Shades of Pamplona

Published on: 21:33PM Jun 26, 2015


Market Watch with Alan Brugler

June 26, 2015

Shades of Pamplona

As many of you know, Pamplona (in Spain), is known for its annual running of the bulls event. The 6 bulls for the evening bull fight are turned loose on a well barricaded street course, along with some steers for company. The crowd tries to escape being gored as the bulls run at an average 15 mph from the pens to the arena. There are usually a few who unwisely let a bull get to close and are gored. That pretty much sums up the action in the ag markets this week, only the actual cattle markets were sharply lower.  Those weekly changes in the table below are some of the biggest bullish moves of the year in the grains. As I say in seminars and webinars, “The market is not a hockey stick. Prices don’t go down and stay down, they go too far down and then correct back up.” Wheat was the fastest bull this week, with Chicago up more than 13%!














% Chg









CBOT Wheat







KCBT Wheat







MGEX Wheat














Soy Meal







Soybean Oil







Live Cattle







Feeder Cattle







Lean Hogs




















Corn was a whopping 8.25% this week, with July hitting the highest price since April 8. Weekly ethanol stocks dropped a sharp 800,000 barrels to 19.8 million barrels, while production rose to a new all time weekly high of 994, 000 bpd. Miles driven are rising nicely in the US as the economy improves.  Export sales commitments YTD are 97% of the full year forecast, vs. the 100% average, so there is still work to do there. This week was mostly about spec bears taking profits ahead of the end of the quarter on June 30, with the added incentive of wet weather leaching nitrogen and otherwise taking the top end out of likely yields for 2015.  The Commitment of Traders report on Friday night confirmed that the large spec funds had reduced their net short in corn by 25,649 contracts in the week ending June 23.

Wheat futures lived up to their dual reputations of 1) “Wwheat takes no prisoners” and 2) “Trade wheat and sleep in the street”.  Futures were up 13% for the week in Chicago. Price action since April has been extremely choppy.  Wheat export business is still lagging, with only 22% of the full year forecast on the books vs. an average over 30%. Some areas were getting harvested, but others were shut down by soft soils.  Test weights have been generally good, but wind damage and diseases tied to wet weather are limiting yield and/or quality. The global picture is muddled. The supposed El Nino victims (India and Australia) have excellent crop conditions right now, while Canada, the EU and Russia have some drought concerns. Coceral reduced projected 2015/16 EU production to 140.6 MMT.

Soybeans were up a more modest 3% for the week in the July contract. July hit an intra-day high of $10.24 1/2 on Friday morning but dropped 22 1/2 cents between pit open and pit close. Soybean export sales commitments continue to increase, but the pace has slowed vs. other years. Outstanding (unshipped) soybean meal sales are more than twice as large as last year at this time. The CFTC Commitment of Traders report showed the spec funds went net long 1,829 contracts as of 6/23 after being net short more than 100 thousand contracts earlier in the spring. This of course took place right ahead of the huge rally on Wed-Friday.  

July Cotton was up 5.7% this week, catching a little of the bullish fever circulating in the grains. Weekly export sales reported by the USDA on Thursday were 117,100 running bales, including 113,200 RB of upland and 3,900 RB of pima.  Old crop upland sales were a net 60,500 RB.  Overall US cotton export commitments are close to the long term average at 107% of the full year WASDE forecast. The USDA put the AWP for this week at 50.22, with the LDP/MLG at 1.78 cents vs. 1.49 cents the prior week. The CFTC report showed the large spec funds still net long 28,786 contracts as of Tuesday night.

 Live cattle futures broke hard this week, down 2.4%.  Weekly beef production was down 8.4% from the same week in 2014 but up 1.2% from the previous week. Beef production YTD is now down 5.3% from last year. Slaughter has been down 7.5%, with higher weights making up the difference. Cash cattle trade was light on Friday, mostly cleanup after volume was done on Thursday. Prices were mostly $148-149 in the south and $238 in the north. Wholesale beef prices were up 0.7%  in the Choice boxes on a Friday/Friday basis.  Select product was up 0.8% for the week.

Lean hog futures were down 0.4% this week. US pork production YTD is up 6.4% from last year at this point. Weekly pork production was up 0.4% from June 20, but 12.2% larger than the same week in 2014. The USDA pork carcass cutout value was down 1.1%  this week. Pork bellies continue to rise in seasonal fashion, but the ham primal was down 7.74% for the week. Estimated weekly slaughter of 2.143 million head was up 0.4% from the previous week and 12.2% more than the same week in 2014.  The USDA Hogs and Pigs report on Friday afternoon showed Market hog numbers up 9.44% from last June, and All Hogs up 8.66%. USDA sharply revised the December and March data to better fit observed slaughter data. The breeding herd is still expanding, but at a slower than expected pace of 101.2% of year ago when traders had looked for more than 2%. March-May farrowings were smaller than expected at 99.2% of year ago, but pigs per litter were record high at 10.37.  

Market Watch

Grain traders will begin the week reacting to any surprise futures positions inherited via options exercises on the 27th.  The big grain rallies put some previously “safe” call options in the money, including July $10 soybeans and July 560 CBT Wheat.  Things will stay interesting, with the USDA quarterly Grain Stocks and Planted Acreage reports being released on Tuesday at 11 am CDT. On the grain side, the regular USDA Export Inspections and Crop Progress reports are due on Monday, with weekly Export Sales on Thursday. Stats Canada is also expected to release an Acreage report on Tuesday. Tuesday is also month end and quarter end for the funds, allowing for plenty of asset allocation adjustment.

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