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

The Pitchers Are Ahead of the Batters

Published on: 20:29PM Apr 10, 2015

 Brugler

Market Watch with Alan Brugler

April 10, 2015

The Pitchers Are Ahead of the Batters

 

It is the first week of the major league baseball season, and arguably the first week of planting season since it is the first week USDA put out weekly crop progress ratings. A look at the scoreboard below tells us that the pitchers for the Bears are throwing a lot of strikes and winning these early games. In fact, they had an extremely low ERA this week.  Of the 12 Bull batters tracked, only two had a batting average with a plus sign. The rest were negative (good thing they don’t do that in the Majors!).  As with big league baseball, it is a long season and doesn’t end until October. The pitchers can sometimes be ahead of the batters in the early season, but the guy who wins the batting title at year end usually has an average above .300 and knocks a few out of the park. Get yourself some popcorn or soy nuts and get into the game!

Corn was down 2.5% for the week. The headliner this week was the WASDE report on Thursday, which boosted corn ending stocks from 1.777 billion bushels in March to 1.827 billion. The increase came from a 50-million-bushel reduction in feed use when the economists reversed the upward bump they made in March based on larger than expected March 1 grain stocks. While the trade expected an increase of 1.63 MMT in the WASDE, global corn stocks jumped more than 3 MMT. In the first Crop Progress report of the season, Southern corn planting was shown to be off to a slow start, with Texas 37% done vs. 50% average for this date. Louisiana was 67% done vs. 93% average but did manage to plant more than half the total intended acres in a single week!

Soybeans lost more than 34 cents this week, with May closing the week at $9.52 despite USDA reducing ending stocks from 385 million to 370 million bushels. The market’s reaction was one of “buy the rumor, sell the fact” reaction as the USDA numbers were within the trade range of expectations. Global end stocks crept up from 89.53 to 89.55. Brazilian production was left unchanged at 94.5 but Argentina’s crop was raised 1 MMT to57 MMT.  Year to date, US soybean export shipments total 1.649 billion bushels and are 154.7 million bushels ahead of last year. Only 146 million bushels of additional shipments are needed to make USDA’s projection for the marketing year. From this week last year through July 31, we shipped 771.4 million. That doesn’t mean we’ll exceed the forecast: In Thursday’s export sales report, bookings for2014/15 were a negative 176,700 as Chinese buyers rolled 355,000 MT of purchases into 2015/16.

 

 

Commodity

 

 

 

Weekly

Weekly

Month

03/27/15

04/03/15

04/10/15

Change

% Chg

May

Corn

$3.91

$3.87

$3.77

($0.095)

-2.52%

May

CBOT Wheat

$5.08

$5.36

$5.27

($0.098)

-1.85%

May

KCBT Wheat

$5.53

$5.83

$5.59

($0.240)

-4.30%

May

MGEX Wheat

$5.76

$5.91

$5.81

($0.095)

-1.64%

May

Soybeans

$9.67

$9.86

$9.52

($0.345)

-3.63%

May

Soy Meal

$321.40

$327.30

$309.20

($18.100)

-5.85%

May

Soybean Oil

$30.60

$31.04

$31.09

$0.050

0.16%

Apr

Live Cattle

$162.63

$163.03

$158.80

($4.225)

-2.66%

Apr

Feeder Cattle

$218.93

$220.38

$212.45

($7.925)

-3.73%

Apr

Lean Hogs

$61.13

$63.18

$62.55

($0.625)

-1.00%

May

Cotton

63.55

63.77

65.06

$1.290

1.98%

May

Oats

$2.72

$2.69

$2.67

($0.025)

-0.94%

 

It seems the wheat market was more impressed with Monday’s crop conditions report and rain than the WASDE report, as the market traded generally lower during the week.Kansas City lost 24 cents on a weekly basis; Chicago, almost 10 cents and Minneapolis, 9.5 cents. The wheat crop is in better shape than a year ago, according to USDA. Wheat condition was 44% good/excellent and 16% poor/very poor compared with 35% in the top categories and 29% in the bottom last year. The Brugler500 Index for the first full reporting week was 331 vs. 301 last year. The WASDE tightened US stocks by 7 million bushels and global ending stocks modestly.  

Live cattle futures lost more than $4.22 and feeders, almost $7.93 this week. The latter was a 3.7% drop. The WASDE estimate for beef production in 2015 increased from 24.06 billion pounds to 24.21 billion. The expected cash cattle average price was bumped $3 higher on the low end, to $160; the top end of the range was unchanged $167. Yet beef cutout prices have rebounded and the spread against pork prices is record wide. The question on everyone’s mind is whether beef can maintain such a premium in the face of rising pork and poultry supplies.  Weekly beef production was down 4.5% from the previous week. The YTD total is down 5.5% from last year. Estimated carcass weights are 22# heavier, offsetting some of the 7.6% drop in slaughter.

Lean hog futures were not immune to the general rout in the ag markets: The April contract lost 62.5 cents. The WASDE report increased estimated pork production from 24.12 billion pounds in March to 24.24 billion. USDA’s year-average cash price range (live hog basis) dropped from $53-$57 to $48-$51. The $49.50 midpoint would equate to $66.90 in the lean hog equivalent traded by the futures market.  Pork production YTD is up 4.8% from last year at this point. Weekly slaugher was down 0.3% from the previous week, with pork production down the same.

Cotton was one of two commodities that ended the week with a higher futures price, up 2%.  USDA raised cotton ending stocks from 4.2 million bales to 4.4, disappointing the trade, which expected a reduction to 4.14 million. Higher old-crop production – which accounted for the boost - had been telegraphed in the earlier Ginnings report, but was off the trade’s radar by the time it showed up in the WASDE report. The global ending stocks figure was up just a tick but still represent 97% of annual use. Weekly average spot cotton prices were up almost 3 cents over the previous week, on sales of 40,030 bales, according to USDA. Total spot transactions so far this marketing year total 1.97 million bales, up from 1.25 million a year ago.The AWP in effect for April 10-16 is 51.09, leaving the LDP at 0.91 cents.    

Market Watch

Wednesday April 15 will bring the monthly NOPA crush report. It will receive extra scrutiny, coming on the heels of USDA’s supply/demand report this week, as traders seek to match up usage. USDA  will continue with its Monday Crop Progress and Conditions reports and the usual Export Inspections report on Monday and Export Sales on Thursday.  Cotton traders will be reacting to any surprise May positions inherited from the May 10 options expiration. April hog futures expire on Wednesday.

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.

Copyright 2015 Brugler Marketing & Management, LLC