The Bulls Have Traction

Published on: 18:07PM Feb 21, 2014


Market Watch with Alan Brugler

The Bulls Have Traction

February 21, 2014

 Corn futures gained 8 cents for the week, and are up 19 cents in three weeks. Ethanol imports were zero for the 20th week in a row. US weekly ethanol stocks rose to 17.2 million barrels, with some Midwest stocks buildup due to the inability to retrieve empty railcars from the East Coast. Weekly corn export sales were smaller at 691,400 MT, but well above the average pace needed to meet the USDA forecast for the year. USDA shows that 87% of the projected corn sales for the year are already on the books. We would typically only be 69% by now. The largest commitment in recent years has been 80%. At the Outlook Forum, USDA projected 2014 corn plantings at 92 million acres, with the average cash price dropping to $3.90.  They are using a national average yield of 165.3 bpa, a new record.

Soybean futures were up 2.5% this week, with soybean meal up 1.3%.  Weekly US soybean export sales improved to 835,400 MT including 86,300 MT of old crop. Total US export Commitments for 2013/14 are now at 105% of the USDA forecast for the year. The 5 year average would be 87%. At the Outlook Forum, USDA projected 79 million acres would be planted to soybeans this year, with a record yield expected to drive the national average cash price below $10.

Wheat futures were up another 1.9% in Chicago and 1.2% in KC this week. MPLS March futures had a double digit sell off on Friday that tipped them into the red for the week. Weekly wheat export sales on Friday morning were 491,500 MT, which was down from the prior week. Export commitments are 87% of the USDA forecast for the year, vs. the 5 year average of 88%.  The Commitment of Traders report shows the large managed money specs are net long KC wheat and reduced their short in Chicago by another 8,823 contracts last week. They were still short 34,402 contracts in Chicago as of Feb 18.















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Cotton futures pulled back 0.53% this week. Global ending stocks are still projected to be record large at more than 96 million bales. US old crop ending stocks are still seen at 3 million bales. US Export commitments improved to 89% of the USDA forecast for the year. This compares to 82% for this point last year, and the 5 year average of 85%. The National Cotton Council survey projected 11.26 million acres to be planted in 2014, up from 10.41 million in 2013. USDA used11.5 million acres in their forecast at the Outlook Forum in DC, up 10.5% from last year.

Cattle futures were up 1.4% this week, or $1.95 per cwt. Cash cattle traded at $145 on Friday. Wholesale prices were lower on Friday. Weekly estimated slaughter at 539,000 head was down from 568,000 a year ago for this week. Beef production was up 0.3% for the week and down 4.3% vs. year ago. YTD production is down 8%. The USDA Cattle on Feed report on Friday afternoon showed larger than expected placements (108.6%) and smaller than expected marketings (94.5%), resulting in Feb 1 numbers at 97.2% of year ago.  Beef in cold storage January 31 was down 12.88% from year ago.

Hog futures were up 3.25% this week in the front month, getting a very modest assist from beef prices Estimated weekly slaughter totaled 2.134 million head, up from 2.113 million last week. The PED virus is showing an impact, but breeding herd expansion is also underway and the spring run is building. Estimated carcass weights are still running about 6 pounds above year ago. Pork production year to date is up 0.1% from last year. The pork carcass cutout value was up $.35 on Friday to $98.03. USDA weekly export sales for pork were a solid 16,600 MT.

 Market Watch

Livestock traders will begin the week reacting to the USDA Cattle on Feed report from Friday night, as well as the Cold Storage report. Grain traders will be shedding positions acquired as part of options expiration and exercises on Friday. The USDA weekly Export Inspections report will be out on Monday, along with a handful of state crop condition ratings. Weekly Export Sales will be on Thursday. Friday will market first notice day for March grain futures deliveries, and expiration of the February Live Cattle contract.

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