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BOO

Published on: 21:49PM Oct 30, 2015

 

Market Watch with Alan Brugler

October 30, 2015

 

BOO!

 

Halloween is tomorrow and most of the trick-or-treaters can hardly wait to put their costumes on.  Some treat the occaision as a chance to dress up like their heroes, or pretend to be their favorite character from TV or the movies.  There are always a few who take the traditional route and figure out how to be scary: ghosts, goblins, monsters as well as victims of gorey violence.  One scary monster we saw creeping around this week was the US Dollar chart; threatening a triangle-breakout to the upside following the Fed meeting, before finishing the week lower than it began.  Presumably large world wheat stocks coupled with large discrepancies in key production estimates had the wheat markets resembling Frankenstein stumbling up a dimly lit stairwell this week.  A close election in Argentina, along with precipitation in dryer parts of Brazil, roused the Incredible Hulk of South American soybean production.  The market relentlessly chased lean hog futures down a trail of red candle sticks. Then you had the $4 trading ranges in both live cattle and feeders this week, which likely bloodied up some balance sheets for both bulls and bears as the month came to an end.

 

Corn futures settled mostly a penny or two higher on Friday, up 2.5 cents on the week.  Weekly ethanol production was down 7,000 barrels per day from the previous week, and stocks declined as well; down to the smallest stocks reported since the week ending Sept 11, due to wk/wk declines in all reporting regions.  Weekly corn export sales improved significantly from the previous week, but total commitments are still lagging; down 33% vs. a year ago. IGC updated its forecast for 15/16 world corn production to 970 MMT (USDA: 972.6 MMT). National average basis for corn has narrowed about 6 1/2 cents from a month ago, but the national average cash price is a little more than three cents lower.  According to the Commitment of Traders (COT) report from the CFTC released this afternoon, managed money accounts were fairly comfortable with their positions from a week earlier, posting a net change of only 767 contracts from the previous report. They added both shorts and longs, but a few more longs. 

 

Wheat futures were between 1 and 7 cents higher on Friday, helping to post weekly gains from about 3% to 6% for the front months of all three major wheat classes this week.  Relatively low crop condition ratings on Monday afternoon were supportive, more forecasts for cuts in the Australian crop also brought support.  Winter wheat ratings are largely expected to improve in the Plains this week, but drought continues to hurt the PNW.  Egypt purchased 240,000 MT of wheat on Thursday, and some analysts expect another tender is coming soon.  US export sales were stronger this week, but are still off 16% compared to a year ago.  CFTC data on the commitments of traders says that managed money accounts were a net 19,002 contracts less-short in SRW wheat futures and options than the previous week (as of the Tuesday close).  However they were shown increasing their net short position in HRW by 3,248 contracts from a week earlier.

 

Did you know? We are now posting Alan’s media interviews as audio files in the Special Resarch Reports area of our main web site and on the mobile site as well. Login to the site and go to the SRR menu, then click Latest Market Audio.

 

November soybeans were a nickel higher on Friday, but still down nearly 12 cents from last Friday. Weekly net soybean sales topped 2 MMT for the fifth time in the first 8 weeks of the marketing year; two more than the same period last year.  However total 15/16 commitments still lag a year ago; it appears global buyers are comfortable enough with the supply situation to delay purchases until closer to when they actually need to ship them.  CNGOIC predicts Chinese soybean imports will climb to 22 MMT during the fourth quarter, up 18% from the fourth quarter in 2014.  The Commitment of Traders report confirmed that the large spec funds are still net long; 2,376 as of the Tuesday close. They added 484 more short positions than long positions during that week.  Managed money had the least long net position reported for that group in soybean meal since early June.   

 

December cotton futures were higher this week, up 56 points or 0.88% from last Friday.   US export commitments are 38% of the full year forecast, well below the 60% average pace for this date. That usually means WASDE is overstating the full year total, but accumulated exports as a percent of total exports are 12% vs. only 10% at this point last year, and the 5 year average of 13%.  USDA put the AWP for this week at 47.14 and the LDP/MLG is 4.86 cents.   The Commitment of Traders report on Friday afternoon showed the managed money spec funds net long 43,942 contracts, which was -3,982 less long than a week earlier. 

 

 

 

Commodity

 

 

 

Weekly

Weekly

Mon

10/16/15

10/23/15

10/30/15

Change

% Chg

Dec

Corn

$3.768

$3.798

$3.823

$0.025

0.65%

Dec

CBOT Wheat

$4.923

$4.905

$5.220

$0.315

6.03%

Dec

KCBT Wheat

$4.835

$4.755

$4.938

$0.183

3.70%

Dec

MGEX Wheat

$5.12

$5.08

$5.26

$0.175

3.33%

Nov

Soybeans

$8.983

$8.955

$8.838

($0.118)

-1.33%

Dec

Soy Meal

$312.00

$305.10

$304.40

($0.70)

-0.23%

Dec

Soybean Oil

$28.60

$28.57

$28.20

($0.370)

-1.31%

Dec

Live Cattle

$139.425

$143.400

$141.725

($1.675)

-1.18%

Nov

Feeder Cattle

$190.15

$193.25

$190.90

($2.35)

-1.23%

Dec

Lean Hogs

$65.575

$63.600

$59.200

($4.400)

-7.43%

Dec

Cotton

63.85

62.76

63.32

0.560

0.88%

Dec

Oats

$2.308

$2.278

$2.273

($0.005)

-0.22%

 

 

October live cattle futures expired today, after posting a range of more than $4 on the week.  December is taking over as lead month with a $1.675 (1.18%) loss on the week.  Beef export sales reported this week were the lightest of the calendar year, knocked down by cancellations from Hong Kong, Japan and Senegal.  The managed money accounts were shown to have lightened up on their short positions compared to the previous Tuesday, showing net long 8,389 contracts in today’s report.  Wholesale prices were higher this week, with choice boxes up $2.87 (1.3%) and select up $1.17 (0.6%) from Friday to Friday.  The C/S spread on Thursday was the widest since September 10.  Cash cattle trade was light this week, with a wide range of prices stretching from $130 to $139.  Dressed sales averaged $209.86 in a much more active market.  

Lean hogs were sharply lower this week.  The Dec15 contract lost $4.40 (or 7.43%) from Friday to Friday, and posted its lowest price since August 24th.  Pork carcass cutouts were down $2.64/cwt today, and $7.84 (9.12%) for the week.  The average price for bellies was 20.12% lower today than it was last Friday. Weekly US pork export sales were up significantly from the previous week, but still below the weekly average for the year to date.  FI hog slaughter including Saturday was estimated to be off 2.5% from last week, but about 2.5% larger than the same period a year ago.  The weekly Commitment of Traders report from the CFTC showed managed money accounts decreasing their net long position in lean hogs to 38,553 contracts as of the Tuesday close; a net change of -7,518 contracts.   

Market Watch

 

If you remember to adjust your clock for the end of daylight savings time after the Halloween activity on Saturday night, you will end up with an extra hour this weekend as the time “falls back” until Spring.  We will then start the week with the usual Export Inspections report on Monday morning, followed by the Crop Progress report in the afternoon.  Folks will be watching the winter wheat condition ratings, along with the harvest progress for corn, soybeans and cotton.  The EIA report on Wednesday will provide more current data on ethanol production and stocks.  Export sales for the past week will come out on Thursday morning, and on Friday we get another look at the commitments of traders.  The unemployment figure on Friday morning is one that traders will be watching for insight as to future action by the federal reserve, which is one of the many factors influencing the US Dollar Index.  

 

Visit our Brugler web site at http://www.bruglermarketing.com, find our iPad app "AgMarket" in the Apple app store, or call 402-289-2330 for more information on our consulting and advisory services for farm family enterprises and agribusinesses.

 

There is a risk of loss in futures and options trading. Past performance is not necessarily indicative of future results.

 

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