Bleak Midwinter

Published on: 22:17PM Jan 15, 2016


Market Watch with Alan Brugler

January 15, 2016

Bleak Midwinter

In the past couple weeks, the opening lines of a Christmas hymn have been rattling through my head. The hymn (also a poem) is titled In the Bleak Midwinter and is actually a story of hope. It starts off pretty harsh though:

In the bleak mid-winter
Frosty wind made moan,
Earth stood hard as iron,
Water like a stone;

It sounds pretty frigid. I wondered why it kept coming to mind, but then I looked a commodity prices for the first two weeks of the year. The CRB Index (CRY) is down more than 9.2%,  February crude oil is down 19.8% and the S&P is down 7.8%. Feb cattle futures are down 4%. The Chinese stock market is down more that 20% from its peak and officially in bear market territory.  The talking heads are in full financial disaster mode. However, my contrary opinion bone is aching. That’s the one that hurts when too many people are making the same argument, and stretching really weak assumptions to make them fit the observed market direction. From that perspective, spring has got to be coming up soon, even if we have to wait a while on the calendar.

Do you want to feel more spring like while winter does its best? Compare the January 15 column vs. the December 31 column in our table. All three wheat markets are up on the year, as is corn, as are soybeans and soybean meal. We suspect a little asset allocation money leaking out of stocks into commodities as a safe haven. You take your buying where you can get it.

Corn futures were up 1.7% this week, more than 6 cents per bushel. Most of that increase came on Friday as funds exited the stock market and went looking for something cheap to buy. Weekly USDA export sales totaled 669,231 MT, exceeding the highest trade estimate of 650,000 MT.  The Rosario Grain Exchange in Argentina upped its Argentinean corn production estimate to 23.8 MMT from its previous projection of 20.2 MMT (USDA: 25.6 MMT).  The Buenos Aires Exchange, also in Argentina, increase projected corn plantings to 3.1 million HA from 2.85 million. Celeres in Brazil is projecting corn production of 87.1 MMT, with 58.3 MMT coming from the safrinha crop. Weekly US ethanol production was the second largest ever. The elevated production is resulting in a stocks buildup. US ethanol exports dipped to 59 mgal in November, with Canada and China as the two largest buyers. The 2015 shipments through November totaled 753.9 mgal, or about 267 million bushels of corn at typical conversion rates.

Wheat futures were down 1% in Chicago, off less in MPLS and higher in KC for the week. USDA reported actual weekly sales of 290,673 MT during the week ending last Thursday, within trade expectations. Weekly shipments totaling 552,174 MT were the largest since the week ending October 1. The Rosario Grain Exchange (Argentina) left its wheat production estimate for the country unchanged at 9.6 MMT (USDA: 10.5 MMT).  Wire services reported two ships loaded with Argentine feed wheat are expected to land in the US based on freight records.

Soybeans were up 1.5% for the week. USDA reported net soybean export bookings of 1.127 MMT during the week ending 1/7, in the middle of the range of trade estimates. China purchased 775,257 MT.  Argentinean soybean production is estimated to reach 55 MMT according to the Rosario Grain Exchange (USDA: 57 MMT). Celeres in Brazil is projecting a crop of 99.8 MMT on 3.5% fewer acres. NOPA monthly crush for December was 157.7 million bushels, just about what traders had expected. Soy oil stocks for NOPA members were below estimates at 1.481 billion pounds.

March cotton futures saw only a 1 point change for the week, to the plus side. USDA reported net weekly cotton export sales totaled 205,918 running bales (RB) including 27,100 RB of Pima. Net cotton sales were the largest in six weeks, and Pima sales hit a marketing year high. The new average world price (AWP) for this week is 46.90 and the new LDP/MLG is 5.10 cents from now until Thursday.  The previous LDP was 4.40 cents. CONAB in Brazil is estimating 2% smaller cotton acreage for 2016 harvest, with their Goias forecast reduced this week from the previous number.














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Live cattle futures retreated by more than 4% this week.  Wholesale prices were stout early in the week, but faded late.  For the full week, both Choice and Select boxes were up 0.1%, which in the case of Choice is 27 cents per hundred pounds. Cash cattle traded at $133-134 at mid-week but activity dried up when the futures and wholesale prices broke. Estimated weekly slaughter was up 6.3% vs. a year ago and up 3.2% from the previous week. Estimated average carcass weights continue to run above year ago. Feeder futures were down 3.3% on the weakness in the fats and higher feed ingredient markets.

Lean hog futures were up 3.5% this past week. The CME Lean Hog Index was $55.12, up 33 cents on Friday. Estimated FI hog slaughter for the week was 2.3 million head, down 69,000 from the previous week, but 2.4% larger than the same week in 2015. Hog slaughter for the first 15 days of the year is down 2% from last year. The pork carcass cutout price was up 3.73% on a Friday/Friday basis. Hams and bellies were the strongest primal for the week.

Market Watch

The markets will be closed on Monday for the MLK holiday. That will delay the USDA weekly export inspections to Tuesday, and weekly Export Sales will be released on Friday.  USDA will also release the monthly Cattle on Feed and Cold Storage reports on Friday afternoon (Jan 22). The February serial grain options will also expire on Friday. Traders will keep one eye on the US stock market, which has never been down 8% in the first two weeks of the year before (S&P).  It has been down that far for the full month on two occasions, and ended the year higher in one of them.

Mark Your Calendars

The Brugler Marketing Winter Seminars will be held on Feb 1-2 in Dayton, OH and Feb 4-5 in West Des Moines, IA. These will feature comprehensive fundamental and technical analysis for both 2015 and 2016 field crops, as well as cattle and hogs. This is the first time the winter seminar has been in Iowa since 2005, so we’re looking for a show of support from those of you who can’t travel to Omaha! Registration links are now available from the home page of our web site at

Visit our Brugler web site at or call 402-289-2330 for more information on our consulting and advisory services for farm family enterprises and agribusinesses.Clients can also get one touch access to our cash market and hedging recommendations via our mobile web site.  You will be taken to the mobile home page automatically if you visit our web site with the mobile device. Three times daily fundamental news from Brugler is available on the free side of the mobile site.


There is a risk of loss in futures and options trading. Past performance is not necessarily indicative of future results.  Copyright 2016 Brugler Marketing & Management, LLC