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Self Driving Cars

Published on: 21:07PM Oct 02, 2015

 

Market Watch with Alan Brugler

October 2, 2015

Self Driving Cars

Self driving cars are getting a lot of attention these days, with Apple, Google and others somewhere in the game. The TV show 60 Minutes is expected to do a feature on the technology this weekend. If you think about it, the human driver is computer, taking visual inputs such as highway markings, traffic signs, weather conditions, the directions to the destination and other vehicles and translating those into speed, braking and turning actions in the vehicle.  The argument for self driving vehicles is that the human doesn’t perform that function all that well if impaired or distracted, and that the time spent driving could be spent more constructively.

Ag producers already enjoy some aspects of the self driving vehicles, as we already have auto-steer and GPS guidance that allow us to be more precise in getting that field planted, harvested or otherwise manipulated. Aircraft make wide use of autopilots. At times this week, the markets (notably cattle and the S&P) could have used a little autopilot.  The humans were panicking and driving extreme price moves. In the case of the S&P, they pulled out of the early Friday nosedive and flew higher on the day. Cattle were still fighting the stick to get back to horizontal. 

The key to making all of these technologies work (cars, planes, tractors and markets) is good data and good software.  Programmers say “garbage in, garbage out”.  Loss of a GPS signal, or an object in the path that mimics something else will cause an inappropriate result. In the markets, you need to gather the correct inputs and have the training to steer the marketing moves in the right direction without panic, fear or greed distracting your driving.  Here at Brugler Marketing, we have the sensors and the human “liveware” to get you where you want to go.

Corn futures eked out a 1/4 cent net gain for the week. The USDA September 1 corn stocks were within 8 million bushels of trade estimates, resulting in a lack of market response. The monthly Grain Crushings report on Thursday showed 445 million bushels used for ethanol production in August, off a mere 3 million bushels from July. Ethanol yields are running at 2.83-2.84 gallons per bushel, an efficiency improvement which is limiting overall corn consumption. Weekly ethanol stocks declined. Petrobras is raising gasoline and diesel prices in Brazil, creating room for more ethanol use there or higher prices. US export sales commitments are lagging, with 22% of the full year forecast on the books vs. the 5 year average pace of 37% for this date. In the COT report form the CFTC, Managed Money (MM) speculative accounts added 788 contracts to their net long position during the week ending September 29.  They were net long 67,413 contracts.

Wheat futures were cautiously higher this week.  The front month SRW and HRS contracts were up 5 1/2 and 4 1/2 cents respectively, while KC HRW lagged with a 1/4 cent advance. The market rallied this week on smaller US production, with USDA 84 million bushels smaller than expected in the September 30 report. Russia took steps to free up exports by adjusting their tariff scheme, but is also trying to raise domestic intervention prices. There are dry weather concerns for both Russia and Australia. On the bear side, Stats Canada hiked projected production there to 26.1 MMT, 1 MMT larger than pre-report estimates. Total US export commitments are 46% of the full year USDA estimate. They would typically be 53% by this point. Sales last week were miserable at only 77,100 MT.

November soybeans finished the week 15 cents lower, down 1.7% after a 2.5% gain the previous week. USDA tightened old crop carryover to 191 million bushels in the Grain Stocks report, which will be adopted in the October 9 WASDE report. On the other hand, traders are concerned that US average yield might be increased next Friday based on field reports. Export sales were stout at over 2.5 MMT last week, but full year commitments are 8.1 MMT behind year ago (297 million bushels). USDA is expecting them to be down 104 million bushels for the year due to South American competition.  Brazil shipped 3.7 MMT in September vs. 2.6 MMT last year. The Commitment of Traders report confirmed that the large spec funds trimmed their  bearish bets from the previous week.  They added a net 15,773 long positions during the week ending 9/28 and were net short -30,497 contracts on that date. 

October cotton futures were down 44 points for the week, but the contract is expiring.  December is playing the price discovery role. It was down 24 points for the week.  USDA weekly Export Sales for the week ending 9/24 9/24 were 122,700 running bales, including 4,600 RB of Pima cotton. Total upland sales increased by nearly 34% week over week. US export commitments are 33% of the full year forecast, lagging the 53% average pace for this date. That usually means WASDE is overstating the full year total. As of Tuesday night, managed money accounts were shown to be net long 19.068  contracts. They added 705 in the week ending September 28. USDA put the AWP for this week at 44.32, boosting the LDP/MLG to 7.68 cents per pound from 7.39 last week.

 

 

Commodity

 

 

 

Weekly

Weekly

Mon

09/18/15

09/25/15

10/02/15

Change

% Chg

Dec

Corn

$3.773

$3.890

$3.893

$0.002

0.06%

Dec

CBOT Wheat

$4.868

$5.078

$5.133

$0.055

1.07%

Dec

KCBT Wheat

$4.823

$5.003

$5.005

$0.002

0.05%

Dec

MGEX Wheat

$5.110

$5.228

$5.273

$0.045

0.85%

Nov

Soybeans

$8.673

$8.893

$8.743

($0.150)

-1.72%

Oct

Soy Meal

$309.000

$308.700

$298.500

($10.20)

-3.42%

Oct

Soybean Oil

$26.050

$27.720

$27.840

$0.120

0.43%

Oct

Live Cattle

$136.000

$133.700

$123.075

($10.625)

-8.63%

Oct

Feeder Cattle

$185.83

$184.60

$179.50

($5.10)

-2.84%

Oct

Lean Hogs

$71.050

$71.875

$73.350

$1.475

2.01%

Oct

Cotton

59.850

59.640

59.20

(0.440)

-0.74%

Dec

Oats

$2.305

$2.313

$2.123

($0.190)

-8.95%

 

Live cattle futures were down a sharp 8.6% on the week despite a dead cat bounce on Friday. October feeders were down $5.10 or 2.8% for the week. Packers successfully backed up heavy cattle into an expected hole in October marketings, with a net result of some very heavy animals and big discounts.  Beef export sales have been poor, and domestic business after Labor Day has suffered from chicken and pork substitution. Ground beef, notably 50% CL, is at multi-year lows due to large imports and a pull back in restaurant sales during August. Weekly beef production was steady with last week, but 1.6% larger than the same week in 2014. YTD production has crept within 3.9% of year ago, due to record high average carcass weights.  Wholesale prices were sharply lower for the week, but not as bad as the previous week. Choice boxed beef was down $6.46/cwt (-3.0%) for the week, with Select product down $8.44/cwt (-4.0%).

Front month lean hog futures were up 2% from last Friday. The October contract finished the week up $1.47 at $73.35. The CME Lean Hog Index was $72.65. The two need to converge at futures expiration on October 14.  Weekly pork production was down 0.1% from the previous week, but 7% larger than the same week in 2014. Year to date pork production is up 7.4% from last year. Weekly FI slaughter was estimated at 2.270 million head, down 6,000 head from last week.  YTD slaughter is 8.2% larger than a year ago. Wholesale pork prices were up $1.59/cwt or 1.89% from Friday to Friday.  Pork export sales for the week picked up to 26,100 MT, a 26% improvement for the week.

Market Watch

Cattle traders will begin the week dealing with any surprise futures positions inheritied with the expiration of the October options on 10/2. We’ll get the usual USDA Export Inspections and Crop Progress reports on Monday, with traders expecting soybean harvest to be as high as 50% completed. USDA will release the regular weekly Export Sales report on Thursday morning, but the most highly anticipated reports of the week will be on Friday morning (Oct 9) with the release of the monthly Crop Production and WASDE supply/demand reports. Traders are anxious to see if USDA makes any changes to planted and harvested acreage, based on the incorporation of FSA data into the NASS survey structure. Tweaks to the US average yield are also possible.

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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