Giddyup!
Market Watch with Austin Schroeder and Alan Brugler
Apr 8, 2022
Giddyup!
According to the Oxford dictionary, giddyup (/ˈɡidēˌəp/) is an exclamation used to get a horse to start moving or go faster. The term is common in Western novels and movies. I think it could be aptly applied to the grain markets this week, if you substitute bulls for the horse. Traders took a look at the USDA numbers, found nothing threatening (like cactus or rattlesnakes) and told those bulls to Giddyup! KC Wheat had the most bullish non-report fundamental story, and ran the fastest, up 9.3% for the week. The first 18-state NASS winter wheat crop condition ratings were released on Monday, with a Brugler500 index of 279. That is the worst start to the year since 1996. The corn and soybeans were also motivated by move quickly.
Corn futures reversed the previous week’s losses, as nearby May was up 4.59% since last Friday. The USDA’s monthly WASDE update indicated no change to the US 21/22 carryout, leaving it at 1.44 bbu, vs. estimates of a 40 mbu cut. Brazilian corn production was also raised by 2 MMT to 116 MMT. World ending stocks were raised by 4.49 MMT to 305.46 MMT. Weekly export sales data showed sales picking back up a little to 782,400 MT. New crop sales were tallied at 145,200 MT, lower than the previous last week. US old crop corn export commitments (shipped plus outstanding sales) are now at 54.437 MMT, 18% below last year at this time. They are now 86% of the full year WASDE forecast, slightly behind the average pace of 88%. Accumulated exports are 53% of the updated WASDE full year projection, now 1% above normal. Friday’s Commitment of Traders report tallied managed money spec funds at a net long 362,306 contracts as of 4/4. That was up 7,702 contracts from the previous week.
Wheat bulls regained their footing this week. KC wheat was the leader of the complex, with May up 9.25% on the week. Chicago was next in line, rallying 6.81%. MPLS was the only of the three to take out all of last week’s losses, 5.82% higher. The WASDE report from USDA showed larger expected US ending stocks for wheat by 25 mbu to 678 mbu. That was done via cuts to feed & residual and exports. World carryout was actually down 3.09 MMT to 278.42 MMT. The weekly Export Sales report showed old crop wheat sales slowing again to 156,300 MT for the week ending 3/31. New crop sales were down vs. the previous week 223,000 MT. Old crop wheat export commitments are now 19.420 MMT. That is just 91% of USDA’s newly revised full year forecast. They would normally be 100% by now. Shipments to date are still 22% smaller than a year ago, at 16.011 MMT. That is 75% of the USDA projection vs the average of 80% by now. The weekly CFTC Commitment of Traders report indicated spec traders in CBT wheat futures and options backing off their marginal net long position by 5,480 contracts as of April 5 to 13,959 contracts. For KC wheat, they trimmed 281 contracts from their net long position in that week, taking it to 45,029 contracts.
Soybean bulls put on their rally boots this week, with May up more than $1.06 (6.71%). The products gave a helping hand with nearby Meal up $18.20/ton (4.04%) and soy oil 392 points higher (5.51%). USDA data was bullish this week with the WASDE showing a 25 mbu reduction to the old crop carryout at 260 mbu. That was mainly due to higher projected exports. They also trimmed Brazil’s estimated soybean production by 2 MMT to 125 MMT. World stocks were only down 0.38 MMT, as carryover was also increased and Chinese imports were down 3 MMT. The weekly Export Sales report tallied old crop bean bookings in the week that ended on 3/31 at 800,700 MT, with new crop at 298,500 MT. US soybean exporters have either sold or shipped 56.143 MMT of the 21/22 crop, now just 7% smaller than last year’s record buying pace. Total export commitments are 97.5% of the USDA full year estimate, outpacing the 93% average for this date. Shipments are 77.1% of that projection, matching than the average pace. CFTC’s Commitment of Traders report on Friday showed money managers in soybean futures and options adding back 7,382 contracts to their net long in the week ending April 5. That took the net position to long 163,655 contracts.
Live cattle finished out the week with April futures down 82 cents from last Friday (-0.60%). Cash trade got off to an early start but was mostly steady with last week at $138-140. Feeder cattle felt pressured by the strength in corn with April down $5.02, or 3.11%. The CME Feeder Cattle Index was down just 4 cents from the previous week to $156.01. Wholesale beef prices were mixed this week, widening the Chc/Sel spread to $10.14. Choice boxes were up $3.33 (+1.2%) per 100 pounds, with Select $2.19/cwt lower (-0.8%). Weekly beef production was up 5.4% for the week and was 6% larger vs. the same week last year. YTD beef production is now up 1% vs. a year ago. YTD cattle slaughter is now 0.7% larger than last year. Weekly Export Sales for beef backed off to an 11-week low to 14,000 MT in the week ending in March 31. Japan was the main buyer of 6,500 MT. Shipments were tallied at 19,300 MT, with 5,400 MT headed to South Korea. The weekly Commitment of Traders data showed managed money spec funds slashing 11,500 contracts from their net long position in live cattle futures and options in the weeks of 4/5, taking it 40,264 contracts.
Lean hogs added to the previous week’s losses, falling another $5.87 on the week, or -4.88%. The CME Lean Hog index was down $2.45 this week to $100.68. The pork carcass cutout value was down $0.44 (-0.4%) this week to $103.16. Ham primals were back up 4.3% after leading, with bellies down 8.8%. Weekly pork production was down 0.1% from last week and 0.6% below the same week in 2021. YTD that number is down 6.5% vs last year on 6.2% fewer hogs slaughtered. USDA Weekly Export Sales data tallied sales at 41,200 MT of pork sold for the week ending 3/31, a 49% jump from the previous week. Mexico bought 13,200 MT. Shipments were 29,000 MT in that week. Friday’s Commitment of Traders report showed spec funds in lean hog futures and options trimming 11,382 contracts from their net long position in the week ending last Tuesday. That took their net long to 59,749 contracts by 4/5.
Cotton futures slipped another 1.59% this week. They are less than a couple weeks removed from contract highs but still well below the highs seen in 2011, however. New crop December is posted a new life of contract high on Friday. Friday’s WASDE report showed no change to the US balance sheet, with carryout remaining at 3.5 million bales. On the world side, USDA raised world stocks were up 810,000 to 83.38 million bales. USDA tallied export sales of cotton in the week ending 3/31 at just 62,900 RB for old crop, a MY low, and 64,400 RB for new crop. Shipments were a MY high 455,500 RB. Outstanding cotton sales are 44% larger than year ago at 7.181 million RB. Total commitments are now 103% of the full year WASDE projection, vs. the normal 99%. Catch up is still needed on shipments with 51% of the expected number shipped, vs. the 60% average pace. USDA’s FSA set the week’s AWP for cotton at 130.42 cents. That is down just 47 points from last week! That is in effect through next Thursday. The weekly Commitment of Traders report shows managed money spec funds in cotton net long 79,501 contracts as of April 5. They added 3,795 contracts to the net long vs. the previous week.
Market Watch
Next week is expected to be pretty mild on the report side of things. It starts out with Monday showing Export inspections data in the morning, with the Crop Progress report in the afternoon. EIA will publish their weekly production and stocks report for ethanol on Wednesday. Export Sales data will be released on Thursday morning. It is also the expiration of April Lean Hog futures and options. The markets will be closed on Friday in observance of Good Friday.
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