Another Fine Mess

Published on: 21:20PM Mar 29, 2018


Market Watch with Alan Brugler

March 29, 2018

Another Fine Mess

Comedians Laurel and Hardy are known for the phrase ‘That’s another fine mess you’ve gotten me into”. According to their official web site, the actual phrase was “Well , here's another nice mess you've gotten me into”, but a later movie short titled “Another Fine Mess” likely cemented the misquote in our collective memory. Either way, Thursday’s ag markets were another fine mess. USDA threw the grains off balance with surprisingly low corn and soybean planting intentions numbers, and surprisingly large corn and soybean stocks (which were pretty much ignored in the rush to cover shorts ahead of the three-day Easter holiday weekend). Feeder cattle didn’t like the double digit gains in corn and soybean meal, and cattle futures were another mess after cash trade dropped to $121-122 from $126 last week. Hogs were a picture of stability while awaiting the quarterly Hogs & Pigs report. That report showed steady expansion of hog production, but numbers that were close to trade expectations. Just like the Easter family gatherings, we’ll have some things to clean up on Sunday night and Monday morning.

Corn futures gained 2.78% this week, mainly on Friday’s gains of 14 ¼ cents. Ethanol production for the week ending 3/23 was down 10,000 barrels per day to 1.039 million bpd. Stocks of ethanol were down 968,000 barrels to 22.79 million barrels. The weekly Export Sales report indicated 1.353 MMT in old crop corn export sales during the week of 3/22. That was down 8% from last week’s report, but 21slightly larger than the same week in 2017. Weekly corn export shipments for that week totaled 1.376 MMT, slightly lower than a year ago but slightly above last week. Thursday morning’s Planting Intentions report indicated that US producers intend to plant 88.026 million acres of corn in 2018. That was below expectations of 89.479 and is 2.141 million acres fewer than last year. On the bear side, March 1 corn stocks were above expectations and 266 mbu larger than a year ago at 8.888 billion bushels.

Wheat futures were lower in all three markets again this week. MPLS was the weakest with a 4.02% decline, as KC HRW lost 2.01% lower and Chicago was down 2.5%. Individual state ratings released on Monday showed improvement in the Southern Plains, with the national condition ratings expected out next Monday. Thursday’s Export Sales report showed all wheat export sales at 353,760 MT during the week of 3/22. That is still 23.8% behind than this time last year but 33.4% above than last week’s total. New crop sales were tallied at 121,825 MT, with exports of all wheat shown at 328,722 MT. The USDA Planting Intentions report showed producers expecting to plant 47.339 million acres of all wheat in 2018. Winter wheat acreage was up 99,000 acres from January at 32.708 million acres. Durum acreage is expected at 2.004 million acres, 303,000 below last year. The surprise came from other spring acreage at 12.627 million acres, 1.618 million larger than last year and above estimates of 11.537.

Soybean futures took back some losses from the previous week, as nearby May was up 1.6% on strong Friday gains. Soy meal was up 1.61%, with bean oil joining the crowd up 1.43%. The USDA Export Sales report showed old crop soybeans sales of just 317,511 MT, a drop of 58.2% from the previous week and 46.6% from this time last year. Sales of new crop soybeans were reported at 69,717 MT. Export shipments for the week of 3/22 were reported at 782,917 MT, 81% larger than last year. The annual March Planting Intentions report released by the USDA indicated US producers are intending to plant 88.982 million acres. That went against trade expectations of 91.056 million acres, and is 1.16 million acres below last year. Soybean stocks on March 1 were tallied at 2.107 billion bushels, 77 mbu larger than expectations and a whopping 378 mbu above last year.

Cotton futures dropped 0.45% from the previous week in the nearby May contracts. Export sales of all upland old crop cotton were tallied at 304,271 RB for the week of 3/22 by the USDA Thursday morning. That was 10% below the previous week and 22.44% lower this time last year. New crop sales were 62,128 RB. Export shipments of all upland cotton were shown at 438,357 RB, a jump of 11.26% from this time last year. Thursday morning’s USDA March Planting Intentions report showed US cotton producers expecting to plant 13.469 million acres of cotton. That was slightly higher than most expectations and 857,000 acres above a year ago. The Adjusted World Price was updated to 72.88 cents/lb on Thursday, 104 points lower than the previous week. 













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Live cattle futures fell another 1.98% this week, mainly on Friday’s losses. Feeder cattle futures were down 2.04% on the week. Cash cattle traded mostly $4 lower for the week at $121-122, with a few sales of $193-194 in the North. Wholesale beef prices were down this week. They lost $4.21 (-1.9%) in the Choice boxes on a Thursday/Thursday basis and $8.34 (-3.8%) in Select. The USDA reported 23,324 MT in beef export sales for the week ending March 22, 117.8% above this week last year. Beef exports were totaled at 15,562 MT, 7% lower than last week but 7.24% larger than this time last year

Lean hog futures dropped another 2.01% from last week, as April has closed lower in 10 of the past 12 sessions. The CME Lean Hog index lost another $3.18 over the past week to $59.85. The pork carcass cutout value was down 1.1% on a Thursday/Thursday basis. Most of the pressure came from the picnics and loins, with bellies higher on the week.  USDA weekly pork export sales were shown at 19,630 MT, slightly above last week but 6.9% lower than last year. The quarterly USDA Hogs and Pigs report showed March 1 inventory of all hogs at 72.908 million head, up 3.12% from last year. Hogs kept for breeding were up 1.67% at 6.2 million head, with hogs kept for marketing at 66.708 million head, up 3.26%. The December-February pig crop was reported at 32.341 million head, up 3.8%.

Market Watch

The first week of April will start out fairly busy. Hog traders will be reacting to the Thursday night H&P report. Grain traders will have had the long weekend to further think over the USDA numbers from Thursday morning. From a USDA stand point, the Export Inspections report will be released on Monday morning, with the monthly Grain Crushing and Fats and Oils reports out that afternoon. Monday afternoon will also show the first of the weekly 18-state USDA Crop Progress reports. On Wednesday, the weekly EIA ethanol report will be released. Thursday will present the USDA Export Sales report in the morning. US Census trade data for February will be out on Thursday, with USDA conversions released on Friday.

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