AgriCharts Market Commentary
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Corn futures closed the Friday trade down 2 to 3 cents, with the Mar16 contract down 6 1/4 cents on the weekly board. Commodities were pressured by the rebounding USD today, which was up a few hundred points. The next installment of the WASDE report will be released next Tuesday. Traders expect 15/16 US corn ending stocks to be 1.815 bbu on average (Jan: 1.802 bbu). World ending stocks on average are projected to be 208.32 MMT (Jan: 208.94 MMT). Brazilian production is estimated to rise 0.2 MMT to 81.7 MMT, but Argentinean production is projected to slip by 0.3 MMT to 25.3 MMT. Data from the CFTC showed that managed money reduced their net short position during the week ending Feb 2 by 27,718 contracts. The position held as of the close on Tuesday was still 59,479 contracts net short. Ethanol prices at the pumps this week were 2 cents lower in IL and 6 cents off in SD, but were a penny higher in IA. NE ethanol prices were unchanged week to week.
Soybean futures traded 6 to 7 cents off on Friday, after ending Thursday a couple pennies lower. The Mar16 contract lost 14 3/4 cents from last Friday. The Mar16 soy oil contract was up 35 cents this week, but meal was down $7.40. In anticipation for the WASDE report next Tuesday, the average trade guess for 15/16 ending stocks is 449 mbu (Jan: 440 mbu). The same survey of trade analysts projects (on average) that world ending stocks will be 79.09 MMT (Jan 79.28 MMT). Brazilian bean production is expected to slip by 0.8 MMT from the Jan estimate to 99.2 MMT, while Argentinean bean production is expected to rise to 57.3 MMT, up 0.3 MMT from the January report. The ag attache in Argentina pegged its production estimate at 58.5 MMT on higher yields. The Commitment of Traders report showed that managed money held a net short position of 25,862 contracts as of the close on Tuesday, February 2. This was a reduction of 4,594 contracts to the net short position from the Tuesday before.
Wheat futures settled the Friday session 1 to 6 3/4 cents lower, extending losses from Thursday. On the weekly board, MPLS Mar16 wheat held the firmest, losing only 8 3/4 cents. Mar16 wheat in CHI and KC was down 12 1/2 and 18 cents respectively. Pre-report estimates for the WASDE report on Feb 9 have traders estimating average 15/16 US ending stocks at 949 mbu (Jan: 941 mbu). World ending stocks are projected to dip slightly to 231.43 MMT (Jan: 232.04 MMT). After receiving only four offers (when up to 20 offers would be typical), Egypt once again canceled its tender for an unspecified amount of wheat. French offers were the cheapest at $186.64/ton FOB, but the GASC says prices offered were too high in comparison to an Algerian purchase on Thursday for $178/ton. Exporters have become hesitant to offer wheat to Egypt due to several rejections blaming a policy on ergot. Managed money accounts held net short positions of 48,685 contracts in CHI and 20,119 contracts in KC as of 2/2. Account holders reduced their net short position by 2,014 contracts in SRW, but increased the net short position by 3,610 contracts in HRW from the week before.
Live cattle futures settled with losses mostly from 75 cents to $1.25 on Friday, after trading mostly 10 to 30 cents lower yesterday. Front month Feb16 cattle were 75 cents higher from last Friday. Feeders also closed sharply lower this afternoon, with the Mar16 contract down $3.42 on the week. The CME Feeder Cattle Index for 2/4 was a penny lower to $159.67. Cash cattle trade recorded a few live sales of $132-$134 this week, with a few dressed sales ranging from $210 to $216. The USDA reported that choice boxed beef prices were down $2.43 today to $220.60 (+$1.84 Fri to Fri), and select boxes were $1.97 lower to $216.51 (+$3.05 Fri to Fri). WTD FI slaughter including Saturday estimates was 534,000 head, down 33,000 head from last week, and 12,000 head smaller than the same week last year. Weekly beef production totaled 443.8 million pounds this week, just slightly lower than the same week in 2015. CFTC data showed that managed money reduced their net long position by 3,525 contracts in live cattle during the week ending on Tuesday, but increased their net long position in feeders by 579 contracts. The updated net long positions held as of the close on Tuesday were 9,300 contracts (live cattle) and 2,322 contracts (feeders).
Hog futures settled mixed on Friday afternoon with April up a nickel, but losses mostly from 32.5 to 40 cents in the other contracts. On the weekly board, Feb16 hogs were down a buck. The CME Lean Hog Index for 2/3 was up 68 cents to $63.98. The USDA reported the average carcass cutout was up $1.05 today to $77.57 (+$0.56 Fri to Fri). Bellies were just shy of $3.00/cwt higher, but picnics lost a quarter in average price. The national average cash hog base price was up 32 cents on Friday. Regional prices were 13 cents higher in IA/MN, and up 51 cents in the WCB. Including Saturday estimates, FI slaughter this week was 2.182 million head, down 146,000 head from the previous week, and 77,000 head smaller than the same week in 2015. For the week, pork production totaled 467.5 million pounds, down 3.7% from the same week in 2015. Production was slowed by blizzard conditions on Tuesday and Wednesday in the WCB. As of the close on Feb 2, managed money accounts held a net long position of 35,828 contracts. This was a week over week increase to the net long position of 5,983 contracts.
Cotton futures settled mixed on the day. They were 10 and 26 points lower in May16 and Mar16 respectively, but 3 to 12 cents higher from thereon out. The Friday trade extended triple digit losses from Thursday in the front two contracts. Mar16 cotton was down 116 points from last Friday, a decline of nearly 2% on the week. Managed money reduced their net long position by 2,476 contracts during the week ending 2/2. The CFTC report stated that the updated position held as of the close on Tuesday was 24,841 contracts. USDA reported that exporters shipped only 642,900 RBs in December 2015, down from 1.025 million RBs in December 2014. The Cotlook A Index was down 25 points to 68.70. ICE reported that there were 26,916 certified bales in warehouses on February 4, with 704 new certs and no decertified bales. The USDA AWP for this week is 46.85, with the LDP/MLG returning to 5.15 cents for the week after being 5.11 cents last week.