Published on: 15:49PM Jul 12, 2013


Market Watch with Alan Brugler

July 12, 2013



A hodgepodge is a jumbled up mixture, and that pretty much fits the weather forecasts and crop condition reports coming across our desk. It’s fairly typical for mid-July, with one of my favorite sayings being " You can get any weather forecast you want to pay for."  With money on the line, you were told it was too wet or too dry or too hot or too cool for somebody, in some time frame between now and November. The USDA corn and soybean crop condition ratings were above average for early July, while wheat ratings were, you guessed it, a hodgepodge of good and not so good.  

July Corn futures continued their bullish ways, up 17 cents per bushel for the week as they went off the board. They did give up 14 ½ cents on the last day as some very patient longs took profits ahead of expiration. December futures were up 18 cents despite losing 17 ¾ on Friday.  Weekly ethanol production increased, keeping strong basis bids in place if you are anywhere near an ethanol plant. On Thursday, USDA cut projected old crop ending stocks 40 million bushels, while also increasing expected imports. Weekly export sales also jumped to more than 1.049 MMT for the holiday shortened July 4 week. They will be over 1 MMT again this coming week, since USDA announced a 960,000 MT sale under the daily reporting system on Friday morning. US corn export commitments are now 102% of the amount needed to hit the USDA forecast for the year, which matches with the 5 year average pace.

Nearby July Soybeans lost 25 cents for the week, due to a 38 cent collapse on Friday as the contract expired. July meal futures, on the other hand, were up $9.80 on their last day. That didn’t stop August from plunging $15.10/ton on Friday. November futures were up 29 ¾ cents, with the gain on Monday and Tuesday. Both soybean and soybean meal export commitments are at 102% of the USDA projection for the marketing year. USDA left projected old crop soybean ending stocks UNCH at 125 million bushels in their Thursday WASDE report. They increased their new crop figure from 265 to 295 million bushels, expecting the cash average price to drop below $11 because of the additional supply.

KC Wheat futures shot up 5.4% this week despite a larger than expected USDA HRW production estimate on Thursday. Chicago was the beneficiary of some large export sales to China, but was also pressured by a larger production estimate from USDA. The net gain there was 20 cents per bushel. MPLS gained 4.6% as it chased KC. USDA also reported weekly export sales last week were 1,473,300 MT, almost 40% larger than trade expectations going into the report. Projected global wheat ending stocks for the 2012/13 crop were cut 5.37 MMT, and the new crop USDA estimate was down 8.87 MMT from last month. For the 2013/14 marketing year, US HRW ending stocks were put at 209 mbu, HRS ending stocks are estimated to be 181 mbu, and the total ending stocks figure is 576 mbu.

Cotton futures gained 1.7% for the week. USDA raised projected old crop ending stocks to 3.9 million bales from 3.6 million. They left new crop production and consumption unchanged, so the extra 300,000 bales all flowed to higher new crop ending stocks of 2.9 million bales. USDA also increased its projection for 2013/14 world ending stocks by about 2%.  The Indian production estimate was raised from 27 to 28 million 480lb bales.
















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Cattle futures were off 10 cents this week.  Feeders lost $1.68 or 1.1%. Choice beef prices are still reverting to the mean after their record levels in May. Wholesale beef prices were lower this past week, with Choice down 2.4%% and Select down 2.2% on a Friday/Friday basis. We did get some evidence that large export sales to Japan during May drove much of the spike to record highs in the Choice that month.  USDA reported weekly beef export sales through July 4 were 14,600 MT, which is 17.7% more than last week.  Weekly beef production jumped 14.8% from the holiday suppressed prior week, but output was still down 0.3% from the same week in 2012. YTD beef production is still 0.9% below last year.

Hog futures were down 25 cents for the week in the expiring July contract, supported by their discount to the CME Index. August futures were $2.85 lower. The USDA weekly export sales report slowed to 6,400 MT from 10,000 MT the prior week. Estimated weekly slaughter was 2.038 million head. That was up 13.9% from the holiday week, and 4% larger than the same week in 2012. Pork production YTD is now down only 0.4%. The pork carcass cutout value lost 4.25% this week after being down 3.61% the previous week. Pork loins and pork butts were hit the hardest. Cash hog prices on Friday afternoon were sharply higher in the west but lower in the east. The IA/MN average was up $2.55.  The WCB average jumped $3.09 and the ECB was 88 cents lower.

Market Watch

Traders will start the week with the monthly NOPA crush report on Monday morning. Trade estimates appear to be in the 115-120 million bushel range. Also on Monday, USDA will release the weekly Export Inspections report and the Crop Progress report. There is some sentiment for a decline in the weekly crop condition ratings for corn and soybeans, due to drier and hotter weather (and a seasonal tendency for the ratings to decline each week into the end of August.  USDA will issue the usual weekly Export Sales report on Thursday morning. The main monthly reports will be Cattle on Feed and Milk Production on Friday afternoon. Friday will also mark expiration of the monthly equity futures options.

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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