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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.

Big Bang Theory

Jun 29, 2012

Brugler

Market Watch with Alan Brugler

June 29, 2012 

Big Bang Theory 

The 4th of July may not occur until Wednesday, but the markets were shooting off fireworks all week. The grand finale was on Friday, with Gold up $50/ounce, crude oil up more than $6 per barrel and the dollar plummeting after the two day EU meeting offered some fresh solutions to the "crisis that keeps on giving".  Grains also had a stellar week if you were a bull. Corn did a nice impression of a star shell while Minneapolis wheat was more of a Black Cat.

Corn rallied a huge 13.8% this week on drought fears and a little assist from a weak dollar on Friday . Weekly export sales were still poor, but the dropping crop condition ratings had nearly all analysts pulling back from USDA’s 166 bushel per acre yield estimate, and thus tightening up projected ending stocks and raising price expectations. On Friday, USDA released the quarterly Grain Stocks report and for once the trade got it right. The USDA number was 3.148 billion bushels and the average trade guess was 3.17 billion. Planted acreage did expand from the March intentions, as it has had a strong tendency to do over the past decade. USDA found 96.405 million acres.

 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

06/08/12

06/15/12

06/22/12

06/28/12

Change

% Change

July

Corn

$5.98

$5.80

$5.91

$6.73

$0.82

13.79%

July

CBOT Wheat

$6.30

$6.10

$6.73

$7.39

$0.66

9.77%

July

KCBT Wheat

$6.56

$6.30

$6.86

$7.39

$0.52

7.65%

July

MGEX Wheat

$7.69

$7.88

$8.59

$8.64

$0.05

0.58%

July

Soybeans

$14.26

$13.76

$14.43

$15.13

$0.70

4.87%

July

Soybean Meal

$429.80

$410.10

$422.00

$436.00

$14.00

3.32%

July

Soybean Oil

$49.46

$48.44

$49.74

$52.21

$2.47

4.97%

Jun

Live Cattle

$119.88

$116.15

$116.90

$116.55

($0.35)

-0.30%

Aug

Feeder Cattle

$159.38

$156.03

$152.80

$151.45

($1.35)

-0.88%

July

Lean Hogs

$92.93

$93.03

$94.93

$96.63

$1.70

1.79%

July

Cotton

$72.90

$79.98

$74.17

$72.16

($2.01)

-2.71%

July

Oats

$3.03

$3.08

$3.29

$3.36

$0.07

2.21%

July

Rice

$14.05

$13.92

$14.47

$14.19

($0.28)

-1.94%

 

Soybeans gained 4.9% this week after being up 4.7% the prior week. Weekly soybean export sales were larger than expected for the reporting week ending June 21. Chinese buying is still there. US export commitments (shipments plus open contracts) are now larger than the USDA export estimate for the year. While it is difficult to hurt soybean yields in June, there are widespread complaints about poor stands and a lot of "cupping" of moisture stressed plants during the day. The Brugler500 index for soybean crop conditions dropped to 342 from 349. That was the lowest index reading for this week since 1988. Soy oil futures kept pace with the soybeans, while former bull leader meal lagged a bit.

Two of the three wheat markets posted nice gains for the week, led by Chicago at 9.77%. Minneapolis lagged, despite a bull friendly Planted Acreage number of 11.99 million on Friday. All Wheat acreage was smaller than expected at 56.017 million acres due to the shortfall in Other Spring and a smallish 2.203 million acres for durum. Winter wheat crop condition ratings are done for the year, with the Brugler500 Index at 346. That is most similar to 2005. USDA put June 1 ending stocks at 743 million bushels, on the high end of trade expectations.

Nearby cotton futures closed the week 2.7% lower. The big old crop purchase by China initially supported the market, but most of that purchase was cancelled in the week ending June 21. The market hates the bait or switch, or whatever that was. Export Commitments YTD had been 117% of the USDA forecast for the year. They are now down to 111%. The average trade estimate for US cotton plantings was 12.68 million acres versus 13.16 million on the March intentions report. The USDA figure was very close at 12.635 million.

Cattle futures retreated 0.3% for the week. Wholesale beef prices for the week were lower, with choice down $1.97 and select boxes down $2.00 per cwt. Estimated beef production for the week was 512.5 million pounds, down 0.7% from the equivalent week in 2011. YTD production is down 2.6% on a 4.6% drop in the number of cattle slaughtered. Limited cash cattle trade was reported at $116, but most of the key areas were still inactive on Friday afternoon as high temps interfered with operations.

Lean Hog futures gained a net $1.70 for the week in the run up to the quarterly Hogs & Pigs report. The report was fairly neutral, with All Hogs at 100.8% of year ago. The breeding herd was a little larger at 101% of last year, but farrowing intentions were only 99% of last year. Some of those sows must not be working! Market hog numbers were up 0.8% from June 2011. Wholesale prices dropped a sharp 5.34% for the week, after breaking $100 for the first time since October last week. Loins and hams lost 10% of their value in a week. Ribs were also lower as July 4 demand at the wholesale level was completed. Estimated pork production this past week was up 2% from the prior week, typical for this time of year. Production was still up 3.9% from the same week in 2011, however, and pork tonnage YTD is still 2% larger than at the same point a year ago.

Market Watch: It will be a chopped up week, with the 4th of July holiday in the US falling on a Wednesday this year. Some traders will take 2 vacation days and make it a 5 day holiday, others will just enjoy the mid-week break. Futures trading will halt early on Tuesday, and not resume again until Thursday morning. We’ll have the regular USDA Crop Progress and Export Inspections reports on Monday. Weekly export Sales will be delayed until Friday by the mid-week holiday. July futures deliveries are underway. July serial options for Live Cattle will expire on Friday. Weather forecasts will be monitored closely throughout the week.

 

There is a risk of loss in futures and options trading.  Such trading is not appropriate for all individuals. 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. 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 individualized subscription and consulting services. Visit our web site at https://www.bruglermarketing.com for more information on our consulting and advisory services for farm family enterprises and agribusinesses.

 

 Copyright 2012 Brugler Marketing & Management, LLC

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