Sorry, you need to enable JavaScript to visit this website.

Groundhog Days

Published on: 23:32PM Feb 05, 2016

Market Watch with Alan Brugler

February 5, 2016

Groundhog Days

A quick internet search shows a concensus forecast. Four different groundhogs were consulted, none saw their shadows. Thus, the tradition calls for an early end to winter in North America. With El Niño in full force who can argue with that? Above normal temps are expected for Dec-Mar across the northern part of the US. Of course, others might recall a Bill Murray movie called Groundhog Day, which consists of repeating the same day over and over.  We’re getting a little of that in the grain markets, with sideways action in corn and soybeans and the ADX showing little or no trend. That is not the case in the US dollar, which dropped into the deep freeze this week. The Euro and crude oil took on sunnier dispositions, with rising prices. Even Groundhog Day eventually ends.

Corn futures lost 6 3/4 cents for the week after a 1 ¾ cent gain last week. The weekly USDA export sales total was above the high end of trade idea, at 1.144 MMT. Accumulated shipments since September 1 are still down 22% from last year at this time.  Total commitments are 56% of the full year forecast, vs. 70% average for this date. There is a definite risk that USDA will cut the export forecast again on Tuesday. Milo sales (187,000 MT this week) continue to be mostly to China and Mexico, but not at the rate seen in 2015. US ethanol production slowed in the most recent reporting week, while ethanol stocks rose. The Friday CFTC report showed the spec funds reducing their bearish position by 27,718 contracts for the week ending February 2, on the heels of a 71,013 contract move in the same direction the week before.

Wheat futures lost between 8 and 18 cents in the March contracts of the three major classes with the steepest losses in HRW. USDA reported weekly export sales totaled 154.000 MT for the week ending January 28. The weekly total included 87,800 MT of sales for 2016/17. USDA indicates that 78% of the full year export estimate has been either booked or shipped. It typically would be 85% by this date. Shipments are down 15% YTD since June 1. The Commitment of Traders report showed managed money accounts getting less short in SRW wheat, and more short in HRW wheat.   The managed money position as of last Tuesday was net short -48,685 contracts in Chicago, and net short -20,119 contracts in the KC HRW.

Soybeans were down 14 3/4 cents, or 1.7% in the March contract this week. USDA reported net negative old crop soybean export bookings of 43,600 MT , with cancellations larger than sales. This was not a total surprise, as the biggest cancellation of 374,900 MT had been reported under the daily system last week. Weekly soybean meal sales were respectable at 187,500 MT. Soy oil bookings were larger than the previous week at 12,800 MT. Soybean export shipments are running 11% behind year ago since September 1. Total commitments are 88% of the full year WASDE number. They would typically be 90% by this date.  The Friday afternoon Commitment of Traders report showed the big spec funds backing off their net short position by 4,594 contracts. The net short increased to shrank to -25,862 contracts as of Tuesday night.

March cotton futures lost 1.9% this week after slipping 2.2% the previous week. The weekly USDA Export Sales report showed that 269,160 RBs of cotton was sold to international importers during the week ending last Thursday, including 10,800 RBs of Pima. It was the largest weekly total for US sales since the week ending Nov 26, and above trade expectations. China bought 13,661 RBs, the largest purchase for the country in three weeks. The USDA AWP for this week is 46.85, with the LDP/MLG returning to 5.15 cents for the week after being 5.11 cents last week.

 

Commodity

 

 

 

Weekly

Weekly

Mon

01/22/16

01/29/16

02/05/16

Change

% Chg

Mar

Corn

$3.703

$3.720

$3.658

($0.063)

-1.71%

Mar

CBOT Wheat

$4.755

$4.793

$4.668

($0.125)

-2.68%

Mar

KCBT Wheat

$4.708

$4.720

$4.540

($0.180)

-3.96%

Mar

MGEX Wheat

$4.97

$5.00

$4.91

($0.088)

-1.78%

Mar

Soybeans

$8.765

$8.823

$8.675

($0.147)

-1.70%

Mar

Soy Meal

$268.50

$272.40

$265.00

($7.40)

-2.79%

Mar

Soybean Oil

$30.50

$30.88

$31.23

$0.350

1.12%

Feb

Live Cattle

$132.075

$135.300

$136.050

$0.750

0.55%

Mar

Feeder Cattle

$157.90

$157.25

$153.83

($3.42)

-2.23%

Feb

Lean Hogs

$63.000

$65.800

$64.800

($1.000)

-1.54%

Mar

Cotton

62.45

61.13

59.97

(1.160)

-1.93%

Mar

Oats

$2.055

$2.008

$1.970

($0.037)

-1.90%

 

Live cattle futures were up 0.55% this week and up $3.97 in two weeks. Wholesale beef prices were mixed. For the full week, Choice boxes were up 0.8% and Select boxes were down 0.3%. Cash cattle business was slow to develop, with some $134 sales reported on Thursday and Friday in the south and some $208-210 business in the north. Weekly beef production was down 6% from the previous week, and down 0.6% from the same week in 2015.  YTD production is down 0.6%. Average carcass weights are still running about 13# above year ago. CFTC data showed that managed money reduced their net long position by 3,525 contracts in live cattle during the week ending on Tuesday, but increased their net long position in feeders by 579 contracts. The updated net long positions held as of the close on Tuesday were 9,300 contracts (live cattle) and 2,322 contracts (feeders).

Lean hog futures were up down 1.5% this week after a 4.26% jump the previous week. The CME Lean Hog Index was $63.98, up $3.75 from the previous Friday. Estimated FI hog slaughter for the week was 2.182 million head, down 6.3% from last week due to storm closures on Tuesday. Production for the week was down 6.4% vs. last week and down 3.6%  from the previous week. Pork production year to date is down 1.4%. The USDA reported the average carcass cutout was up $0.56 or 0.73% on Friday to $77.57.  The large spec funds added 5,983 contracts to their net long position in the reporting week ending February 2, taking it to 35,828 contracts.

Market Watch

We start off next week with the beginning of Chinese New Year on the 8th, the start of Golden Week in China. Cattle traders will also be reacting to any surprise positions inherited upon expiration of the February cattle options on the 5th. USDA will issue the regular weekly Export Inspections report on Monday, and Export Sales on Thursday. The main event will be the WASDE supply/demand estimates on Tuesday at noon EST.  Friday will be the expiration day for Feb hogs, and March cotton options, as well as Lincoln’s Birthday.

Visit our Brugler web site at http://www.bruglermarketing.com 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