Published on: 21:36PM Jun 30, 2017

Market Watch with Alan Brugler

July 5, 2019


In most parts of the US, the July 4th holiday is commemorated with fireworks. Elaborate aerial displays are seen in major urban areas, and some neighborhoods have enough firecrackers, bottle rockets and mortar shells to mimic a 4-5 day battle for control of Main Street. While quality controls have improved over the years, there are still some duds with bad fuses, and dangerous “will it or won’t it explode” decisions to be made. Our ag markets had some fireworks of both kinds. Cattle and corn were hotter than a firecracker, while soybeans and wheat were either duds or got a little too much rain for a good show.














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Corn futures posted 3.27% gains this week, propped up by strong gains on Wednesday. US corn crop conditions were steady at 56% gd/ex in Monday’s Crop Progress report, as the Brugler500 index was up 1 to 350 points. Several May demand numbers were released this week, with the Grain Crushing report on Monday showing 459.643 mbu of corn used for ethanol in May. That was down 2.29% from May 2018 but was the largest of any month in 2019. Official Census corn exports for May were 4.69 MMT (184.63 mbu), which put 18/19 exports YTD at 1.715 bbu. That leaves 485 mbu of corn exports over the next three months needed to achieve the USDA projection of 2.2 bbu. The weekly Export Sales report showed sales of 156,251 MT for old crop, as commitments are now 88% of the USDA projection (100% average). As of the final week of May, accumulated exports in that report were 125 mbu behind the official data from Census for the same timeframe.

Wheat futures fell this week in all three markets. MPLS was down 3.61%, wiping out last week’s gains, with July CBT 1.66% lower and KC down 3.05%. NASS pegged the winter wheat harvest at 30% complete as of last Sunday, with warmer and drier weather likely allowing that to push north this week. The Spring wheat crop was reported at 25% headed, vs. that 52% average for that week. Crop ratings for winter wheat were up 3 points on the Brugler500 Index of USDA ratings, with spring wheat down 2 points to 378. Census data released on Wednesday showed May wheat exports at 2.759 MMT (101.37 mbu), which brought the 18/19 total to 914 mbu, 36 mbu off USDA’s target. Friday’s Export Sales report showed sales of 276,496 MT for the week of June 27. That was down 37.17% from last year, with total export commitments actually 20.56% larger than at this time in 2018.

Soybean futures dropped 3.06% from last Friday, showing losses in 3 of the 4 trade sessions this week. Soybean meal was down 2.97%, with soy oil 2.83% lower to pressure product value.  The Crop Progress report on Monday showed soybeans 92% planted by last Sunday. That would suggest 6.4 million acres of soybeans yet to plant on 6/30 when comparing to USDA’s 80.04 acreage number from last Friday. Conditions were UNCH on the gd/ex scale at 54%, with the all-inclusive Brugler500 Index down 1 at 348. May crush was 165.25 mbu per USDA, a drop of 4.18% from the same month in 2018. Monthly exports reported by Census showed that US shipped 2.56 MMT (94.08 mbu) of soybeans in May, with half headed to China. Old crop commitments for exports are now 105% of USDA’s projected total, with the normal pace for this week at 102%. Unshipped sales are a large portion of that total (21.89%), with shipments 82% of USDA’s target vs. the 92% average.

Cotton futures saw a jump of 1.12% in December Futures this week. Monday’s Crop Progress report showed 37% of the US crop reported as squared and 7% setting bolls, both 2% back of normal. Official Census data was released on Wednesday, with May cotton exports shown at 1.831 million bales, up 4.12% from April but 8.23% lower yr/yr. YTD (Aug18-May19) exports are 12.192 million bales, down 14.11% from the same time last year. Cotton export sales were 141,498 RB for old crop upland and 55,261 RB for new crop in the week ending June 27. Commitments for export are now 111% of USDA’s projected total, vs. the 106% average and 109% last year. The weekly Cotton On-Call report from CFTC showed mills at a total of 32,814 contracts of unfixed call sales for December, with unfixed call purchases at 39,149 contracts.

Live cattle futures saw a 2.54% pop in August Futures this week, with strength seen from cash trade. Sales started out at $109, but soon rose to $110 in the South, with sales of up to $113.50 in the North. Feeder cattle futures were up 1.44% this week, fighting off higher feed prices via strength in fats. The CME feeder cattle index was $133.21, up 12 cents for the week. Wholesale beef prices were slightly lower this week. Choice boxes were down 0.2% for the week, with Select down 0.1%. Weekly beef production was down 13.5% from the previous week due to Thursday’s Holiday and 1.3% below the same week in 2018. Year to date beef production is now 0.1% larger than year ago on 1.2% higher slaughter. May beef exports were off of last year’s monthly record by just 0.1% at 272.334 million lbs, which was also up 11.9% than April.

Lean hog futures were up a tick this week from last Friday. Accumulated pork export sales in the weekly report are 8.8% larger than the same time last year. China continues to ship US pork every week, with this week’s total 8,107 MT, a multi-year high to the country. The CME Lean Hog index was $73.22 on Friday, down $4.04 from the previous week. The pork carcass cutout value lost 67 cents this week (-0.9%) this week, at $73.17. Weekly pork production was 13.4% smaller than the previous week due the July 4th celebration, but 7.3% larger than the same week in 2018. YTD pork production is up 3.9% on 3.2% more hogs, insinuating larger carcass weights. Census data, converted by USDA, showed 511.437 million lbs of pork were exported in May. That was down 0.8% from last year’s record and a 2.5% drop from April. Exports to China were nearly double the same month last year at 56.751 million lbs.

Market Watch

We will get back to the normal weekly report schedule. USDA’s Export Inspections report will be released on Monday morning, with the Crop Progress report out in the afternoon. Wednesday will show the release of the EIA report for ethanol stocks and production as of July 5. Thursday will be a busier than average day, with the Export Sales numbers out in the morning and the monthly Crop Production and WASDE reports released in the afternoon. July cotton futures expire on Tuesday, with corn, soybeans, meal, bean oil, and the three wheat exchanges expiring on Friday.

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