Market Watch with Austin Schroeder
May 3, 2024
Call Your Shot
A couple weeks back we released an article to our customers that detailed the seasonal rally in December corn and November soybeans. What we call the spring low to summer high, with the low taking place after the end of March. The goal was to try and find out how high the market could go in an average year as well as using a few that were analogous to the current crop situations. In doing so, and to try to find an estimated high, we took the low from April 19th. By using that low, we were effectively saying if we stop here, the high should be in this area; and if we print a new low, take that multiplied by this % move and that is your target to shoot for. Now, I will preface this with the statement that I do NOT pick bottoms. I only observe what the market shows me and go from there. With that said, this is the closest you’ll find me to calling my shot, as the market has a quick way of humbling an individual. And being 23 cents off that low for corn and 55 cents off the low for Nov beans, it looks plausible. Now for getting to those highs…
Corn rounded out the week with July up a total of 10 ¼ cents to make the 2-week run at 17 cents. New crop December was up 9 ¼ cents since last Friday. Crop Progress data showed 27% of the national corn crop planted as of 4/28 and ahead of the 22% average. Rain across parts of the Midwest this week may have slowed things some. EIA data showed a 33,000 barrel per day bump in ethanol production during the week that ended on April 26 to 987,000 bpd. Despite the increase in output, stocks saw a draw of 245,000 barrels to 25.488 million barrels. USDA Monthly Grain Crushings data showed 468.75 mbu of corn used for ethanol production during March. That was a 7.48% jump from last year, the largest March total since 2018. The weekly Export Sales report showed 758,466 MT in corn bookings during the week ending on April 25. New crop sales were just 33,658 MT in that week. Monthly export data from Census showed 5.89 MMT (232 mbu) of corn shipped during March, a 19.78% increase on the same month last year and the largest monthly total since last May. The CFTC Commitment of Traders report showed specs in corn futures and options trimming 20,506 contracts from their still large net short position in the week that ended on April 30. They held a net short of 218,040 contracts by Tuesday. Commercial held a net short position of 55,445 contracts, adding another 13,273 contracts in that week.
The wheat market was mixed this week. MPLS got a chance to lead the bulls higher, 11 cents (1.56%). Chicago was up just s tick in the July contract when all was said and down on the down then up week. Kansas City slipped 4 cents lower in the July contract. Crop Progress data from Monday showed 30% of the US wheat crop headed, vs. the 21% average. Condition ratings slipped 1% this week to 49% gd/ex, or a 344 (-2) rating on the Bruger500 index. The spring wheat crop was 34% planted, 15% above the average pace. The weekly Export Sales report showed a net reduction of 20,298 MT of wheat sales in the week of 4/25. New crop sales were tallied at 406,911 MT. Export data released by Census indicated 2.09 MMT (77.1 mbu) of wheat shipped in March, an 18-month high. The weekly CFTC Commitment of Traders report showed spec funds in CBT wheat slashing 28,318 contracts from their net short position as of 4/30 at 47,886 contracts. That was the smallest net short since last July. In KC wheat, they cut a large 18,598 contracts from that net short position to 29,610 contracts as of Tuesday.
Soybeans were put in rally mode this week as July was up 37 ¾ cents (3.21%). New crop November was 26 ¼ cents higher. Meal led the charge, with a 7.98% gain ($27.5/ton). Bean oil continued to be a drag on the market, down 5.4% (246 points). Crop Progress data pegged the 18% of the US soybean acres planted on 4/28, well above the average planting pace of 10%. The monthly Fats & Oils report from USDA showed 203.7 mbu of soybeans crushed during March, up 2.91% from last year and a record for the month. Export Sales data showed an improvement from the week prior at 413,997 MT of beans sold in the week ending on 4/25. New crop bookings were at just 7,000 MT. Census data from March had soybean shipments at 3.05 MMT (112.2 mbu), a drop of 2.6% from last year. Commitment of Traders data showed the large managed money spec funds in soybean futures and option adding 222 contracts back on to their net short position in the week of 4/30. That took them to a net short 149,236 contracts as of Tuesday. Managed money in bean oil added another 17,354 contracts to the net short in that week to -66,882 contracts, the largest since May 2019.
Live cattle fell $1.90 this week pressured by continued talk of the H5N1 bird flu virus. USDA tested meat samples in retail stores, which showed no signs of the samples and prompted the market to get a late week pop. Cash trade was higher this week with the North trading at $186-188 and the South exchanging hands at $184-186. Feeders closed the week with losses of $5.40 (2.17%. The CME Feeder Cattle Index was back down $2.74 this week to $242.39. Wholesale boxed beef quotes slipped lower again this week. Choice boxes were down $2.94 (-1%) at $294.20, while Select was $1.07 lower (-0.5%) to $287.65. Weekly beef production was 1%% above the previous week and 3.3% above last year at 523.9 million lbs. That took the YTD beef production to down now just 2.3% from the same time a year ago, with cattle slaughter down 4.5%. Export Sales of beef in the week of 4/25 totaled 22,468 MT, a calendar year high. Census data converted to a carcass weight scale showed 256.1 million lbs of US beef exported in March. That was down 10.4% from last year and was a 5-year low. This Friday’s Commitment of Traders report indicated spec traders trimming back 2,034 contracts from their net long in cattle futures and options. They took that to 33,620 contracts as of April 30.
Hogs saw weakness creep in the market, with losses of $3.52 on the week. The CME Lean Hog Index was another up 4 cents this week at $90.92. USDA’s Pork Carcass Cutout was back up a slight 49 this week (0.5%) to $98.12. The loin and picnic were the only primals reported lower this week, with the ham leading the way to the up $3.07. Weekly pork production was up 1.3% from last week at 519.8 million lbs, buy down 2% vs. the same week last year. YTD hog slaughter has run just 0.1% above last year, with production just 0.5% higher, implying lighter carcass weights. Pork export sales totaled 33,583 MT during the week that ended on 4/25, a 3-week high. The monthly export update from Census showed converted carcass weight exports of 621.1 million lbs of pork shipped in March. That was a 3-year high and the third largest March all time. CFTC data showed managed money backing off their large net long in the hog market by 7,008 contracts to a net long of 85,379 contracts of futures and options during the week that ended on April 30. Much of that was via long liquidation.
Cotton continued the recent drop with July losing another 284 points this week (3.51%). New crop December was down 134 points (1.73%). Crop Progress data showed the US cotton crop at 15% planted as of 4/14, even with average pace. The weekly Export Sales report showed 97,408 RB of upland cotton sold in the week ending on April 25, with new crop sales totaling 34,407 RB. Export shipments in that week dropped to a 14-week low to 179,980 RB. Monthly export data from Census showed 1.63 million bales of cotton (excluding linters) shipped during March. That was a 3.63% increase over the same month last year, and the largest since June 2022. The FSA cut the Adjusted World Price for cotton by 78 points on Thursday, to 60.55 cents/lb. USDA’s Cotton Systems report showed 758 RB cotton consumed by US mills in March, up 48.6% from last year but 25.9% below the Feb use total. Stocks were at 1,307 RB, the lowest for March going back 2015. Commitment of Traders data shows managed money in cotton futures and options flipping to a new net short position during the week that ended on 4/30 to -1,934 contracts that was a bear move of 11,435 contracts on the week the ended on Tuesday.
Market Watch
We begin next week with the Monday morning Export Inspections report and the weekly Crop Progress report following in the afternoon. On Wednesday we will get updated EIA ethanol stocks and production data, as well as May cotton futures expiration. Export Sales data will be out on Thursday morning. On Friday, USDA will issue their monthly Crop Production and WASDE reports, with the latter showing the first balance sheets for new crop.
Visit our Brugler web site at https://www.bruglermarketing.com or call 402-697-3623 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. Similar risks exist for cash commodity producers. Past performance is not necessarily indicative of future results.
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