Market Commentary – January 27, 2013

Corn

Commodity markets
Commodity markets

Corn futures traded on both sides of the market on Friday. Futures initially traded lower following the USDA report at 7:30 AM, but staged a midmorning rally that failed to take out the high from the overnight session. They quickly retraced the rally after failing to take out the high, with March finishing lower on the day and 7 cents lower on the week. US corn export sales were slightly below trade expectations, with 5.5 million bushels of old crop and 2.03 million bushels of new crop being reported. Total corn export commitments now stand at 55% of the USDA projection, with the 5-year average at 63%. Exports were 359,500 MT, up 50% week over week and a likely contributor to the strong basis we have seen along the Mississippi and Gulf. Improved weather models for South America took out any bullish momentum the market may have had this week, and the trade will most definitely be watching the forecast through this weekend.

Mar 13 Corn closed at $7.20 3/4, down 3 1/2 cents,
May 13 Corn closed at $7.21 1/2, down 2 3/4 cents,
Jul 13 Corn closed at $7.12 3/4, down 2 1/2 cents
Sep 13 Corn closed at $6.07 1/4, down 1 cent

Soybeans
Soybeans had a minor selloff after export sales were announced but staged a midday rally that, unlike corn, did take out the highs from the overnight session. Futures fell 15 cents from that high over the next hour but gained most of that back in the afternoon trade that ended with a bullish close. March soybeans finished 12 cents higher on the week. February options settle against March, and expired today. Soybeans export sales were 14 million bushels of old crop and 21.86 MB for new crop. Total soybean export commitments stand at 90% of the USDA total vs. the 5-year average of 79%. Soybean oil commitments stand at 73% of the USDA projection, 19% ahead of last year. Exports are expected to drop off by late February or March as the South American crop comes online.

Mar 13 Soybeans closed at $14.41, up 5 3/4 cents,
May 13 Soybeans closed at $14.26, up 2 1/4 cents,
Jul 13 Soybeans closed at $14.17 3/4, up 1/4 cent,
Aug 13 Soybeans closed at $13.91, down 1 1/2 cents,
Mar 13 Soybean Meal closed at $416.40, up $1.70,
Mar 13 Soybean Oil closed at $52.10, down $0.01

Wheat
Wheat futures posted solid gains on strong export sales numbers. March Chicago and KC wheat both finished 15 cents lower on the week, while March Minneapolis finished 10 cents lower. Weekly export sales were 21 million bushels for old crop and 2.75 MB for new crop. Actual exports were up by 96% over the previous week at 559,300 MT. Wheat continues to run behind the USDA export expectations, with total commitments at 72% of the USDA total. The 5-year average is 85% for this point in the marketing year. Basis at the Gulf for SRW tightened on the strong export sales numbers, with end users reportedly paying 73-77 cents a bushel above March CBOT wheat. The export window for US wheat is NOW, as Australias projected exports have been reduced 33% over the previous year by the USDA and Argentinas exports are expected to fall by 61 percent.

Mar 13 CBOT Wheat closed at $7.76 1/2, up 8 cents,
Mar 13 KCBT Wheat closed at $8.29 1/2, up 8 cents,
Mar 13 MGEX Wheat closed at $8.65, up 9 1/2 cents

Cattle
Cattle futures settled on the day mixed ahead of the COF report. Live Feb cattle finished $1.35 higher despite only 4-days of trade and the heavy selling pressure that was applied last week. The report put cattle on feed as of Jan 1 at 94.4% of a year ago. This was at the low end of trade estimates, with their average guess at 95.6. Dec placements were reported at 99.4% of last year, which came as a surprise to the trade as they were expecting an increase in placements over 2011. The average trade guess for December marketings was 93.2%, but the USDA put the number higher at 98.3%. Boxed beef finished the day with Choice down 57 cents and Select down 33 cents on 154 loads. For the week, Choice slid by $2.4 and Select was off by $0.40. Live cattle trade was mostly inactive on Friday. The weekly slaughter is estimate at 631,000 head with Saturdays estimate. The YTD slaughter is down 5.1% over 2011. The CME feeder cattle index was last reported at $145.17, up $0.81.

Feb 13 Cattle closed at $126.475, up $0.600,
Apr 13 Cattle closed at $130.800, up $0.450,
Jun 13 Cattle closed at $126.800, unch,
Jan 13 Feeder Cattle closed at $144.650, up $0.050
Mar 13 Feeder Cattle closed at $147.750, down $0.200
Apr 13 Feeder Cattle closed at $150.925, down $0.250

Lean Hogs
Hog futures finished lower on the day, but Feb hogs posted a 1.73% gain on the week. Traders booked profits on Friday after a strong rally on Thursday. The lower pork cutout on Thursday helped pressure the market on Friday. Fridays pork cutout reversed losses though, and was reported $0.41 higher at $85.11. For the week the carcass cutout finished up $1.48, driven largely by the $4.99 gain in bellies and the $3.33 gain in hams. Packer margins improved Friday as they paid less for cash hogs in the west. IA/MN cash hogs were reported down $1.88, the WCB was reported down $1.74, while the ECB was reported $0.38 higher. The weekly slaughter is projected to come in at 2,159,000 head. This is 63,000 less head than what was reported last week, but mainly to due some plants being offline on Monday. The YTD slaughter is 4.5 percent behind last year. The CME lean hog index was reported at $0.78 cents higher at $87.78.

Feb 13 Hogs closed at $86.800, down $0.250,
Apr 13 Hogs closed at $88.950, down $0.725
May 13 Hogs closed at $95.200, down $1.275

Cotton
Cotton felt the pressure on Friday as traders booked profits and some were disappointed with the USDA export sales figures. Despite the triple digit losses today, cotton still finished the week up 2.51% or 197 points. March cotton had an inside day of trade, not able to move above Thursdays lows nor highs despite seeing a large movement in price. USDA reported net weekly upland and pima cotton sales for last week were 264,100 running bales (RB). This was 37% below last week and came as a disappointment among the trade, as sales to China were expected to be strong. Total export commitments stand at 84% of the USDA export projection, 5% above the 5-year average. The Cotton Certified Stock Report showed current deliverable stocks here in the US at 112,194 bales, 2,053 new certs, and 18,822 awaiting review. The cotton “A” index was 1.55 higher at 89.50.

Mar 13 Cotton closed at 80.52, down 237 points,
May 13 Cotton closed at 80.48, down 172 points
Jul 13 Cotton closed at 80.4, down 64 points

 

Courtesy:

Brugler Marketing & Management LLC
1908 N. 203rd St.
Omaha, NE 68022
Phone: 402-697-3623
Fax: 402-289-2353
E-mail: alanb@bruglermktg.com
Web: www.bruglermktg.com

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