Return of The Black Ink

Weekly Ag Market Price Changes -8/12/22
Weekly Ag Market Price Changes -8/12/22
(Brugler Marketing & Management LLC. 2022.)

 
Market Watch with Alan Brugler
August 12, 2022

Return of the Black Ink

Take a quick glance at this week’s price table.  Notice anything unusual?  It is a color table, and this week it is only black and white. Why? Because all of the commodities in the table increased in price this week! That’s rather uncommon! You can blame some of it on weather threats. Or perhaps inflation. Contrary to certain public statements, inflation was not zero in July, it was 8.5% as measured by CPI, and 5.9% ex food and energy.  The weakening dollar might have had something to do with it, with DX futures settling at the lowest reading since late June on Friday. A weaker dollar usually means higher prices for commodities priced in dollars.

Corn futures posted a nice 29 ½ cent gain on the week for a 4.83% jump. New crop December was up 32 ¼ cents. USDA’s Crop Progress report from Monday showed 45% of the corn crop in the dough stage as of 8/7, 4% slower than the 5-year average pace. NASS said 6% of the crop had dented compared to 9% on average. Crop conditions slipped 7 points point in the Brugler500 index for the week (to 348), with gd/ex ratings down 3% to 58%. On Friday USDA’s first survey driven projection from NASS showed national yield at 175.4 bpa, a 1.6 bpa reduction from the July WASDE estimate. That production cut helped to take stocks for new crop 82 mbu lower to 1.388 bbu, with old crop carryout up 20 mbu to 1.53 bbu. The world stocks number for new crop was also taken lower with carryout down 6.2 MMT to 306.68 MMT. The weekly Export Sales report indicated old crop sales of 191,800 MT for the week of 8/04. New crop sales were about the same, at 191,300 MT. US old crop corn export commitments (shipped plus outstanding sales) are now at 60.850 MMT, 13% below last year at this time. That is 98% of the USDA export forecast, vs. the 103% average. Shipments are 92% of the forecast vs. the 94% average pace. The CFTC Commitment of Traders report showed managed money firms adding 12,141 contracts to their net long position in the week ending August 9. That put them net long 142,062 contracts in the run up to Friday’s USDA reports.

Wheat futures posted a round of solid gains this week, with all three exchanges seeing the active front months all above $8. KC HRW led the charge to the upside, with September 41 cents higher, a 4.83% move. Chicago SRW was up 3.90%, or 30 ¼ cents. MPLS spring wheat was up 3.72%, or 33 cents higher than the previous week. NASS data on Friday showed total wheat production up 2 mbu to 1.783 bbu. That increase came via spring wheat, up 9 mbu, with HRW down 9 mbu and SRW up just 5 mbu. A larger export projection by 25 mbu helped to cut the carryout projection by 29 mbu to 610 mbu. The weekly Export Sales report showed all wheat sales back up 44% from the previous week, at 359,200 MT for the week that ended on August 4. Sales commitments YTD are 8.675 MMT, now 2% below last year. That is also 38.6% of the new USDA forecast, behind the average pace of 41% for this date. Weekly CoT data showed the managed money spec funds were getting more bearish in CBT wheat. For the week, they added 5,378 contracts to their net short, bringing it to 20,348 contracts.  Managed money firms were 8,023 contracts net long in KC wheat after reducing the position 1,969 contracts in the week that ended August 9. That was their smallest net long in that market since 2020.  Spec funds in MPLS also went net short for the second consecutive week, the first time since 2020 (-1,015 contracts).

Soybeans took back all of the previous week’s losses, with September futures up 4.90% this week. New crop November almost recovered the previous week’s losses, with contracts up 3.23% (45 ½ cents. Product values helped lead the way, with meal 6.22% higher and soy oil up 6.97% for the week. NASS reported 61% of the soybean crop was setting pods as of 8/7. That is 5% point behind the average. The Brugler500 index was back down 2 points from last week at 355 as that 1% of the crop went back to fair from excellent (reverting to the previous week). Thursday’s Export Sales report indicated another net reduction for old crop soybean export sales, this time by 66,700 MT. New crop export sales were 477,200 MT. Old crop export commitments are 101.1% of the full year forecast (typically 104% on this date). The cancellations and roll overs are having an impact. Accumulated shipments YTD are 93% of the WASDE forecast, with the average 94% for this date. CFTC’s update had spec funds 101,509 contracts net long as of August 9. That was up 2,038 contracts from the previous week and their most bullish position since July 5.

Live cattle were up $2.35 or 1.7% for the week. Cash cattle changed hands at $144-148 in the north, up $4-5 on the week, with some $229-235.50 in the beef. Cash trade also rallied in the South to $140, allowing August futures to clear that mark.   The CME Feeder Cattle Index was up $2.85 from last week to $178.28. Wholesale beef prices were mixed this week, with the Choice/Select spread narrowing to $23.78. Choice was down $1.25 (-0.5%) through the week. Select boxes were $0.92 per hundred (-.4%) higher. Weekly beef production was down 0.7% from the previous week and 0.8% larger than the same week in 2021. Beef production YTD is up 1% on 1.2% larger slaughter. Thursday’s Export Sales report showed beef bookings increasing to 14,600 MT in the week that ended August 4. Japan, South Korea and Taiwan were the three main buyers. The Commitment of Traders report on Friday showed spec funds were adding 11,068 contracts to their cattle net long in the week ending 8/9/22. They were net long 49,072 contracts as of Tuesday night.

Lean hog futures were up $1.62 in the October contract for the week. The CME Lean Hog index was $121.86 up another 15 cents from last week. The pork carcass cutout value was down $3.20 (-2.6%) this week. Bellies led the way lower, down $13.58, while the loin and picnic were higher. US weekly pork production was UNCH from the previous week and 1.8% below the same week in 2021. YTD production is down 2.9% on 3.6% fewer hogs. USDA trimmed their estimate of 2022 US pork production by 81 million lbs. in the WASDE report.  FAS data showed weekly pork export sales of 21,500 MT. Mexico, Japan and China were the main buyers. The Commitment of Traders report showed managed money spec funds were net long 65,153 hog futures and options contracts as of 8/9. That was up 8,403 contracts from the prior week.

Cotton futures shot up 13% this week, aided by a limit up move on Friday. USDA Crop Progress data showed 69% of cotton was squaring as of 8/7 and % had bolls open. The average pace would be 64% setting bolls with 9% opening. Condition ratings took a hit, with 7% moving out of the gd/ex categories to 31%, and the Brugler500 index dropping 18 to 283 points. The NASS crop production report on Friday was a shocker, with USDA increasing their abandonment estimate by 1.42 million acres in a single month. The Texas production estimate dropped from 7.7 million bales to 2.9 million.  National production dropped to 12.57 million bales, forcing a reduction in estimated ending stocks to 1.8 million bales. USDA’s AWP for cotton was down 1.29 cents on Thursday, to 88.15 cents/lb. The Commitment of Traders report had the spec funds 1,239 contracts more net long (to 33,068 contracts) as of August 9 than they were the previous week.  

Market Watch

Next week’s schedule starts off with the weekly Export Inspections report on Monday morning, along with the monthly NOPA release later that morning. Crop Progress data will be updated that afternoon showing condition/progress changes for this week. Skip ahead to Wednesday and EIA will release ethanol numbers for stocks and production. Thursday is the weekly Export Sales release from FAS.  Friday marks the monthly release of the Cattle on Feed report from NASS.

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.  

Copyright 2022 Brugler Marketing & Management, LLC.  All rights reserved.

 

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