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Pay Attention While Driving

Published on: 20:30PM Oct 24, 2014

 Brugler

Market Watch with Alan Brugler

October 24, 2014

Pay Attention While Driving

 

Many of you are driving combines, trucks or grain carts right now. While you have been busy, the grain markets (and cattle also) have been busy rallying. Harvest rallies aren’t the most durable thing around. This one is vulnerable to month end profit taking or pre-Nov USDA report correction. It is easy to become complacent when things appear to be going your way. We would urge you to pay attention while driving this harvest, not just for your personal safety, but your financial safety. You have the technology to monitor the markets and our subscription Ag Marketing Professional advice via wireless connections to our web site and/or our AgMarket iPad app. When you are taking a lunch break or before you go out ni the morning, give marketing a little time so that your hard work doesn’t go unrewarded later on.

Corn posted a 4th consecutive weekly gain, this time 1.5% . Weekly USDA reported export sales came in toward the higher end of expectations at 1,031,200 MT.  USDA also reported strong weekly sorghum export sales and big sorghum export shipments to China. The threatened interruptions to sorghum sales to China have not materialized. The weekly Commitment of Traders report showed managed money accounts were getting longer in corn by a net 38,284 contracts as of the Tuesday close.  The funds are now net long 126,952 contracts, their largest net long reported since mid-June. 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

10/03/14

10/10/14

10/17/14

10/24/14

Change

% Change

Dec

Corn

$3.23

$3.34

$3.48

$3.53

$0.052

1.51%

Dec

CBOT Wheat

$4.86

$4.99

$5.15

$5.18

$0.025

0.49%

Dec

KCBT Wheat

$5.68

$5.78

$6.05

$5.94

($0.113)

-1.86%

Dec

MGEX Wheat

$5.44

$5.53

$5.70

$5.67

($0.027)

-0.48%

Nov

Soybeans

$9.12

$9.23

$9.52

$9.78

$0.253

2.65%

Dec

Soybean Meal

$298.80

$311.00

$330.20

$350.20

$20.000

6.06%

Dec

Soybean Oil

$32.42

$32.44

$32.05

$32.39

$0.340

1.06%

Oct

Live Cattle

$162.40

$164.90

$165.05

$168.25

$3.200

1.94%

Oct

Feeder Cattle

$240.88

$240.50

$238.45

$237.90

($0.550)

-0.23%

Dec

Lean Hogs

$93.03

$94.40

$90.58

$90.25

($0.325)

-0.36%

Dec

Cotton

$62.47

$64.10

$63.08

$63.81

$0.730

1.16%

Dec

Oats

$3.42

$3.43

$3.47

$3.52

$0.047

1.37%

Nov

Rice

$12.59

$12.59

$12.51

$12.41

($0.105)

-0.84%

Soybean futures were up another 2.65% this week. USDA weekly export sales were a huge 2.17 MMT, including more than 1.7 MMT to China. Some of those sales apparently were supposed to be reported under the daily system but were not. Producer selling has been limited, both because of the low price level and because they are busy harvesting. Soybean meal jumped 6% this week due to limited production in September that thinned out the pipeline. The weekly COT report from the CFTC showed managed money accounts getting less-short, but by a measly 853 contracts.  They are still net short 16,337 contracts.  The run off presidential election in Brazil is this weekend.

Wheat futures were lower for the week in the KC and MPLS contracts,with Chicago SRW hanging on for a 1/2% gain. USDA reported net weekly export sales of ony 299,400 MT for the week ending October 16. Lower estimates for Russian production in 2015 (SovEcon elow 50 MMT) and for 2014 in Australia (23.2 MMT) were supportive but did not trump rapid planting of HRW and burdensome supplies of spring wheat in the US and Canada. The CFTC reported on Friday that managed money accounts were getting less short in Chicago wheat by a net 9,016 contracts, and they were getting longer in KC wheat by 5,437 contracts.  

December cotton futures were up 1/2% this week, after being down 1.6% the prior week. USDA reported 86,000 RB of US cotton was sold into the export market last week. This included 4,700 RB of pima, with the balance upland varieties.  Export commitments as a percent of total projected 2014/15 exports are at 61%, several points ahead of the 5 year average for this date of 53%.  They were only 41% after this week last year. The USDA AWP for this week (today through Thursday) is 49.30, resulting in an LDP of 2.70 cents.  Managed money accounts were shown reducing their net long position in cotton from the previous week by a net 882 contracts.  They are now net long 4,548 contracts according to the weekly report from the CFTC.  

Cattle futures set new all time highs, and rose 1.9% for the week. Feeder cattle futures did not follow, and were down 0.23%. Wholesale beef prices had a negative week, with Choice boxes down 0.7% for the week. The Select boxes were down 0.9%. Weekly estimated slaughter was 6.9% smaller than the same week in 2013, with beef production down 4.5%. Beef production for the YTD is down 6.0%, with slaughter down 7.1%. Higher carcass weights make up the difference, with the weekly estimate 21# higher than the actual Oct 19 number from last year. The Friday afternoon USDA COF report showed September placements at 101% of year, with marketings at 99.5%. The net result was fewer cattle on feed October 1 than expected, at 99.5% of year ago.

Hog futures were down 0.4% this week. Thus far in 2014, hog slaughter is off 5.3% from the same point in 2013. Slaughter this past week was down 5.3% vs. year ago. Pork production is only down 1.8% YTD, due to higher carcass weights. Carcasses are currently running 4# above year ago.  Pork carcass cutout values lost a lot of ground this week, down 11.5% on top of a 9.5% drop the previous week. Hams were down nearly 24%. According to the CFTC report released after the close today, managed money accounts reduced their net long position in lean hogs by 6,893 contracts, taking them to a net long position of 55,186 contracts.

 Market Watch

The cattle markets will begin the week reacting to the Cattle on Feed report issued after the close on Friday. Soybean traders are dealing with some surprise positions (or lack of same) following November options exercises on the 24th. Grain traders will begin the week with the usual USDA Export Inspections and Crop Progress reports on Monday.  Thursday will also mark the expiration of the October feeder cattle futures. We should not lose track of the fact that this is also month end, and quarter end for some traders. Asset allocation practices require some to sell off part of winning positions and buy “undervalued” markets. Index funds will also begin the 10 day process of rolling out of the December contracts, with the Rogers fund beginning at the end of this week.

 

Visit our Brugler web site at http://www.bruglermarketing.com, find our iPad app "AgMarket" in the Apple app store, or call 402-697-3623 for more information on our consulting and advisory services for farm family enterprises and agribusinesses.

 

There is a risk of loss in futures and options trading. Past performance is not necessarily indicative of future results.

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