such as a much less mature SRW crop than in 2007, with less damage potential. USDA’s first crop condition ratings of the year showed HRW already worse than last year before the freeze hit, but SRW in the best shape since 2006 for that date. Ratings are expected to be lower this week.

 

Corn futures were down 3.7% for the week. Prices were technically overbought heading into the week, and the weakness in wheat also tugged at corn since they compete to a degree in feed rations. USDA dropped the projected ending stocks to 1.7 billion bushels, but this was well anticipated by the trade because the March 31 Grain Stocks report showed smaller than expected supplies on hand. USDA bumped up feed & residual use, but cut 10 million bushels out of industrial use.

 

Cattle and Feeder Cattle saw a nice boost for the week, as cash cattle worked their way higher due to the combined effects of seasonally tight numbers and a modest improvement in the wholesale prices for both choice and select beef. We’re still seeing historically high carcass weights, which mean we’re getting more beef than you’d expect given the level of slaughter.

 

Lean Hog futures had another tough week, because the cash hog market wasn’t rallying to meet up with the soon to expire April futures. In a cash settled contract, convergence is expected, and futures had to drop toward the cash. There was some improvement in the pork cutout values at mid-week to help support cash hogs, and packers were planning some Saturday slaughter activity. 
Below is a table showing the net weekly changes and 4 week history of selected agricultural futures contracts:

 

Market Watch

 

 

 

 

 

 

 

 

 

 

 

Weekly

Weekly

 

03/20/09

03/27/09

04/03/09

04/09/09

Change

% Change

May Corn

$3.97

$3.87

$4.05

$3.90

0.14

-3.68%

May CBOT Wheat

$5.50

$5.07

$5.64

$5.22

0.42

-8.18%

May KCBT Wheat

$6.03

$5.50

$6.08

$5.71

0.37

-6.73%

May MGEX Wheat

$6.36

$6.08

$6.72

$6.45

0.27

-4.44%

May Soybeans

$9.41

$9.17

$9.96

$10.07

0.12

1.25%

May Soy Meal

$300.50

$283.80

$306.00

$311.20

5.20

1.83%

May Soy Oil

$32.25

$32.42

$35.32

$35.42

0.10

0.31%

April Live Cattle

$85.20

$84.32

$86.05

$87.52

1.47

1.74%

April Feeder Cattle

$93.78

$93.12

$95.40

$98.15

2.75

2.95%

April Lean Hogs

$61.75

$60.47

$60.27

$58.00

2.27

-3.75%

May Cotton

$44.08

$43.34

$47.60

$48.41

0.81

1.87%

May Oats

$2.00

$1.96

$1.99

$1.96

0.03

-1.53%

May Rice

$12.83

$12.38

$12.78

$13.40

0.62

4.97%

 

 

Cotton futures were higher for the second week in a row. Cold and wet weather in the Southeast was slowing early planting, while other areas were thought vulnerable to the temptation to plant a few extra soybeans because of the rally in that commodity and favorable planting conditions for beans. Export business has picked up a little, and USDA raised projected shipments for the year by 500,000 bales on Thursday. The ending stocks were trimmed to a more manageable 6.7 million bales, which served to support the rally on Thursday.

 

Market Watch:  Traders will return from the Easter break with a renewed focus on planting weather, and an ongoing interest in the behavior of the US dollar. Most commodities have been trading inversely to the Dollar Index. USDA’s Monday night crop progress reports will be scrutinized for signs of delay, but it is still early unless you are in southern TX, Louisiana, etc.  In the Midwest, fertilizer application is the main issue, since not as much was put on last fall as would normally be the case. Report wise, USDA will issue a Cattle on Feed report on Friday the 17th, along with Milk Production. Prior to that we’ll get NOPA Soybean Crush, expected on Tuesday morning. April hog futures will expire on Wednesday the 15th.

 

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

Fresh Money and Motivation

Apr 03, 2009

 

          

 

Market Watch Summary with Alan Brugler

April 3, 2009

 

Fresh Money and Motive

 

The commodity markets had fresh money and fresh motivations this week, and the price changes reflect that. USDA started the ball rolling on Tuesday, with the much anticipated Planting Intentions and Grain Stocks reports. The latter were price supportive for the grains because the inventory levels were below the average trade guesses. On the Intentions report, corn was above the average guess but the soybean acreage reported was 3 million acres below the pre-report guesses. That fueled a 50 cent rally in November beans on Tuesday, and the market was able to sustain the rally for the rest of the week. One key question from the intentions report is what happened to the missing acres. Adding up the acreage for what USDA calls Principal Crops resulted in 317.1 million acres. That was down 7.8 million from last year, and basically takes us back to 2006 cropping levels despite futures prices that are still significantly higher than in 2006. There are a lot of theories about where the ground went, or whether it was just under reported. The market is clearly making it a mission to ensure that some of those "retired" acres are actually planted.

 

Corn futures closed slightly higher on the day and about 20 cents higher on the week. The trend on the Commercial short positions since corn futures made the low the week of March 10th indicates Commercials have been purchasing cash on increasing prices and hedging their purchases. Higher livestock prices are helpful to corn prices down the road by preserving demand. Cold and wet weather in the western Corn Belt continues to delay planting.

 

Soybeans continued higher closing at the high end of the weekly range along with Soy Meal and Bean Oil. The net change for the week was a whopping 79 cents, as the trade tried to adjust to the smaller than expected increase in 2009 planting intentions. The March 1 soybean stocks were also smaller than anticipated. The CFTC Commitment of Traders report released this afternoon showed an increase in Fund long positions of 34% since the Soybean marked a low in the recent price range the week of March 10th. The lower dollar benefitted prices today.

 

Wheat futures prices were higher at all three exchanges, and Chicago wheat led all of the tracked ag commodities in % gain for the week with an 11% advance. Concerns over freezing temperatures in the southwestern Plains and winter storms in the northern Plains contributed to higher wheat prices, but so did fresh fund money coming into the market for the second quarter. Gulf basis was slightly lower to unchanged.

Cotton futures closed above the price range established earlier this week bringing the futures price more in line with the drop in the LDP rate. Freezing temperatures are forecasted for some areas of the cotton belt keeping ground temperatures less than ideal for planting. Cotton open interest for April 2, 2009 was 142,256 contracts and volume was 16,528. The weekly Commitment of Traders report indicates commercials are getting product purchased on the rally that developed from March 9th

 

Cattle and Feeder Cattle futures prices closed strong on Friday with a weaker dollar and the stock market showing a strong weekly close. Choice beef was 135.58 down .22 and Select was 134.94 down .24. This next wave of winter storms could temporarily slow down weight gains. Cash trade was very slow to develop, with some packers on reduced schedules and tight ready numbers.

Lean Hog futures closed much better on the day making most of their gains in the last hour of trade. Monthly pork values indicate the spread between the wholesale value and the Gross Farm Value of pork is narrowing with Wholesale prices decreasing and the Gross Farm Value increasing. Carlot pork carcass prices this afternoon are quoted at 56.94 up 81, Loins were 71.69 up 2.08, Butts were 63.76 up 1.09, Picnics were 37.73 up 1.98. Ribs were 101.11 up 16, Hams were 38.45 down 25 and Bellies were 74.85 up 4

 

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

 

Market Watch

 

 

 

 

 

Weekly

Weekly

 

03/13/09

03/20/09

03/27/09

04/03/09

Change

% Change

May Corn

$3.89

$3.97

$3.87

$4.05

0.18

4.52%

May CBOT Wheat

$5.18

$5.50

$5.07

$5.64

0.56

11.09%

May KCBT Wheat

$5.70

$6.03

$5.50

$6.08

0.58

10.45%

May MGEX Wheat

$6.09

$6.36

$6.08

$6.72

0.64

10.49%

May Soybeans

$8.77

$9.41

$9.17

$9.96

0.79

8.56%

May Soy Meal

$276.70

$300.50

$283.80

$306.00

22.20

7.82%

May Soy Oil

$30.17

$32.25

$32.42

$35.32

2.90

8.95%

April Live Cattle

$84.65

$85.20

$84.32

$86.05

1.73

2.05%

April Feeder Cattle

$92.05

$93.78

$93.12

$95.40

2.28

2.45%

April Lean Hogs

$63.20

$61.75

$60.47

$60.27

0.20

-0.33%

May Cotton

$42.83

$44.08

$43.34

$47.60

4.26

9.83%

May Oats

$1.86

$2.00

$1.96

$1.99

0.03

1.79%

May Rice

$11.63

$12.83

$12.38

$12.78

0.40

3.27%

 

Market Watch:  The cattle market will begin the week reacting to the expiration of the April cattle options and the resulting new futures positions. Export inspections will be out on Monday, but the main USDA report will be the WASDE reports on Thursday the 9th. USDA will use that report to reflect the numbers reported in the Grain Stocks report on March 31, with likely adjustments to feed and residual use. Friday will mark the expiration of the May cotton options. The CME is also closed on Friday, with trading scheduled to resume electronically the evening of the 12th.

 

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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