Market Watch with Austin Schroeder
April 19, 2024
Perspective
A lot of things in life are about perspective. Is the glass half full or half empty? “I can’t get this crop planted” or “well, at least we’re getting rain.” I try to be a glass half full guy, but I am no Socrates, so I am not going to sit here and philosophize. When it comes to this week, perspective was a lot of how we dissected the market. Yes, corn and beans printed a new low for the move and broke some chart support, but we got a rally to head home for the weekend. Cattle put together a nice rally, but it was at the end of a $15 drop. And then there’s wheat, where it hard to have a glass half full opinion seemingly ever.
Despite losses for much of the week, May corn rounded things out with a loss of just 2 cents (0.46%). New crop December slipped 5 ¾ cents lower since last Friday. Crop Progress data showed 6% of the national corn crop planted as of 4/14 and ahead of the 5% average. Rain across parts of the Midwest this week may have slowed things some. EIA reported ethanol production dropping 73,000 barrels per day from the week prior to 983,000 bpd as some plants were taking time off for maintenance. Stocks were down 128,000 barrels to 26.08 million barrels as of 4/12. Export Sales data from Thursday saw a bounce in corn bookings from the week prior to 501,166 MT during the week that ended on April 11. The CFTC Commitment of Traders report showed specs in corn futures and options adding 16,016 contracts to their net short position in the week that ended on April 16. They held a net short of 279,570 contracts by Tuesday. Commercial held a net short position of just 3,673 contracts, trimming it by 17,098 contracts in that week.
The wheat market was mixed again this week, with MPLS getting a chance to lead the bulls higher, up 4 ¼ cents (0.66%). Kansas City was back down 8 ¼ cents (1.4%), with Chicago 5 ¾ cents lower (1.03%). Crop Progress data from Monday showed 11% of the US wheat crop headed, vs. the 7% average. Condition ratings slipped 2% this week to 55% gd/ex, or a 346 (-2) rating on the Bruger500 index. The spring wheat crop was 11% planted, 1% below the average pace. This week’s Export Sales report showed a net reduction in sales of 93,556 MT for the week of 4/11. New crop sales slipped back lower to 222,016 MT, a 3-week low. The weekly CFTC Commitment of Traders report showed spec funds in CBT wheat adding back another 9,835 contracts to their net short position as of 4/16 at 96,403 contracts. That was the largest since last November. In KC wheat, they were nearing record net short country for that smaller volume market, adding another 4,620 contracts to that position at 49,231 contracts.
Soybeans got a decent rally to close out the week on Friday, but it wasn’t enough to erase early week losses. May was down 23 ½ cents (2%) this week, with New crop November down 12 ¼ cents (1.3%). Meal was down just 70 cents on the week, while bean oil continued their collapse, down another 151 points. NOPA released data on Monday, showing the members had an all-time record crush during March at 196.4 mbu. Crop Progress data pegged the soybean crop at 3% planted, even with last year and 2% ahead of normal. The Export Sales report from Thursday had soybean bookings for the week that ended on April 11 at a 4-week high of 485,795 MT. New crop business was a MY high at 263,200 MT. Spec funds in soybean futures and option were adding 28,565 contracts back on to their net short position in the week of 4/16. That took them back to a near record net short 167,875 contracts as of Tuesday. Managed money in bean oil added a massive and record large 49,167 contracts to the net short in that week to -53,295 contracts.
Live cattle pulled out of the dive that started in the last week of March, as June was up $4.20 this week. Cash trade slipped back in the North this week with trade at $183 ($292 dressed), down $1, with the South exchanging hands at $182, even money. Feeders were back up $7.80 (3.33%) on the week. The CME Feeder Cattle Index was down another $2.84 this week to $241.73. Cattle on Feed data from Friday afternoon showed March placements at 1.746 million head, a 12.35% drop vs. last year, while March marketings were down 13.71% at 1.706 million head. That put April 1 on feed inventory at 11.821 million head, a 1.49% increase vs. 2023. Wholesale boxed beef quotes slipped back lower this week. Choice boxes were down $4.90 (1.6%) at $295.67, while Select was $4.71 lower (-1.6%) to $290.83. Weekly beef production was 2.8% above the previous week and 3% above last year at 524.3 million lbs. That took the YTD beef production to down 2.8% from the same time a year ago, with cattle slaughter down 4.8%. This week’s Commitment of Traders report showed managed money trimming another 4,675 contracts from their net long in cattle futures and options. They took that to the lowest since late January at 32,301 contracts as of April 16.
Hogs rebounded from last week’s weakness, as June was back up $2.75 (2.69%) this week. The CME Lean Hog Index was another $1.62 higher this week at $91.46. USDA’s Pork Carcass Cutout was back down a slight $1.11 this week (1.1%) to $100.09. The ham was the only primal reported lower this week, down $7.21 (7.8%). Weekly pork production was up 0.3% from last week at 536 million lbs, as well as 0.7% larger vs. last year. YTD hog slaughter has run just 0.7% above last year, with production just 0.2% higher, implying lighter carcass weights. Managed money backed off their large net long in the hog market, parring back 6,086 contracts of futures and options during the week that ended on April 16. They held a still large net long of 86,645 contracts on Tuesday.
Cotton continued to fall this week. May was down a sharp 393 points (4.76%) as death spiral liquidation took over ahead of deliveries. New crop December lost 256 points (3.20%). Crop Progress data showed the US cotton crop at 8% planted as of 4/14, even with average pace. The weekly Export Sales report showed old crop upland cotton export bookings improving to 146,112 RB, with new crop at 80,077 RB. Shipments totaled 266,732 RB in that week, an 8-week low. The FSA cut the Adjusted World Price for cotton by 325 points on Thursday, to 62.18 cents/lb. Commitment of Traders data confirmed a mass exodus of the managed money long in cotton futures and options during the week that ended on 4/16, of 25,890 contracts. That was the largest bear move in a one-week Tuesday/Tuesday move since CFTC started the data series back in 2006 taking the net long down to just 36,142 contracts.
Market Watch
Next week kicks off with the Monday morning Export Inspections report, with the weekly Crop Progress report following in the afternoon. On Wednesday we will get updated EIA ethanol stocks and production data, as well as the NASS Cold Storage report that afternoon. Wednesday is also the first notice day for May cotton futures deliveries. Export Sales data will be out on Thursday morning, with April feeder cattle futures and options expiring later that day. On Friday, May options for corn, wheat, and the soybean complex will expire.
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