Wearing The Green

Published on: 23:36PM Mar 11, 2016

Market Watch with Alan Brugler

March 11, 2016

Wearing The Green

 

While most of the population of the United States is not of Irish origin, a lot of folks are up for a good party! Just look at how many root for a favorite in the Super Bowl when their own team was out of the playoffs before Thanksgiving. St. Patrick’s Day is coming up on Thursday the 17th, but it looks like a lot of commodity markets are already celebrating the occasion. We’re seeing a lot more green numbers on the screen this month, and not just from the 2016 bull leaders such as hogs and gold.  Crude oil has completed a double bottom on the April chart, and the dollar chose an opportune time to swoon. Can grains and cattle join the party? It looks good so far, with April LC posting the highest trade since November and November soybeans ticking the highest levels since before Christmas. Enjoy the celebration, but make sure you have your favorite hangover cure close at hand just in case!

 

Corn futures were 3.1% higher this week. US weekly export sales were 1.192 MMT, up 8.6% from the week before. The US has a sales window here, with Brazil switching over to soybean exports and Argentine harvest just beginning. US export sales commitments are only 69% of the full year WASDE figure. They typically would be 79% by now, so some catching up is needed or USDA will eventually have to reduce the forecast. Weekly EIA ethanol production averaged 978,000 barrels per day, a decrease of 9,000 bpd from the week before. Ethanol stocks rose to record high levels of 23.5 million barrels. USDA left US ending stocks UNCH at 1.837 billion bushels in the WASDE report, but cut projected world ending stocks to below 207 MMT. That tightened the world stocks/use ratio a little, particularly if Chinese stocks are excluded from export availability. Weekly data from the CFTC released on Friday afternoon showed that as of Tuesday, the managed money accounts collectively held an even larger net short position than a week earlier. Commercial accounts were net 12,212 contracts less short than they were the previous week.

 

Wheat futures were higher in all three markets this week, with Chicago SRW the strongest at 3.2% for the week. A weaker US dollar aided export sales perceptions, and above normal temps are expected to be followed in the Plains by a period of below to much below mid-March temps late this coming week. USDA left projected US wheat ending stocks UNCH at 966 million bushels on Wednesday, preferring to wait on data from the Grain Stocks report before tweaking feed and residual use. World stocks were tightened for the first time in a number of months, with reductions in the Indian and Australian crop estimates.  US Weekly export sales were higher than last week, coming in at 433,478 MT for the week ending 3/3. New crop sales were the largest since the week ending September 10. In weekly CFTC data, managed money accounts were shown lightening up on their net short position in HRW and SRW wheat compared to the previous week; more so in SRW.  The Commercials are showing a net long position in both HRW and SRW for the fifth week in a row.

 

Soybeans were up 2% this week, with an assist from a 3.8% gain in nearby soy oil. USDA reported net soybean export bookings of only 478,482 MT for the week ending March 3, about 8% more than the total reported a week earlier.  Export commitments (already shipped plus outstanding sales) are 93% of the full year estimate. The average for this date would be 95%.  Unshipped sales are 35% smaller than the 5 year average amount for this date, but on the other hand export inspections have been above year ago for each of the past four weeks. USDA did hike projected US ending stocks by 10 million bushels as the trade expected, to 460 million. The bullish move was a reduction in projected world ending stocks, and having no change in the projected Brazilian or Argentine production from the previous month figure. The Friday afternoon Commitment of Traders report showed managed money accounts lightened up on their net short position by a net 38,552 contracts from Tuesday to Tuesday.

May cotton futures edged out a slight gain for the week, helped by a weaker US Dollar. Large US acreage and production forecasts continue to weigh on the market. USDA made no change in the expected US ending stocks in this months WASDE report, leaving them at 3.6 million bales. The cash average price estimate for the year was lowered 0.5 cents on the top end. World ending stocks are now seen slightly smaller than last month. Export shipments reported on Thursday morning were a new high for the marketing year. Upland cotton bookings were 204,246 RBs for the week ending March 3.  Pima sales were 14,900 RBs. Outstanding (unshipped) US cotton export commitments are now 77% of the full year forecast. They would usually be 96% by now, with the marketing year ending July 31. The USDA AWP for the upcoming week is  43.80 cents, up from 43.29 cents last week. The LDP/MLG was set at 8.20 cents.

 

Commodity

 

 

 

Weekly

Weekly

Mon

02/26/16

03/04/16

03/11/16

Change

% Chg

Mar

Corn

$3.545

$3.545

$3.660

$0.115

3.14%

Mar

CBOT Wheat

$4.433

$4.548

$4.698

$0.150

3.19%

Mar

KCBT Wheat

$4.425

$4.578

$4.725

$0.148

3.12%

Mar

MGEX Wheat

$4.89

$5.03

$5.16

$0.128

2.47%

Mar

Soybeans

$8.550

$8.705

$8.880

$0.175

1.97%

Mar

Soy Meal

$257.20

$267.70

$272.00

$4.30

1.58%

Mar

Soybean Oil

$31.03

$30.73

$31.93

$1.200

3.76%

Apr

Live Cattle

$137.550

$136.350

$139.800

$3.450

2.47%

Mar

Feeder Cattle

$158.65

$158.50

$162.40

$3.90

2.40%

Apr

Lean Hogs

$70.850

$70.800

$71.825

$1.025

1.43%

May

Cotton

57.53

57.11

57.15

0.040

0.07%

Mar

Oats

$1.710

$1.703

$1.810

$0.108

5.94%

 

Live cattle futures rose 2.5% this week. Live cattle trade was mostly quiet all week without enough sales to determine a market trend. Dressed sales in NE and the WCB were reported as high as $220. Choice boxed beef prices were $1.19 lower this afternoon, but Select was up $1.27; the spread was the widest it has been since mid December yesterday. Choice wholesale beef prices were up 1.4% this week, while Select boxes were up 1.5% from last Friday.  Managed money accounts increased their net long cattle position by about 20% from Tuesday to Tuesday, according to CFTC data released today.  Estimated weekly slaughter was 536,000 head, up 3,000 head vs. last week and up 8,000 head from the same week in 2015.  Beef production YTD is up 0.8% vs. 2015 and gaining ground despite lighter average carcass weights.

 

Lean hog futures were up 1.4% this week. The CME Lean Hog Index for 3/9 at $66.56 was 35 cents lower than a week earlier. The USDA average carcass cutout price was down 57 cents in the afternoon report, but it was still 86 cents higher than last Friday’s average. Estimated FI hog slaughter for the week was 2.15 million head, down 0.2% from last week. Hog slaughter for the year to date is down 0.4% from last year. with pork production down 1.3%. Total weekly pork exports of 19,281 MT were a new high for 2016.  As of the Tuesday close, managed money accounts had shaved about 3.65% off of their net long position in lean hogs from a week earlier.

 

Market Watch

 

With the monthly WASDE report out of the way, grain traders are free to focus on the March 31 Grain Stocks and Planting Intentions reports. Livestock operators have the Cattle on Feed report coming up this Friday (18th) while the quarterly Hogs & Pigs report will be released by USDA on the 25th. Monday will mark the expiration of the March grain futures contracts, and also give us weekly Grain Inspections and a few state level crop progress reports from NASS. NOPA is expected to release their monthly member crush report on Tuesday. The Fed is also meeting Tuesday and Wednesday, with traders assuming no risk of an interest rate hike at this meeting. USDA will release weekly Export Sales data on Thursday, with great interest in whether corn bookings continue to improve.  Thursday is also St. Patricks Day, not an official holiday but big enough in Chicago to dye the river green and move a lot of green beer.  Don’t overlook the 20th, which is the first day of Spring.

 

Visit our Brugler web site at http://www.bruglermarketing.com or call 402-289-2330 for more information on our consulting and advisory services for farm family enterprises and agribusinesses.Clients can also get one touch access to our cash market and hedging recommendations via our mobile web site.  You will be taken to the mobile home page automatically if you visit our web site with the mobile device. Three times daily fundamental news from Brugler is available on the free side of the mobile site.

 

There is a risk of loss in futures and options trading. Past performance is not necessarily indicative of future results.  Copyright 2016 Brugler Marketing & Management, LLC