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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.

Flashy Start, Bearish Ending

Nov 06, 2009

 

Market Watch and January Soybean Tech Talk with Alan Brugler

November 6, 2009

 

Flashy Start, Bearish Ending

 

Corn was up 32 ¾ cents for the week at one point on Wednesday morning, and then proceeded to give it all back by Friday night. It closed near the low of the day on Friday, leaving only a 0.27% gain for the week. Hedge pressure was part of the story, as harvest weather improved. Weekly export sales numbers were disappointing given the drop in futures prices the week before. The US dollar also failed to provide any oomph, showing only a fractional net change for the week.

 

Wheat showed once again that it is still mostly a follower. It rose with corn, and dropped with corn. There were a couple bouts of wheat/corn spreading by those betting on further corn weakness as harvest drags on. That allowed wheat to post slightly larger gains for the week than the corn did. Smaller Australian crop estimates were mostly ignored, but Egypt’s purchase of EU and Russian wheat instead of US origin definitely hurt prices late in the week. US product at that tender was about 25 cents/bushel (including freight) higher than the competition. While it is likely too late to successfully plant winter wheat in some areas, the warmer and drier weather pattern likely in encouraging those who can make money with $5 wheat to put a few more fields in and hope for the best.

 

Soybean futures were weaker overall than the feed grains. November futures sank 3.07% for the week, with surprising deliveries against the futures contract encouraging some speculative longs to get the heck out of Dodge.  Sliding soybean meal prices encouraged that line of thought. Crush activity is picking up as the plants are able to source more beans. Livestock demand is a little more questionable, with chick placements still running 2% below year ago. Soy oil was firmer, aided by light South American competition and Chinese restrictions on canola imports. Brazil’s pending increase in biodiesel use is also seen as supportive to US exports. Palm oil stocks are also a little snug right now, although expected to expand in 2010 along with production.

 

 

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

 

Market Watch

 

 

 

 

Weekly

Weekly

 

10/16/09

10/23/09

10/30/09

11/06/09

Change

% Change

December Corn

$3.72

$3.98

$3.66

$3.67

0.01

0.27%

December CBOT Wheat

$4.99

$5.48

$4.94

$4.97

0.03

0.61%

December KCBT Wheat

$5.11

$5.50

$4.99

$5.01

0.02

0.40%

December MGEX Wheat

$5.26

$5.61

$5.13

$5.18

0.05

1.07%

November Soybeans

$9.78

$10.07

$9.78

$9.48

-0.30

-3.07%

December Soy Meal

$294.70

$303.30

$297.00

$288.80

-8.20

-2.76%

December Soy Oil

$36.94

$37.94

$36.40

$36.77

0.37

1.02%

December Live Cattle

$85.80

$87.40

$85.68

$85.00

-0.67

-0.79%

November Feeder Cattle

$94.60

$95.48

$94.80

$94.65

-0.15

-0.16%

December Lean Hogs

$54.10

$53.02

$56.70

$55.70

-1.00

-1.76%

December Cotton

$68.21

$67.38

$67.64

$66.54

-1.10

-1.63%

December Oats

$2.52

$2.50

$2.55

$2.54

-0.01

-0.20%

November Rice

$13.66

$13.43

$14.36

$15.16

0.80

5.54%

 

Cotton futures weren’t as weak as soybeans, but with little help from the US dollar they couldn’t get any traction. Weekly export sales were much larger than expected going into the Thursday report, but few new bulls were to be found. The average trade guess for Tuesday’s US cotton production is 12.7 million bales, with a reduction expected due to losses caused by extremely wet weather in the Mid-South and Delta during October. Better weather at the moment perhaps provided a little weaker tone.

 

Cattle futures drifted lower. Consumer demand is iffy, particularly for higher end cuts. Friday’s 10.2% unemployment number raised fresh concerns about consumer demand, although there were some higher earning employment categories that showed job growth. Beef production year to date is down 3.1%, and was down an estimated 3.7% for the week. Carcass weights continue to be elevated, however, offsetting reduced cattle numbers. The estimated weights are 14 pounds above last year.

 

Hogs had their first down week in a while. The excitement about potential Chinese buying faded, as USDA still doesn’t report pork export sales on a weekly basis and thus any data to back up such sales is 6 weeks delayed. Wholesale prices were firm for most of the week, aided by the export potential and also by seasonal pipeline filling for Thanksgiving hams and loins. They did retreat by $1.03 on Friday, with the cutout ending at $58.63 on weakness in hams and pork bellies.

 

 

Market Watch:  Traders will still be keenly interested in the USDA Crop Progress data on Monday night, anticipating improved harvest activity, but also expecting corn harvest to still be way behind the average pace. The main USDA reports for the week will  be on Tuesday morning, however, with Crop Production and the monthly Supply/Demand adjustments. USDA changes to crop yield forecasts will get the most attention. USDA is closed on Wednesday for Veteran’s Day. That will delay the weekly Export Sales report to Friday morning.  Friday will also be the last trading day for November soybeans, canola (Winnipeg) and rice.


 

Tech Talk: January Soybeans

 

 

January soybean futures have sell signals from MACD and from stochastics. They also had a shooting star candlestick on 10/23, a potential reversal signal, and were rejected by the down trending resistance line from the June and August highs. Along with the feed grains, prices dropped under the influence of the rising US dollar this week. However, they hugged the 18-day moving average and posted higher lows on both Thursday and Friday. We have to lean bearish given the sell signals on the chart. If the US dollar is stronger this coming week, beans are likely to head toward the lower Bollinger Band at $9.37. Should the dollar resume its declining ways, beans would have an opportunity to rally to the down trending resistance line around $10.18.

 

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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