Market Watch with Austin Schroeder
May 24, 2024
Some Gave All
Every year around this time, many different people have many different things racing through their minds. Summer is finally here! What are we doing for Memorial Day? What are we cooking? Am I going to get this seed in the ground? So on and so forth. But I think at times we all need to slow down and remember why we have Monday off (at least for those that do). It’s not for a day of cooking steaks/hamburgers. It’s not a day to go boating. And even though we use it as a day to visit and remember the loved ones we’ve lost, it’s not wholly for that either. Memorial Day is a day for us honor those who served our country and never came back. The ones that signed a dotted line to protect our freedoms and defended it with their lives. As we sit back on Monday and enjoy our day off, let’s not forget those who died so that we could have the right to enjoy the things we do.
Corn clawed back most of the losses from the week prior, as July was 12 ¼ cents (2.71%) higher this week. New crop December was back up 11 ¾ cents (2.47%). Monday’s Crop Progress data showed 70% of the US corn crop planted as of 5/19, catching up with the 71% average. Weekly EIA data saw a 19,000 barrel per day increase in ethanol production during the week that ended on 5/10 to 1.019 million bpd. Ethanol stocks dropped 277,000 barrels to 24.212 million. This week’s Export Sales report showed a 4-week high in corn bookings slipping to 911,151 MT in the week ending on May 16. Commitments for old crop sales this marketing year are 90% of the USDA forecast, compared to the 97% average pace. Friday afternoon’s Commitment of Traders report showed spec funds adding back some shorts in corn futures and options (49,991 contracts on net) in the week of May 21. That took their net short position back up to 121,162 contracts as of Tuesday. Commercials trimmed back their net short position by 33,932 contracts by that date to 146,685 contracts.
The wheat market was up again this week, rallying to new multi-month highs. Chicago was 46 cents higher in the July contract (7.06%), as Kansas City futures led the bull charge, up 59 ½ cents (8.99%). MPLS spring wheat was 41 ¼ cents in the green for the July contract (5.8%). Concerns over Russia’s crop and lower private estimates (83-86 MMT) gave the market some additional buying interest this week. Monday’s Crop Progress data showed condition ratings down 1% this week at 49% gd/ex, with the Brugler500 index down 1 to 333. The spring wheat crop was 79% planted, 14% above the average pace. Export Sales data indicated net sales of 17,852 MT of wheat sales during the week of 5/16 as we get closer the end of the MY. New crop sales were down again this week to just 224,860 MT. Commitment of Traders data from CFTC indicated spec traders in Chicago wheat cutting another 3,658 contracts from their net short position to 24,593 contracts by May 21, the smallest since October 2022. In Kansas City futures, they sliced just 503 contracts from that short position to 16,764 contracts as of Tuesday.
Soybeans got some Friday strength to help things along, as well as from meal, to assist the July contract with a 20 cent gain on the week. New crop November soybeans were up 16 ¼ cents (1.35%). Meal was the driver this week, as the July contract rallied $17.70/to (4.80%). Bean oil slipped back another 32 points this week. The NASS Crop Progress report showed 52% of the US soybean crop planted by May 19, still 3% above the average planting pace of 49%. Thursday morning’s Export Sales report saw bean bookings improving slightly from the previous week to 279,402 MT in the week that ended on May 16. Export commitments are now 93% of the USDA forecast, 6% behind the average pace. The Friday afternoon Commitment of Traders report pegged managed money spec funds in soybean futures and option cutting back another 16,239 contracts from their net short position during the week of 5/21. That took them to a net short 26,426 contracts as of Tuesday. Commercials saw an increase to their net short by 20,289 contracts to -65,706 contracts as of May 21.
Live cattle continued to rally on stronger cash action this week, as June was up $2.65 since last Friday. Cash trade picked up this week, with the South improving to $187-188 and the North at $192. Feeders were helped by the higher fats, but held back by the gains in corn, as August was up just 37 cents on the week. The CME Feeder Cattle Index shot up $7.10 week/week to $250.14. Wholesale boxed beef quotes were mixed this week ahead of the Memorial Day Holiday. Choice boxes were back down $3 (-1%) at $310.45, while Select was up $4.32 (+1.5%) to $301.72. The Chc/Sel spread was cut down to $8.73. Cattle on Feed data from Friday afternoon showed April placements down 5.8% at 1.656 million head, as April Marketings were up 10.12% to 1.872 million head. That took the May 1 on feed inventory to 11.554 million head, now down 0.86% from last year. Cold Storage data was also released, showing 430.683 million lbs of beef in stocks at the end of April. That was a drop of 0.88% from the previous month and 4.73% below a year ago (vs. the 9.06% yr/yr drop in the month prior). Weekly beef production was up 1.7% from both last week and the same week last year. That took the YTD beef production to down now just 2% from the same time a year ago, with cattle slaughter down 4.5%. Managed money spec funds increased their net long in live cattle futures and options by 46,480 contracts as of May 21 to 46,480 contracts.
Hogs continued their grind lower this week as June was down $2.22 cents (2.31%). The CME Lean Hog Index was back down 36 cents at $91.77. USDA’s Pork Carcass Cutout was down $1.71 this week (1.7%) to $99.14. The ham was the only primal reported higher this week, with the belly leading the way to the downside at $7.27 lower. Weekly pork production was down 1.3% from last week at 511 million lbs. That was up 1.7% vs. the same week last year. YTD hog slaughter has run just 0.5% above last year, with pork production just 0.2% higher. The monthly Cold Storage report showed some building of pork stocks in during April, up 1.19% on the month at 501.279 million lbs. That was down 11.66% from a year ago, compared to the 13.26% yr/yr drop at the end of March. Weekly Commitment of Traders data showed specs cutting out another 12,631 contracts from their net long position as of 5/21 to 43,497 contracts.
Cotton prices got some help from a limit up day this week, as July was up a total of 463 points (6.1%) since last Friday. New crop December was 304 points higher on the week (4.05%). CFTC from Friday didn’t show it but some late week short covering was likely involved with the price movement. The weekly Crop Progress report showed 44% of the US cotton crop planted as of 5/19, now back to even with the average pace. USDA’s Export Sales report showed a 29.71% wk/wk improvement in old crop sales to 202,935 RB in the week that ended on May 16. New crop sales totaled just 47,870 RB. Export shipments were at a 3-week low at 204,053 RB. The FSA raised the Adjusted World Price for cotton by 62 points on Thursday, to 60.08 cents/lb. The large managed money speculators in cotton futures and options added another 8,058 contracts to their short position as of 5/21. As of the Tuesday reporting period, they were net short 23,372 contracts, the largest in nearly 14 months.
Market Watch
Next week begins a day later, with the markets and USDA closed for Memorial Day on Monday. On Tuesday, the cattle market will start by reacting to the Cattle on Feed report after a 3-day break. Tuesday morning will show the Export Inspections report, with the weekly USDA Crop Progress report that afternoon. Skip ahead to Thursday, and we will get updated EIA ethanol stocks and production data. Export Sales data will be delayed until Friday morning as we round out the month.
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