The Most Wonderful Time of the Year

Published on: 23:17PM Dec 26, 2014

Brugler

Market Watch Holiday Edition

December 26, 2014

The Most Wonderful Time of the Year

 

The school kids [and most of their teachers!] refer to this year as a “wonderful” holiday break with Christmas on Thursday this week, and New Year’s Day on Thursday next week.  The school districts can typically align vacation days to fill the weekdays for two full weeks in a row, capped by weekend on both sides, making for 16 days of free-play in a row.  As we approach halftime for the epic break, folks who work at TV stations, in the insurance industry, at local banks and in other corporate entities embraced the opportunity to utilize some of their vacation time.  With the markets either closed or operating with reduced hours during five of the ten days that would typically be traded during these two weeks, many of the market participants also embraced the idea of a nice long break to end the year.  Trading this week was noticeably light in the ag markets.  We are likely to start the next week with more of the same, other than some last-minute year-end position squaring.  This week seemed like the ag market space was largely anticipating the next year of trading.  The cattle, cotton and soybean meal markets however snuck in some significant gains during the low volume, thinner trade.  

Corn was about 1%  higher on the week, rallying on several signs of continued strength in demand.  Ethanol production set another record for the weekly production rate while ethanol stocks were lower than the previous week.  The Hogs and Pigs report provided hard evidence of expansion in the hog herd, which added to ideas of continued strength in demand for feed on top of a growing cattle herd and poultry flocks.  China has reportedly lifted its ban on corn imports tied to the MIR-162 strain, which brought support to the market this week on ideas of an increase in demand for DDG exports to China, and the opening of a door that US corn could theoretically get through.  Strength in the soybean meal was also supportive.

 

Commodity

 

 

 

 

Weekly

Weekly

Month

12/05/14

12/12/14

12/19/14

12/26/14

Change

%Change

Mar

Corn

$3.95

$4.08

$4.11

$4.15

$0.042

1.04%

Mar

CBOT Wheat

$5.94

$6.07

$6.32

$6.11

($0.215)

-3.40%

Mar

KCBT Wheat

$6.39

$6.34

$6.66

$6.44

($0.218)

-3.27%

Mar

MGEX Wheat

$6.23

$6.21

$6.48

$6.32

($0.168)

-2.58%

Jan

Soybeans

$10.36

$10.47

$10.31

$10.48

$0.170

1.65%

Jan

Soybean Meal

$366.40

$367.00

$363.50

$379.70

$16.200

4.46%

Jan

Soybean Oil

$32.08

$32.36

$31.97

$32.46

$0.490

1.53%

Dec

Live Cattle

$164.45

$162.05

$160.75

$164.75

$4.000

2.49%

Jan

Feeder Cattle

$234.88

$225.60

$220.15

$213.73

($6.425)

-2.92%

Feb

Lean Hogs

$85.63

$83.25

$81.90

$81.55

($0.350)

-0.43%

Mar

Cotton

$59.95

$60.54

$60.89

$61.63

$0.740

1.22%

Mar

Oats

$3.13

$3.13

$3.11

$3.06

($0.045)

-1.45%

Jan

Rice

$12.07

$12.35

$12.31

$12.17

($0.145)

-1.18%

Soybean futures were up 17 cents on the week, or 1.65%.  The week began with a much larger than expected figure in the export inspection report.  Favorable growing conditions in South America weighed on the US market for much of the week.  Support came from the meal market, which gained more than 16 bucks in the front month since last Friday.  On the Dalian exchange in China, the May soybean futures contract (where the most open interest is at right now) rallied 31 cents to close at its highest closing price since November 4 today, finishing at the US equivalent of $19.72.  November imports in China were up 12.3% year over year and about 75% of the month’s shipments came from the US.    

Wheat futures chopped around again this week with a negative bias, finishing with losses from 16 ¾ cents to as much as 21 ¾ cents.  MPLS wheat lost 2.58%, KC was down 3.27% and March CBT wheat lost 3.4%.  The trade is uncertain as to how the US wheat market will be affected by the restrictions on Russian wheat exports.  The bullishness from last week was thinned down considerably this week when news broke of Russia making a special exception for exports to Egypt, Turkey, Armenia and India.  The cold snap forecast for much of the US has been pushed back into next week, but most of the US wheat growing area is without snowcover.   

Cotton futures were up 1.22% for the week, with most of the gain coming on Monday when the March contract closed at its highest price since November posted its largest intraday boost since October 6th.  The US Dollar traded at a new high on Tuesday, and crude oil was lower on the week.  The general (albeit gradual) uptrend since the low on November 13 in the March contract, combined with the explosvive trade on Monday, and the this week despite the pressure from the USD and crude oil brought a bullish tint to the cotton market.  The weekly Commitment of Traders Report from the CFTC is delayed due to the holiday, but will be out on Tuesday afternoon and should provide more insight on the Monday price spike.      

Cattle futures added four dollars or nearly 2.5% this week, and $2.25 of it came today.  Futures were apparently too low when the trade realized the big jump in cash cattle prices from last week to this week was for real, and the sudden attractiveness of delivery cattle is the real deal too.  Feeders failed to follow the cattle rally, losing $.52 to $1.02 but closing at the high of the day.  January feeders lost $6.425 or 2.92% for the week. Wholesale beef prices rallied about 2.5% this week, which helped support the cattle bids.  Choice boxes were $5.95 higher than last Friday, and Select boxes added $5.73 during the week. 

Hog futures were down just 35 cents this week, losing less than half a percent from last Friday despite moderately bearish data in the Quarterly Hogs and Pigs report released on Tuesday.  Trade expectations were for All Hogs to be up about 1.5%, and the report showed them 2% larger than a year ago.  The breeding herd was reported at 5.97 million head, which is 4% more than a year ago, while the trade had only been looking for it to be up about 3%.  The closely watched pigs/litter number (an early gauge as to the efficacy of the PEDv vaccine programs) came in at a new record high for the Sept-Nov period at 10.23.  The pork carcass cutout value gained 82 cents from last Friday’s average price; hams were the only cutout that last value this week.

 Market Watch

 

USDA will issue the weekly Export Sales report(delayed from Thursday morning) at 7:30 CST on Monday, followed by the weekly export inspections report later that morning.  The weekly Commitment of Traders report from the CFTC will not come out until Tuesday afternoon (delayed from Friday) and it will show official positions as of a week earlier.  The EIA report is likely to be out on Wednesday morning, and December Cattle futures will expire at the end of trading on Wednesday to finish out the year.  That is also first notice day for January futures in the soy complex.  The markets will be closed on Thursday again and will reopen on Friday morning after the next round of delayed export sales reports is out.

 

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.

 

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