Hopping Around

Published on: 15:28PM Apr 17, 2014


Market Watch with Alan Brugler

April 17, 2014

Hopping Around 

Easter is upon us, with a 3-day market weekend. Appropriate to the Easter bunny theme, wheat futures have been hopping all over the place after plunging down the rabbit hole for the first 10 days of the month.  They were the bull leader this week in terms of % gain.  May rice apparently has too much competition from chocolate eggs and marshmallow peeps, losing 1.9% to turn in the worst performance for the week.

Corn futures lost 4 cents per bushel this week, or 0.75%. USDA reported a rise in weekly export sales for the week ending April 10, putting them at 794,500 MT vs. 716,700 MT the previous week. That is 96% of the newly raised USDA annual projection. It would typically be 84% of the full year figure by now. Sales are still strong. Three more cargos initially sold to China were diverted to other countries. Given the large Chinese internal stocks, we would expect a slow resolution to the MIR-162 issue, and continued switches as it becomes apparent that the policy will not change in time to allow the shipments to be delivered. Daily average ethanol production surged to the highest level since December, at 937,000 bpd. Despite the larger production, ethanol stocks declined 400,000 barrels to 16 million. Ethanol imports reverted to zero for the week.

Soybean futures were up sharply for the week, posting a gain of 3.5% or 51 cents per bushel.  Meal was up 3.26%, while soy oil rallied 3.1%. Old crop beans hit a high of $15.31 3/4 on Thursday. The monthly NOPA crush report on Tuesday showed about 7 million bushels more beans used than had been expected. This is significant when we are expected to be down to pipeline supplies this summer (135 million). The weekly US soybean export sales announced on Thursday rose to 419,900 MT from only 289,500 MT the prior week. Total US export Commitments for 2013/14 are now at 104% of the USDA forecast for the year. The 5 year average pace for this week is 95%.
















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Wheat futures were 4.42 to 5.35% higher this week, thanks to hard freezes in both HRW and SRW country. The worsening of drought conditions in TX and KS this week was also a supportive factor. Weekly wheat export sales reported this week were 797,000 MT, up from 390,900 MT last week. US export sales commitments are 96% of the USDA projection for full year shipments. They would typically be at 100% by now, with the marketing year ending May 31. The EU approved another 421,000 MT of wheat for export, taking the total for the year to roughly to 24.3 MMT.  The extra 7-8 MMT of shipments vs. last year have crowded out some US sales that might otherwise have been made.  Crop condition ratings declined for HRW, with the Brugler500 HRW index dropping to 279 from 282. It was worse last year, at 262.

Cotton futures were up 1.3% this week. USDA put weekly export sales for cotton last week at 239,800 running bales, up from 109,600 RB last week. Total commitments as % of total exports are now at 93% compared to 94% last year and the 5 year average of 98%. The Fed Beige Book released on April 7 showed an increase in economic activity in most of the Fed regions, generally perceived as helpful to consumer spending and textile consumption.

Cattle futures were up 1.26% this week. Cash cattle trade was $146 in the south on Wednesday, with a limited number sold at $240 in the north. Packer bids in the north were mostly $237. April futures were being supported by their discount to the cash market. Week to date slaughter (through Thursday) at 458,000 head was down from 460,000 the prior week. Wholesale prices posted a modest rebound against their retreat from the March 18 high. Choice boxes were up 0.39% this week, while Select gained 0.53% on a Thursday/Thursday basis. Week to date estimated slaughter at 458,000 head was down 2,000 from last week and 24,000 below year ago. USDA weekly beef export sales were the largest of the marketing year at 21,900 MT. They typically expand at this time of year, but are showing very little price rationing damage.  

April Lean Hog futures were up 2.97% this week. April futures expired below the CME Index, but that 2-day moving average came down to their expiration level two days later. The pork carcass cutout lost 3.53% this week on a Thursday/Thursday basis. Week to date slaughter through Thursday totaled 1.621 million head, down from 1.627 million the prior week and 1.672 million a year ago for the equivalent Thursday. USDA weekly export sales for pork responded to the drop in carcass prices, with USDA reporting 8,600 MT on Thursday vs. 4,200 MT the prior week.

Market Watch

USDA will issue the usual Export Inspections report on Monday morning, and a weekly Crop Progress report on Monday evening. USDA Cold Storage report will be released on Tuesday, with keen interest in whether or to what degree packers and wholesalers were stockpiling inventory against summer shortages. USDA weekly export sales are due out on Thursday morning. The monthly USDA Cattle on Feed report is scheduled for release on Friday afternoon.  Friday will also mark the expiration of the May grain options.

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