A Few Boats Are Floating

Published on: 18:35PM Jul 05, 2013


Market Watch with Alan Brugler and Ryan Palmer

July 5, 2013

A Few Boats Are Floating


There is a saying that "a rising tide floats all boats". If this is a rising tide for commodity markets, more than a few of the boats have leaks. For corn and wheat, Shakespeare may be more appropriate: "There is a tide in the affairs of men. Which, taken at the flood, leads on to fortune; Omitted, all the voyage of their life is bound in shallows and in miseries." The CRB index, a broad measure of a basket of commodity futures prices in dollars, dipped below the low seen in June 2012 last week, but bounced this week. The boats that are floating are crude oil and hogs.  


July Corn futures continued their bullish ways, up 5 cents per bushel this week. Such was not the case for December futures, which lost 19 ¾ cents for the week.  Western Corn Belt stocks on June 1 were the tightest since 1996, also the case for Eastern Corn Belt (OH, IN,IL) states. This should continue to be supportive to old crop cash prices, with basis doing most of the work. July futures are buoyed by a lack of corn in delivery position, forcing shorts to buy their way out of the contract. Weekly export sales announced this morning totaled a better than expected 233,100 MT of old crop and 81,400 MT of new crop. USDA also announced 120,000 MT of new crop sold to "unknown" on Friday under the daily reporting system.


Nearby July Soybeans gained 81 cents per bushel this week. Old crop stocks are tight, and the shorts remember the delivery squeeze in May. They are buying their way out. There are currently no bushels registered for delivery against July. USDA reported 120,600 MT of old crop export sales for the last week of June, a slightly bullish input. Strong soybean meal export sales continue, with old crop bookings of 116,300 MT in the latest weekly report. Both soybean and soybean meal export commitments are at 102% of the USDA projection for the marketing year. November soybean futures lost 23¾ cents for the week, with ideas that USDA will show improved crop condition ratings on Monday.  With wet conditions slowing SRW harvest, there are some questions about whether the expected record number of double crop soybean acres will be planted.


KC Wheat futures were nearly dead even to last week, gaining a mere ¼ cent.  Chicago wheat gained 7 cents, but Minneapolis lost 24 cents, or just over 3%. Weekly export sales were a solid 593,000 MT in the Friday morning report, including 239,300 MT sold to China. China also bought 360,000 MT mid-week, which will be reported in next weeks’ Export Sales report. USDA reported another 120,000 MT on Friday morning under the daily reporting system. A Memphis based consulting firm lowered projected All Wheat and Winter Wheat production estimates, projecting that HRW production will be about 50 million bushels smaller than the June USDA estimate while SRW production will likely be larger in their opinion.















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Cotton futures were 97 points higher in the July contract this week, and the later months did better than that.  December was 102 points higher on the week, and March was 145 points higher.  Net export sales of Upland cotton for last week were a very slow 34,500 RB for 2012/13 and 41,500 RB for 2013/14.  China was in for 8,000 and 5,600 respectively.  Pima sales for 2012/13 were 2,900 RB, and were 1,700 RB for the 2013/14 marketing year. WTI crude topped $102 per barrel on Wednesday due to unrest in Egypt and closed above $103 today.  The dollar took off this morning after a better than expected jobs report, and ended the day 1.238 higher.


Cattle futures were off 8 cents this week.  Feeders gained $2.35 or 1.57%.  Choice beef prices are reverting to the mean after their record levels in May. Wholesale beef prices were mixed this past week, with Choice down 0.6% and Select up 0.3% on a Friday/Friday basis. Cash cattle trade was slow all week, with light volume reported at $119 in the South. Weekly slaughter was 559,000 head, up from 575,000 for the same period last year.  Net weekly export sales for 2013 were reported by USDA at 12,400 MT, and weekly export shipments through June 27 were 15,600 MT.


Hog futures were $1.08 higher for the week.  That makes it 13 of the past 15 weeks that the front month hog futures posted a weekly gain.  The USDA weekly export sales report showed net sales of 10,000 MT of pork for 2013, down from 18,000 MT reported last week. Estimated weekly slaughter was 1.795 million head. That was up from the same week last year which had a weekly kill of 1.745 million head.  The pork carcass cutout value lost 3.61% for the week, due in part to a 12.26% drop in bellies and both ribs, loins and picnic cuts losing more than 2%.


Market Watch


We return back to a "normal" market schedule this week. There are no Fed meetings, and no federal holidays. USDA will release the usual Monday Export Inspections and Crop Progress reports. Weekly Export Sales will be on Thursday morning. The main USDA reports for the week will be on Thursday morning, with Crop Production and the monthly WASDE Supply/Demand estimates. There will be new wheat production numbers, but corn and soybean surveys don’t begin until August. WASDE will change projected production, based on the June 28 acreage update. July grain futures expire on Friday, July 12. The CFTC commitment of traders report that would have been published today, should be available by Monday afternoon.  The Brugler 2013 Marketing Semninar in Omaha is just around the corner on July 24 and 25.


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.  Visit our web site at https://www.bruglermarketing.com or call 402-697-3623 for more information on our consulting and advisory services for farm family enterprises and agribusinesses.               



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