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All or Nothing

Published on: 22:06PM Nov 16, 2018

Market Watch

Nov 16, 2018

All or Nothing

We’re coming up on the Thanksgiving holiday, but I’ll spare you the turkey and dressing theme this year. The holiday does make for an awkward trading environment, falling on a Thursday. Many market participants are traveling and thus not participating on Wednesday, and many take Black Friday off. The CME in its infinite quest for trading volume is open for business on Friday even if few are interested. This has potential for mayhem to appear, just like the guy you’ll see in the ads during your favorite football game. We note several commodities with very tight trading ranges, or charts in consolidation patterns like triangles, flags or Bollinger pinches. These are just begging for somebody with a big wallet to come and try to knock everyone off kilter. It is easier to do that in a thin trading environment. The alternative is that nobody does much of anything and analysts get to go home early!

Corn futures fell a nickel (1.35%) on the week in nearby Dec. Friday’s Export Sales report showed 18/19 sales near the top end of trade estimates at 892,529 MT for the week ending 11/8. Total commitments are now 15.16% larger yr/yr and 38% of the USDA full year export projection, compared to the 41% average. Tuesday’s Crop Progress report showed US corn harvest still lagging the normal pace of 87% at 84% complete as of Sunday. There have been reports of several large ethanol plants cutting production, amid weak margins. Thursday’s EIA report showed production in the week that ended 11/9 at 1.067 million barrels per day, still above last year. Stocks also rose 364,000 barrels to 23.514 million. The weekly Commitment of Traders report showed money managers in corn futures and options trimming 8,648 contracts from their net long position in the week that ended on Tuesday. They were shown at a net position of 17,981 contracts on that date.

Wheat futures saw mixed trade this week, as Chicago SRW was down 0.95% since last Friday. That was the only market higher, as KC HRW was down 0.97%, and Minneapolis spring wheat 0.35% lower. The Tuesday afternoon Crop Progress report indicated that 89% of the US Winter wheat crop was planted, behind the average of 94%. The crop was 77% emerged, with ratings up 3% to 54% gd/ex and at 348 on the Brugler500 index. All wheat export sales for the week that ended 11/8 were a neutral 438,256 MT. Commitments for exports are now 51% of the USDA full year projection vs. the normal pace of 70%. Spec traders in CBT wheat futures and options cut 14,459 contracts from their net short position for the week that ended on 11/13 to -26.684 contracts. In KC wheat futures and options trading they flipped their net position by 14,4147 contracts to net short 1,271 contracts as of Tuesday.

Soybean futures edged out a 5 1/2 cent gain on the week in newly appointed nearby Jan. Soybean meal took back most of last week’s losses, up 1.73%, with soy oil down 0.91% this week. The USDA reported a total of 524,732 MT of soybeans sold to unknown destinations through their daily reporting system this week, all for 18/19. The weekly Export Sales report showed soybean sales picking back up, at 470,362 MT for the week that ended on 11/8. That was still well below last year. Export commitments are now just 43% of the USDA projection, vs. the normal 66% pace. The US soybean harvest was reported at 88% complete as of last Sunday, compared to the 93% average. NOPA’s monthly crush for October was 172.346 mbu, a record for all months. Member soy oil stocks were 1.502 billion pounds or 1.88% lower than September. CFTC’s weekly Commitment of Traders report showed spec funds in soybean futures and options adding another 9,947 contracts to their net short position by to -55,025 contracts in the week that ended 11/13. Brazil’s soybeans are now 82% planted according to AgRural, with the normal pace running 67%.

 

Commodity

 

 

 

Weekly

Weekly

Mon

11/02/18

11/09/18

11/16/18

Change

% Chg

Dec

Corn

$3.7125

$3.6975

$3.6475

($0.050)

-1.35%

Dec

CBOT Wheat

$5.0875

$5.0200

$5.0675

$0.048

0.95%

Dec

KCBT Wheat

$5.04

$4.88

$4.83

($0.048)

-0.97%

Dec

MGEX Wheat

$5.805

$5.733

$5.713

($0.020)

-0.35%

Jan

Soybeans

$8.88

$8.87

$8.92

$0.055

0.62%

Dec

Soy Meal

$311.00

$305.60

$310.90

$5.300

1.73%

Dec

Soybean Oil

$28.20

$27.62

$27.37

($0.250)

-0.91%

Dec

Live Cattle

$117.08

$114.58

$115.35

$0.775

0.68%

Jan

Feeder Cattle

$149.75

$143.80

$146.53

$2.725

1.89%

Dec

Lean Hogs

$58.13

$55.80

$60.08

$4.275

7.66%

Dec

Cotton

$78.79

$78.09

$76.12

($1.970)

-2.52%

Dec

Oats

$2.8425

$2.8500

$2.9825

$0.133

4.65%

Soybean futures edged out a 5 1/2 cent gain on the week in newly appointed nearby Jan. Soybean meal took back most of last week’s losses, up 1.73%, with soy oil down 0.91% this week. The USDA reported a total of 524,732 MT of soybeans sold to unknown destinations through their daily reporting system this week, all for 18/19. The weekly Export Sales report showed soybean sales picking back up, at 470,362 MT for the week that ended on 11/8. That was still well below last year. Export commitments are now just 43% of the USDA projection, vs. the normal 66% pace. The US soybean harvest was reported at 88% complete as of last Sunday, compared to the 93% average. NOPA’s monthly crush report indicated October crush was 172.346 mbu, a record for all months. Soy oil stocks among members were tallied at 1.502 billion pounds. 1.88% lower than September. CFTC’s weekly Commitment of Traders report showed spec funds in soybean futures and options adding another 9,947 contracts to their net short position by to -55,025 contracts in the week that ended 11/13. Brazil soybeans are now 82% planted according to AgRural, with the normal pace running 67%.

Cotton futures dropped a sharp 2.52% this week. A volatile dollar and sharply lower crude oil both played roles. This week’s Crop Progress report showed the US cotton harvest at 54% complete as of last Sunday, lagging the 61% average. The Friday edition of the Export Sales report showed total 18/19 upland sales of 67,593 RB for the week that ended on Nov 8. That was down 25.73% from last week.  Cotton export commitments are now 3.3% above a year ago, slipping a bit on the slower sales. They are still 13% above the normal pace to meet the USDA export projection at 67%. The large spec funds in cotton futures and options trading cut another 3,363 contracts from their net long position to 40,985 contracts as of 11/13. That is the least bullish CFTC position they have held since August 29, 2017.

Live cattle futures were back up 0.68% on the week. Cash trade developed on Friday around $114, steady with the previous week. Dressed trade was at $178 in NE, down $2 from last week. Feeder cattle futures ended the week with January posting a 1.89% gain. The CME feeder cattle index was reported at $147.83 on 11/18, down $3.80 for the week.  Wholesale beef prices were lower this week, with the Ch/Se spread at $15.34. Choice boxes fell $2.29 (1.1%) after a $3.30 drop the previous week. Select dropped $1.15 for a 0.6% decrease. Weekly beef production was down just slightly from the previous week and 0.8% lower than the same week a year ago. US beef production YTD is up 2.7% over last year on 2.4% more slaughter. Managed money in live cattle futures and options trimmed their net long position by 8,707 contracts during the week of 11/13, taking it to 54,421 contracts. They were at the largest ever recorded net short position in feeder cattle futures and options on that date (-4,823 contracts).

Lean hog futures saw a 7.66% gain over the course of the week, thanks to December being limit up on Friday. The CME Lean Hog index was $59.86 on Friday, down $4.52 for the week. The pork carcass cutout value was down $2.09 or 3% during the past week. The picnic primal took a big 12% hit but all the primal were lower except the bellies. They had dropped the previous week. Pork production this week was up 1.7% from last week and 5.4% larger than the same week a year ago on a record large slaughter number. Production YTD has been 2.8% larger than in 2017. Weekly CFTC data on Friday showed spec traders lean hog futures and options trimming 1,467 contracts from their net long position as of 11/13. That net position stood at 28,048 contracts on that date.

Market Watch

The weekly Export Inspections and Crop Progress reports will be back to their usual Monday release time. Wednesday will be a very busy report day, with the monthly Cattle on Feed and Cold Storage reports along with the usual weekly EIA ethanol production and stocks report. Markets will be closed Thursday for the Thanksgiving holiday. The weekly Export Sales update will be out Friday morning next week, with the one day delay.  Friday will also mark the expiration for December corn, wheat, meal and oil options.

Visit our Brugler web site at http://www.bruglermarketing.com or call 402-289-2330 for more information on our consulting and advisory services for farm family enterprises and agribusinesses. Sound analysis and seasoned advice makes a difference to your bank account!

There is a risk of loss in futures and options trading. Similar risks exist for cash commodity producers. Past performance is not necessarily indicative of future results.

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