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Changing Sports

Published on: 21:14PM Apr 08, 2016

 

Market Watch with Alan Brugler

 April 8, 2016

Changing Sports

Avid sports fans are shifting gears, and so are the commodity markets. For the sports types, the March Madness (NCAA basketball) ended with a classic last second shot. The same week, we have the Masters golf tournament at Augusta, the 162 game MLB baseball season began, and the seemingly year round NBA is wrapping up regular season play before switching to a long string of playoffs that take the sport to the edge of summer before crowning a champion. In the commodity markets, the Planting Intentions report on March 31 was the first inning in the 2016 growing season game, which won’t end until after the World Series. As with the NBA, we won’t totally quit worrying about exports and the strength of the dollar, but they now compete for attention with Drought Monitors, crop progress and condition reports and the 8-14 day weather forecasts.

Corn futures were up 2.3% this week, partially recovering from a 4.5% loss the previous week. Spread traders were unwinding positions taken on March 31, believing that producers are backing off from the surprisingly large intended acreage. Weekly ethanol stocks dropped 800,000 barrels from the previous week. Weekly export sales for corn through March 31 were up 20% for old crop at 945,200 MT. We saw another 175,100 MT of new crop bookings.

 

Commodity

 

 

 

Weekly

Weekly

Mon

03/24/16

04/01/16

04/08/16

Change

% Chg

May

Corn

$3.700

$3.540

$3.623

$0.083

2.28%

May

CBOT Wheat

$4.630

$4.758

$4.603

($0.155)

-3.37%

May

KCBT Wheat

$4.718

$4.778

$4.600

($0.178)

-3.86%

May

MGEX Wheat

$5.12

$5.29

$5.21

($0.080)

-1.54%

May

Soybeans

$9.105

$9.183

$9.168

($0.015)

-0.16%

May

Soy Meal

$275.30

$272.30

$273.70

$1.40

0.51%

May

Soybean Oil

$33.18

$34.45

$33.94

($0.510)

-1.50%

Apr

Live Cattle

$135.850

$132.975

$134.375

$1.400

1.04%

Apr

Feeder Cattle

$155.83

$156.20

$155.90

($0.30)

-0.19%

Apr

Lean Hogs

$69.625

$67.800

$66.825

($0.975)

-1.46%

May

Cotton

57.72

59.20

60.07

0.870

1.45%

May

Oats

$1.870

$1.850

$1.870

$0.020

1.07%

 

Wheat futures were lower at all three exchanges.  MPLS was the firmest again, with a 1.5% loss while the others were down 3.4 and 3.8%.  Better than expected winter wheat crop condition ratings were the driver for the bears, with their modest but >0 correlation to above trendline yields. USDA had already confirmed what the market was telling us, i.e. spring wheat acreage will be sharply lower in 2016. MPLS appears to be fighting to keep or expand the 11.3 million acres intended. The market in general was also hurt by poor US export sales. Due to deferrals, old crop sales were net negative 58,100 MT, partly offsetting  159,300 MT in new crop commitments. The EU has approved 23.8 MMT for export this marketing year, down 3.4 MMT from the previous year at this point.

Soybeans were down 02% this after after a similarly modest gain of 0.8% the week before.  Futures were cruising for a down week through Thursday, with unwinding of bean/corn spreads and some profit taking in the veg oil sector. However, the market was up by double digits on Friday with assistance from a weak US dollar.  By Friday night the soy:corn ratio was 2.48:1, off slightly from the 2.52:1 the previous week but still favoring soybeans on the swing acres.

May cotton futures were up 1.45% for the week, thanks mostly to weakness in the US dollar and stronger export sales. Old crop US cotton export sales rebounded nicely to 210,900 running bales of upland and another 13,200 RB of old crop pima. New crop bookings were 28,000 RB for upland and 700 rb for pima. The old crop marketing year ends July 31.  The USDA AWP for the upcoming week is 45.74 cents, up from 44.48 cents last week. The LDP/MLG is 6.26 cents, down from 7.52 cents last week. 

Live cattle futures were up 1% this week. USDA weekly export sales for beef slowed to 11,300 MR after hitting a 2016 high of 24,500 MT the previous week. Cash cattle sales were strong, with live quotes at $133-137 and dressed sales in the $213-216 zone. Weekly FI cattle slaughter was estimated at 535,000 head, down 7,000 from the previous week.  Beef production YTD is now 2.4% larger than last year. Average carcass weights have been running close to 20# above year ago. Choice wholesale beef prices plunged $4.31 this week (-2.0%) to extend the 2.3% drop from the previous week. Select boxes were down $1.68 (-0.8%).     

Lean hog futures were down 1.5% after losing 2.7% the previous week. The CME Lean Hog Index was up 25 cents on Friday to $66.56, up $1.31 from last week. The USDA average pork carcass cutout value was up 55 cents on a Friday/Friday basis, a 0.72% increase. The picnic primal posted the biggest gain for the week at 7.84%.  Estimated weekly FI hog slaughter is 2.154 million head, down 27,000 from last week. Pork production YTD is down about 1.6% from last year.

Market Watch

The main USDA reports this week will be the Crop Production and Supply/Demand (WASDE) on Tuesday at noon EDT.  We will also get the regular Export Inspections and Crop Progress reports on Monday and the weekly Export Sales report on Thursday morning.  April hog futures and options expire on Thursday.  May cotton options expire on Friday. NOPA is also expected to release their monthly soybean crush report on Friday.

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