More Second Guessing

Published on: 21:36PM Jun 28, 2019

Market Watch with Alan Brugler

June 28, 2019

More Second Guessing

Last week’s column was titled “Second Guessing” and the theme was that grain markets were debating whether prices had climbed enough to reflect the known fundamentals and not just the hypotheticals.  This week we have MORE second guessing, only now it is about the sanity of NASS analysts and the validity of their data. The market was shocked by the increase in corn planted acres to 91.7 million  in the Friday report, and now the sport becomes guessing how much they will revise the number. The when is already known, as they are re-surveying 14 states in July but won’t release any needed data changes until the August crop report.














% Chg









CBOT Wheat







KCBT Wheat







MGEX Wheat














Soy Meal







Soybean Oil







Live Cattle







Feeder Cattle







Lean Hogs











 $ 1.9600










Corn futures posted 4.97% losses this week, with a majority of that on Friday. The main reason for the selloff came Friday morning in the form of a bearish June Planted Acreage report. USDA indicated that producer surveys showed 91.7 million acres of corn planted for 2019. While that is down 1.092 million acres from the March Intentions report, trade estimates were looking for a 5.7 million acre drop. USDA did note they will resurvey 14 different states during July to get a better handle on acres since 16.7% of the intended crop was yet to be planted when surveys were collected. June 1 corn stocks were 5.202 bbu, below estimates and a 103 mbu drop from last year. Crop ratings on Monday were seen at 56% gd/ex, translating to 349 on the Brugler500 index, down 5 points from the previous week. Export sales commitments are 87% of USDA’s projected total, trailing the 100% average pace for this date. Unshipped sales on the books are 55% smaller than last year at this time. The large managed money spec funds added another 44,414 contracts their net long position as of Tuesday, as reported in Friday’s Commitment of Traders report. That took them to the largest net long position in over a year at 184,929 contracts.  Commercials extended their large net short hedge position by another 39,151 contracts.

Wheat futures saw firm to higher trade in all three markets this week despite sharp losses on Friday. MPLS was up 3.22% this week, with July CBT 0.38% higher and KC steady. NASS estimated all wheat acreage for 2019 at 45.603 million acres on Friday, a 150,000 drop from March and just under trade estimates. The reduction to acreage was mainly due to other spring wheat acres being down 400,000 acres to 12.43 million acres. Winter wheat was up 274,000 acres from March at 31.778 million. All wheat stocks at the end of the 18/19 MY were reported at 1.072 bbu, which is a drop of 27 mbu from the year prior. Thursday’s Export Sales report did show sales totaling 611,997 MT for the week of June 20, a 9-week high. The Crop Progress report on Monday showed that just 15% of the winter wheat crop was harvested as of last Sunday, lagging the 34% average. The CFTC Commitment of Traders report indicated the funds adding another 8,800 contracts to their net long position in Chicago during the reporting week that ended on June 25, taking it to 31,513. They still held a net short position of 16,803 contracts in KC wheat futures and options.

Soybean futures slipped 0.33% from last week, despite double digit gains on Friday. Soybean meal was down 0.79%, with soy oil 0.7% lower to pressure product value. The main story to end the week was the 2019 acreage number from USDA, 80.04 million acres. That was down 4.6 million acres from March and well below most estimates. NASS noted that 41.2% of the intended acres were yet to be planted at the point surveys were collected (typically 10-15%) The Crop Progress report showed soybeans 85% planted by last Sunday. Soybean stocks as of June 1 also came in under most estimates (1.861 bbu) at 1.789 bbu. That was still a 560 mbu jump yr/yr, but lower than expected.   Old Crop Commitments for exports are now 103% of USDA’s projected total, with the normal figure for this week at 101%. Unshipped sales on the books are up 30% vs. last year, with a large amount of those are committed to China. Per Commitment of Traders data, the large money managers trimmed their net short position by another 21,265 contracts futures and options as of June 25. That put their net position at -34,042 contracts by that date.

Cotton futures rebounded 3.2% this week in July Futures. Cotton export sales commitments were light at 72,000 RB for old crop upland and 45,300 RB for new crop in the week ending June 20. On Friday, USDA confirmed US cotton plantings were completed or intended on 13.72 million acres. That was down from 14.1 million last year, but only 20,000 away from the average trade estimate coming into the report. The Commitment of Traders report showed that the large spec funds increased their net short in cotton by 7,075 contracts in the week ending June 25. That put them net short -37,460 contracts.

Live cattle futures rallied 3.7% this week. The large managed money spec funds continue to liquidate their long position, with the Commitment of Traders report showing another 7,314 contract reduction in their net long position last week. That left them net long 29,406 on June 25. Cash cattle trade was $ 109-111, with most of it occurring on Friday. Feeder cattle futures were up 2.4% this week, aided by the pull back in feed ingredients and higher live cattle. The CME feeder cattle index was $133.12, up $1.75 for the week. Wholesale beef prices were lower. Choice boxes were down 0.1% for the week, with Select down 2.0%. Weekly beef production was up 0.7% from the previous week and up 0.8% from the same week in 2018. Year to date beef production is now 0.1% larger than year ago on 1.2% higher slaughter.   

Lean hog futures dropped 5.4% this week in the nearby July contract. The Hogs & Pigs report on Thursday showed record large hog numbers, but also hinted that recent price declines are reducing the enthusiasm for expansion. Breeding herd inventory was up only 1.42% when 2.1% or more had been anticipated. Weekly pork export sales were improved. China continues to ship US pork every week, with this week’s total 7,270 MT.  The CME Lean Hog index was $77.26 on Friday, down $2.29 from the previous week. The pork carcass cutout value was down $2.89 (-3.8%) this week. That put it at $73.84. Weekly pork production was 2.7% smaller than the previous week due to plant down time on Monday, but 9.8% larger than the same week in 2018.  That pretty much explains the absence of the summer rally in hogs. It is usually driven by declining slaughter. YTD pork production is up 3.8% on 3.2% more hogs.  The Commitment of Traders report showed the large speculative managed money funds reducing their net long by 1,904 contracts in the week ending June 25. They were still net long 33,207 contracts despite the sharp decline in futures over the past month, patiently waiting for global export trade to pick up.

Market Watch

We will start the first week of July with the Export Inspections report on Monday morning. That afternoon USDA will also release the monthly Fats & Oils, Grain Crushings, and Cotton Systems reports, as well as the weekly Crop Progress report. On Wednesday, Census will release trade data from May, in addition to EIA releasing weekly ethanol data. The CME will close early on Wednesday ahead of the July 4th Holiday, with the markets closed Thursday. That will push the USDA Export Sales report to Friday morning.

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