More of the Same

Published on: 14:48PM Jun 07, 2013


Market Watch with Alan Brugler

June 7, 2013

 More of the Same

The weather was still too dry in the Plains and WCB, and too wet in states along the Missouri River. Cattle prices were still under pressure, and hog prices were still rising. It was more of the same. The one big change was in the value of the US dollar, which dropped sharply. In theory that raises prices of commodities in dollar terms, and facilitates export sales to countries whose currencies gained at the dollar's expense.

Corn futures rallied 4 cents per bushel this week, a 0.64% gain. That makes 4 up weeks in a row, even if progress is glacial. Ethanol plant margins are positive. Weekly ethanol production rose to a daily average of 885,000 bpd, the largest since June 2012. Corn use was about 95 million bushels for the week, depending on your assumed product yield. Corn export interest was poor, less than half of the trade estimate going into the report. However, we don’t think the trade had made an allowance for the Memorial Day holiday. Planting is still not completed. It should be around 95-96% on Sunday. The largest area of concern is the Dakotas, SE MN, Eastern IA, western IL and WI. There will definitely be a number of producers taking Prevented Planting in northern IA and SE MN, based on client conversations this week.  


Soybeans gained another 18 cents per bushel, and are up 79 cents in 3 week. Weekly soybean export sales were about as expected at 638,300 MT. Old crop bookings were stronger than expected at 48,400 MT. Soybean meal export sales activity continues strong, with 271,300 MT booked in the most recent reporting week. Meal commitments are now 102% (typically only 90% by now) of the USDA forecast for the year, with soybean commitments at 100%.  The strong export sales pace for meal is raising concerns about availability of old crop beans for crushing in July and August. Some South American beans may be available if logistics improve, but protein levels on Argentine beans appear to be below normal and thus unattractive for import if your plant needs to sell 48 pro meal.
















% Change




 $     6.57

 $     6.62





CBOT Wheat


 $     6.98

 $     7.06





KCBT Wheat


 $     7.46

 $     7.51





MGEX Wheat


 $     8.06

 $     8.20







 $   14.76

 $   15.10





Soybean Meal


 $ 428.20

 $ 447.20





Soybean Oil


 $   49.24

 $   48.38





Live Cattle


 $ 120.58

 $ 121.30





Feeder Cattle


 $ 144.55

 $ 144.33





Lean Hogs


 $   94.88

 $   95.63







 $   81.53

 $   79.36







 $     3.65

 $     3.74







 $   15.72

 $   15.30





Wheat futures were lower on all three exchanges, with Chicago down 1.31% and MPLS down only a fraction of a cent to again lead the market. US weekly export sales were a solid 631,700 MT, with rollovers of 33,200 MT out of old crop. MPLS was supported by ongoing wet weather. The last 5-10% of the crop may be too late to safely assume a yield if planted. Winter wheat heading is also running behind the average pace.


Cotton surged 537 points for the week after losing 217 points the previous week. The US dollar dropped more than 4% from the May 23 high to the low this week. That made cotton cheaper in terms of importer currencies. US export sales last week were excellent at 322,600 RB of upland. Total US export commitments are now 102% of the USDA forecast for the year. The 5 year average for this date is 106% (some sales are always carried over into the next marketing year). The marketing year ends July 31.


Cattle futures lost $1.18 per cwt this week.  Choice beef prices were weaker in the post-Memorial Day period. Wholesale beef prices were weaker, with Choice down 2.38% and Select down 2.27% on a Thursday/Thursday basis. There have been scattered cash cattle sales at $122, which would be $2 lower than last week, but feedlots know that numbers are tightening and packer margins are still good. There is some resistance to the lower bids. US beef production YTD is 1.1% smaller than last year. Weekly slaughter was down 2.47% vs. 2012. Estimated carcass weight is 1# below last year’s actual of 788#.


Hog futures were up $.75 for the week, a continuation of a month long rally. Weekly export sales were poor at 6,600 MT after a jump to 15,100 MT the week before Memorial Day. Estimated weekly slaughter was 2.018 million head. That was up 8.1% from the previous holiday week, and 0.6% larger than last year. Weekly pork production was up 7.9% from the prior week because of the holiday, but 0.6% larger than the same week in 2012. Average carcass weights were estimated to be a pound lighter than year ago. Pork production YTD is 0.9% below last year at this time.  The pork carcass cutout value was down 0.9% for the week despite a 1.2% rise in pork belly prices (Thurs/Thurs basis).


 Market Watch


The main event for the week will be the USDA WASDE supply/demand update on Wednesday. More changes are expected for the global numbers than for the US, but it is fresh insight ahead of the key June 28 Planted Acreage and Grain Stocks reports. USDA will also update Crop Production for winter wheat. Cattle traders will begin the week reacting to any surprise futures positions resulting from the expiration of June cattle options on the 7th. Index funds will be rolling long positions out of July and into September or December for the first found days of the week. This can occasionally affect the spreads, but is well advertised and to a degree those who would be most impacted have insulated themselves through options and pre-roll futures adjustments.


The market will also be interested in the weekly Crop Progress report on Monday evening, and in the weekly export Inspections report on Monday morning. That will be the final inspections total for old crop wheat, although not the official annual exports. That figure comes from the Commerce Department in July and will be adopted by USDA after release. USDA will also post weekly Export Sales on Thursday, with traders curious whether the 4% plunge in the US dollar index over a two week period has stirred up more buying interest.


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