Ready for Some Early Fireworks

Published on: 15:48PM Jun 21, 2013


 Market Watch with Alan Brugler

June 21, 2013

Ready For Some Early Fireworks

It is that time of year again. I don’t mean the first day of summer, although that was today.  I mean time for fireworks. As a child, that meant July 4th.  For the grain markets, that means the June 1 Grain Stocks report, scheduled to be issued on June 28. We expect early fireworks from that report, just like the kids in town who had a vacation out of state and started lighting those firecrackers weeks ahead of the actual holiday.

Corn futures returned to their winning ways, up 7 cents per bushel in nearby July after losing 11 cents per bushel the week before. Ethanol plant margins have slipped, but are still positive. Weekly ethanol stocks crept up to 16.5 million barrels, due primarily to imports brought into both PADD1 (East Coast) and PADD4 (West Coast). Corn used by ethanol was about 92 million bushels for the week, depending on your assumed product yield. Corn export interest was poor. Since USDA lowered expected sales for the year to 700 million bushels, commitments YTD are now 99% of the forecast, and ahead of the 98% average pace for this date.

Soybeans lost 23 cents per bushel after being down 12 cents the prior week. Meal futures were also down $3.00/ton in cautious pursuit of the corn market. Soybean meal export sales activity continues strong, with 141,200 MT booked in the most recent reporting week. Meal commitments are now 99% (typically only 93% by now) of the USDA forecast for the year, with soybean commitments at 101%.  The strong export sales pace for meal is raising concerns about availability of old crop beans for crushing in July and August. The NOPA monthly crush report was larger than some folks had been expecting, at 122 million bushels.

Wheat futures were higher on all three exchanges this week. US weekly export sales totaled 434,700 MT including 2,000 MT of 2014/15. USDA did report that 11% of the winter wheat crop has now been harvested. The average would be 25%. Our Brugler500 index dropped to 270 from 271 for winter wheat. USDA reported larger than expected winter wheat production last week at 1.509 billion bushels. Projected world stocks were trimmed 5 MMT to 181.25 MMT. That isn’t stopping wheat feed use, and in fact there was some bargain hunting going on. Japan bought its usual quantity of HRW and DNS wheat, but is still avoiding US white wheat until USDA will certify the crop to be GMO free.

Cotton ran into resistance and reversed course this week. After gaining 656 points the prior week, nearby futures were down 597 points this week. The US dollar rallied sharply after becoming technically oversold. The US stock market was also down hard, particularly on Thursday. US weekly export sales were 152,400 RB, of which 1,200 RB was the pima variety. Total Commitments YTD are now 101% of the revised USDA forecast for the year. That now lags the 110% average pace over the past 5 years.















% Change



 $     6.62







CBOT Wheat

 $     7.06







KCBT Wheat

 $     7.51







MGEX Wheat

 $     8.20








 $   15.10







Soybean Meal

 $ 447.20







Soybean Oil

 $   48.38







Live Cattle

 $ 121.30







Feeder Cattle

 $ 144.33







Lean Hogs

 $   93.45








 $   79.36








 $     3.74








 $   15.30







Cattle futures were 1.9% higher this week, with most of the gain on Friday. 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 0.1% and Select up 1.3% on a Friday/Friday basis. Cash cattle trade was slow to develop on Friday, with a few sales reported at $121 but most owners asking $122 or higher. US beef production YTD is 1.0% smaller than last year. Weekly slaughter was up 0.8% vs. 2012. Estimated carcass weight is 2# below last year’s actual of 788#. The USDA Cattle on Feed report on Friday showed slightly larger than expected May placements and smaller than expected May marketings, leaving June 1 On Feed numbers at 96.9% of year ago.

Hog futures were up $1.72 for the week, a continuation of a multi-month ally. Weekly export sales were slower than the 12,100 MT the previous week. Estimated weekly slaughter was 1.981 million head. That was up 1.6% from the previous week and 1.1% larger than last year. Weekly pork production was up 1.5% from the prior week. Average carcass weights were estimated to be 1 to 3 pound higher than year ago. Pork production YTD is 0.8% below last year at this time.  The pork carcass cutout value was up 3.5% for the week, with all of the primal cuts higher, and hams up 8%.

 Market Watch

The grain trade will start the week reacting to any ‘surprise’ positions inherited through July futures expirations on Friday. The two options strikes with the most surprise potential were the 660 strike in corn and the 700 strike in July CBT wheat.  The standard USDA crop progress report on Monday and Export Sales on Thursday will deserve scrutiny, but the big event will be on Friday morning with the release of the USDA quarterly Grain Stocks and Planter Acreage reports. USDA will also release a quarterly Hogs & Pigs report at 2 pm CDT.  Coming as they do at the end of the month and the end of the quarter, the Grain Stocks reports have earned a reputation for generating limit moves in corn.  Friday will also mark first notice day for July grain futures deliveries, should the shorts have any extra old crop corn or soybeans they wish to get rid of.....

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