Waiting Around

Published on: 19:54PM Mar 27, 2015


Market Watch with Alan Brugler

March 27, 2015

Waiting Around

Most of the ag industry (at least the grain operations) is just waiting around for something to happen. Everyone is waiting for soil temps to get warm enough to plant, and those in the east or south are waiting for fields to dry up. Market wise, everyone is waiting for the Tuesday USDA reports. The Grain Stocks  and Prospective Plantings reports have a reputation as market movers, but not always in the upward direction. Basis bids have been firm due to a lack of producer selling ahead of the reports, and merchandiser concern that they won’t be able to buy it after the reports because either a) prices are too cheap or b) prices are going up and producers are waiting for further gains.

Corn was up 1.6% this week. Weekly ethanol production was up, at 953,000 barrels/day.That put corn grind over 101 million bushels for the week. Weekly net export sales for corn in the week ended March 19, at 502,288 metric tons for the current marketing year, were down almost 14% from the prior week. Accumulated exports have reached 21.806 MMT, 1.9% ahead of the same time last year. New-crop export sales were just 28,966 metric tons, a little more than sold in the same week last year. Grain sorghum net export sales for the current marketing year slumped from 181,822 metric tons a week earlier to just 58,883. Accumulated exports reached 4.83 MMT and 3.252 MMT are outstanding. New-crop sales were strong at 228,000, bringing the total for new crop to 828,255.

Soybean futures were down 0.4% week, with soybean meal down 0.5% while soy oil was almost UNCH. Soybean export sales saw a big jump, from 341,961 a week earlier to 505,803 in the week ended March 19. That’s the highest weekly net sales since Feb. 5. More than 220,000 in new-crop sales also were added to the books. Soymeal sales also rose, though more modestly,from 203,990 to 224,270.  New-crops sales were just 3,933 metric tons, bringing total bookings to mjust 506,405 metric tons, less than half the 1.138 million on the books at this time last year.  













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Chicago wheat futures were down a hard 4.5% this week despite a bounce on Friday. KC was down 2.9% and MPLS slipped 2.4%. Wheat export sales continue to be anemic. Net old crop sales for this week were only 102,341, the lowest since the end of the 2013 marketing year. Total old-crop commitments lag a year ago by 24%. New-crop sales also fell hard, with just 79,350 reported, down from 142,900 the prior week. IGC is projecting a 10 MMT drop in world production for 2015, but expects only a 2 MMT tightening of global ending stocks.  This forecast will of course be revised as Northern Hemisphere planting of spring wheat occurs, and conditions for winter wheat can be better determined.

Cattle futures rallied 2.6% this week, with a two week gain of more than $8 per cwt. Ready cattle numbers tightened in March but will begin to expand in April and May. On a Thursday/Thursday basis wholesale beef prices were higher, with Choice up 1.65% and Select up 0.89%. Beef exports bounced back a bit in the week ended March 19 after a slight drop the prior week. Weekly beef production was 2.3% larger than the previous week, but lagged the same week in 2014 by 6.7%. For the year to date, beef production has been 5% smaller than 2014.  Slaughter has been down 7.1%, with the difference due to higher average carcass weights.

Hog future were 4.4% higher for the week as spec shorts cashed out of winning positions ahead of the March 27 quarterly Hogs & Pigs report. Weekly pork production was 1.4% larger than the previous week, and 11.5% larger than the same week in 2014. For the year to date, pork production is up 4.9%. Although next pork export sales slipped in the current week, they were still nearly three times the same week a year ago. Total pork export commitments have been above a year earlier since the year began, and the lead is growing. Accumulated exports, at 203.75 MMT, were 10 times last year’s PEDv-supply-reduced total.  The Hogs & Pigs report showed slower expansion than expected, with the breeding herd up 2.24% from year ago. However, the number of hogs out there right now is substantial at 107.75% of year ago in the market hog category. Pigs per litter for Dec-Feb were a record 10.17

Cotton futures were up 1.15% for the week. Net cotton export sales collapsed fronm 181,822 bales in the prior week to only 58,883 in the week ended March 19, although new-crop sales picked up – no doubt in anticipation of lower production and hence higher prices in 2015.  A year ago, new crop sales were negligible and outstanding new crop commitments stood at 290,000 against 828,255 this year. Trade estimates for 2015 US cotton acreage are nearly all below 10 million acres.  A Dow Jones survey showed the average acreage estimate at 9.44 million.

Market Watch

The coming week is shortened by the Good Friday holiday, when markets are closed. Dominating the week for agriculture will be the USDA Prospective Plantings and Grain Stocks reports at 11 a.m. CT Tuesday.  Little attention is likely to be paid to the second USDA grain crushings report as the market will still be trading the news from the prior day. Otherwise, the grain export inspections, EIA ethanol production and stocks and export sales all are scheduled for their usual release days and times. In outside markets, where Federal Reserve tightening is still a hot topic, the Consumer Confidence report on Tuesday may garner some interest as a measure of how robust the economy is. The US Trade Balance report on Thursday could provide some insight into how the strong dollar is affecting the overall balance of trade.

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.

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