If you’ve ever watched sports, baseball in particular, you may understand the meaning of a rally cap. Typically, when teams are down near the end of the game, fans or players in the dugout will put their hat in some funky formation (inside out, upside down, etc) in the hopes of drawing out some luck to pull off a victory. Well, looking at the markets this week, it seems as though some of the recent rallies have been capped! The end of the month brought along some pressure, but a number of the grains and livestock still showed pretty decent gains from the April lows. That’s now the type of rally cap I was talking about! As we work into June with little bull friendly news hanging over the market, there may be some in the crowd looking to break out their rally caps this weekend. Just don’t wear them around town. You may get some weird looks!
Corn futures were in near freefall mode once the Tuesday morning break ended, as July was down 18 ½ cents on the week (3.98%). New crop December was down 21 ¼ cents (4.35%). Some of that pressure likely came from the Crop Progress report, which showed 83% of the US corn crop planted as of 5/26, now ahead of the 82% average planting pace. Weekly EIA data saw another 49,000 barrel per day increase in ethanol production during the week that ended on 5/24 to 1.068 million bpd. Ethanol stocks were drawn down by another 1.005 million barrels to 23.207 million, the lowest since December. The delayed Friday morning Export Sales report showed corn bookings slipping to 810,148 MT in the week ending on May 23, with 187,763 MT for new crop. Higher prices likely cooled buyer enthusiasm that week. Export commitments for old crop sales this marketing year are 92% of the USDA forecast, compared to the 98% average pace. Commitment of Traders data from CFTC showed spec traders adding back another 12,315 contracts to their net short in corn futures and options in the week ending May 28. That took their net short position back up to 133,477 contracts as of Tuesday. Commercials trimmed back their net short position by 19,208 contracts by that date to 127,4775 contracts.
The wheat market pulled back this week to round out the month of May. Chicago was the leader to the downside, with the July contract 18 ¾ cents (2.69%) lower. Kansas City futures were back down 12 ½ cents (1.73%). MPLS spring wheat 13 cents in the red for the July contract (1.73%). Concerns over Russia’s crop subsided with wetter weather in the forecast, and some month end profit taking pressured the markets lower. Weekly Crop Progress data showed condition ratings down 1% this week at 48% gd/ex, with the Brugler500 index down 2 points to 331. The spring wheat crop was pegged at 88% planted, 7% above the average pace. The Friday edition of the Export Sales report showed net reduction of 60,870 MT during the week of 5/23 as we wind down the MY. New crop sales were back up this week to 381,695 MT. The weekly CFTC Commitment of Traders report showed spec traders in Chicago wheat adding just 838 contracts to their net short position to 25,431 contracts by May 28. In Kansas City futures, they slashed 7,016 contracts from that short position to just 9,748 contracts as of Tuesday.
Soybeans couldn’t recover from the failed Monday night rally that started the week, as futures closed the short week with July down 43 cents (3.45%). New crop November soybeans were down 35 cents (2.87%). Meal was the driver again this week, only this time to the downside, as July contract fell $21.80/ton (5.64%). Bean oil was the bright spot for the bulls, with gains of 57 points (1.27%). The NASS Crop Progress report showed 68% of the US soybean crop planted by May 26, now 5% above the average planting pace. The delayed Export Sales report tallied bean bookings improving to 329,427 MT in the week that ended on May 23. New crop business continues to be slow with just 6,900 MT reported in that week. Export commitments are now 93% of the USDA forecast, 6% behind the average pace. Commitment of Traders data showed managed money spec funds peeling back another 12,208 contracts from their net short in soybean futures and options during the week of 5/28. That took them to a net short 14,218 contracts as of Tuesday, the smallest since the first week of the year. Commercials saw an increase to their net short by 13,708 contracts to -79,414 contracts.
Live cattle pulled back some this week on month end pressure, with June down $2.15. Cash trade took a step backwards, with the South slipping $1-2 to $186 and the North down $2 at $190. Feeders were down $3.82. The CME Feeder Cattle Index was back down $1.90 week/week to $248.24. Crop Progress data showed pasture ratings across the US at 48% gd/ex, down 1% from last week. A weighted Brugler500 index of beef cow states indicated a 2 point improvement to 344.Wholesale boxed beef quotes were mixed this week. Choice boxes were back up $2.75 (0.9%) at $313.20, while Select was down a penny to $301.71. The Chc/Sel spread was cut down to $11.49. Weekly beef production was down 1% from the same week last year, taking the YTD beef production to down 1.9% from the same time a year ago, with cattle slaughter down 4.5%. Beef export sales were reported at 15,700 MT, a sharp drop from the previous week. Export shipments were tallied at 16,100 MT, a 7% decline from the week prior’s calendar year high. Managed money spec funds increased their net long in live cattle futures and options by another 12,076 contracts as of May 28 to 58,556 contracts.
Hogs saw a higher close this week, but by just 7 cents in the June contract. The CME Lean Hog Index was down 77 cents at $91. USDA’s Pork Carcass Cutout found some strength this week, up $4.11 (4.1%) to $103.25. The butt and rib were the only primals reported lower this week, with the belly (+81%) and ham (11.7%) leading the way to the upside. Weekly pork production was up 7.4% from the same week last year. YTD hog slaughter has run just 0.4% above last year, with pork production just 0.7% higher. Export Sales data showed strong pork sales of 44,400 MT in the week of 5/23, with 23,200 MT to Mexico. Shipments of 34,700 MT were a 3-week high. Weekly Commitment of Traders data showed specs cutting another 14,105 contracts from their net long position as of 5/28 to 29,392 contracts.
Cotton futures reverted to their selling ways, with July losing 437 points on the week, a 5.43% drop. New crop December was 290 points lower on the week (3.72%). Tuesday’s holiday delayed Crop Progress report showed 59% of the US cotton crop planted as of 5/26, now 2% above average. The initial cotton condition ratings score was 60% gd/ex, with the Brugler500 index at 362, the best start since 2017. USDA’s Export Sales report showed a 9.71% wk/wk improvement in old crop sales to 222,632 RB in the week that ended on May 23. New crop sales totaled just 78,102 RB. Export shipments were at an 18-week low of 172,195 RB. The FSA raised the Adjusted World Price for cotton by 429 points on Thursday, to 64.37 cents/lb. CFTC data did show some short covering in the week that ended on May 28, with specs trimming 10,607 contracts from their net short position. They took it to 12,765 contracts as of May 28.
Market Watch
Next week starts out normally, with the Monday morning Export Inspections report, and the NASS Crop Progress report that afternoon (with corn conditions reported). Monthly demand reports will also be released that afternoon, via the NASS Grain Crushing, Fats & Oils, and Cotton Systems reports. On Wednesday, we will get updated EIA ethanol stocks and production data. Export Sales data will be back to the normal release on Thursday morning, with the Monthly Census data also out that day. Finally, on Friday, June Live cattle and July Cotton options will expire.
See Page 4 for Tech Talk
The December Corn contract had a rough week. We failed to break above the 61.8% Fib retracement resistance (not pictured), with the 200-day moving average at $4.92 also not letting anything through. After a failed rally on Tuesday out of the long weekend, we posted a key reversal, and boy was there follow through. There were several key moving averages in the $4.73-$4.78 range that failed to hold things up, as well as the uptrend line off the Feb low on Friday. There is a 2/3 speedline off that low at $4.66, with the 61.8% Fib retracement support at $4.65 ¼. If those fail to hold, the 78.6% is at $4.56 ¾. The 4-day RSI argues they should hold and Monday gets some fresh money to come into the market after the 4-day selloff this week. MACD is bearish, with ADX rising and DMI-(negative momentum) increasing. Finally, as if the bearish tones weren’t enough, there is a Head & Shoulders top with a count at $4.54.
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 2024 Brugler Marketing & Management, LLC. All rights reserved.
Austin Schroeder
Brugler Marketing & Management LLC
Phone: 312-264-4333
There is a risk of loss in futures and options trading. Past performance is not necessarily indicative of future results.
Copyright 2024, Brugler Marketing & Management LLC. All rights reserved.
Rally Cap. Ag Marketing Report 06/03/2024
If you’ve ever watched sports, baseball in particular, you may understand the meaning of a rally cap. Typically, when teams are down near the end of the game, fans or players in the dugout will put their hat in some funky formation (inside out, upside down, etc) in the hopes of drawing out some luck to pull off a victory. Well, looking at the markets this week, it seems as though some of the recent rallies have been capped! The end of the month brought along some pressure, but a number of the grains and livestock still showed pretty decent gains from the April lows. That’s now the type of rally cap I was talking about! As we work into June with little bull friendly news hanging over the market, there may be some in the crowd looking to break out their rally caps this weekend. Just don’t wear them around town. You may get some weird looks!
Corn futures were in near freefall mode once the Tuesday morning break ended, as July was down 18 ½ cents on the week (3.98%). New crop December was down 21 ¼ cents (4.35%). Some of that pressure likely came from the Crop Progress report, which showed 83% of the US corn crop planted as of 5/26, now ahead of the 82% average planting pace. Weekly EIA data saw another 49,000 barrel per day increase in ethanol production during the week that ended on 5/24 to 1.068 million bpd. Ethanol stocks were drawn down by another 1.005 million barrels to 23.207 million, the lowest since December. The delayed Friday morning Export Sales report showed corn bookings slipping to 810,148 MT in the week ending on May 23, with 187,763 MT for new crop. Higher prices likely cooled buyer enthusiasm that week. Export commitments for old crop sales this marketing year are 92% of the USDA forecast, compared to the 98% average pace. Commitment of Traders data from CFTC showed spec traders adding back another 12,315 contracts to their net short in corn futures and options in the week ending May 28. That took their net short position back up to 133,477 contracts as of Tuesday. Commercials trimmed back their net short position by 19,208 contracts by that date to 127,4775 contracts.
The wheat market pulled back this week to round out the month of May. Chicago was the leader to the downside, with the July contract 18 ¾ cents (2.69%) lower. Kansas City futures were back down 12 ½ cents (1.73%). MPLS spring wheat 13 cents in the red for the July contract (1.73%). Concerns over Russia’s crop subsided with wetter weather in the forecast, and some month end profit taking pressured the markets lower. Weekly Crop Progress data showed condition ratings down 1% this week at 48% gd/ex, with the Brugler500 index down 2 points to 331. The spring wheat crop was pegged at 88% planted, 7% above the average pace. The Friday edition of the Export Sales report showed net reduction of 60,870 MT during the week of 5/23 as we wind down the MY. New crop sales were back up this week to 381,695 MT. The weekly CFTC Commitment of Traders report showed spec traders in Chicago wheat adding just 838 contracts to their net short position to 25,431 contracts by May 28. In Kansas City futures, they slashed 7,016 contracts from that short position to just 9,748 contracts as of Tuesday.
Soybeans couldn’t recover from the failed Monday night rally that started the week, as futures closed the short week with July down 43 cents (3.45%). New crop November soybeans were down 35 cents (2.87%). Meal was the driver again this week, only this time to the downside, as July contract fell $21.80/ton (5.64%). Bean oil was the bright spot for the bulls, with gains of 57 points (1.27%). The NASS Crop Progress report showed 68% of the US soybean crop planted by May 26, now 5% above the average planting pace. The delayed Export Sales report tallied bean bookings improving to 329,427 MT in the week that ended on May 23. New crop business continues to be slow with just 6,900 MT reported in that week. Export commitments are now 93% of the USDA forecast, 6% behind the average pace. Commitment of Traders data showed managed money spec funds peeling back another 12,208 contracts from their net short in soybean futures and options during the week of 5/28. That took them to a net short 14,218 contracts as of Tuesday, the smallest since the first week of the year. Commercials saw an increase to their net short by 13,708 contracts to -79,414 contracts.
Live cattle pulled back some this week on month end pressure, with June down $2.15. Cash trade took a step backwards, with the South slipping $1-2 to $186 and the North down $2 at $190. Feeders were down $3.82. The CME Feeder Cattle Index was back down $1.90 week/week to $248.24. Crop Progress data showed pasture ratings across the US at 48% gd/ex, down 1% from last week. A weighted Brugler500 index of beef cow states indicated a 2 point improvement to 344.Wholesale boxed beef quotes were mixed this week. Choice boxes were back up $2.75 (0.9%) at $313.20, while Select was down a penny to $301.71. The Chc/Sel spread was cut down to $11.49. Weekly beef production was down 1% from the same week last year, taking the YTD beef production to down 1.9% from the same time a year ago, with cattle slaughter down 4.5%. Beef export sales were reported at 15,700 MT, a sharp drop from the previous week. Export shipments were tallied at 16,100 MT, a 7% decline from the week prior’s calendar year high. Managed money spec funds increased their net long in live cattle futures and options by another 12,076 contracts as of May 28 to 58,556 contracts.
Hogs saw a higher close this week, but by just 7 cents in the June contract. The CME Lean Hog Index was down 77 cents at $91. USDA’s Pork Carcass Cutout found some strength this week, up $4.11 (4.1%) to $103.25. The butt and rib were the only primals reported lower this week, with the belly (+81%) and ham (11.7%) leading the way to the upside. Weekly pork production was up 7.4% from the same week last year. YTD hog slaughter has run just 0.4% above last year, with pork production just 0.7% higher. Export Sales data showed strong pork sales of 44,400 MT in the week of 5/23, with 23,200 MT to Mexico. Shipments of 34,700 MT were a 3-week high. Weekly Commitment of Traders data showed specs cutting another 14,105 contracts from their net long position as of 5/28 to 29,392 contracts.
Cotton futures reverted to their selling ways, with July losing 437 points on the week, a 5.43% drop. New crop December was 290 points lower on the week (3.72%). Tuesday’s holiday delayed Crop Progress report showed 59% of the US cotton crop planted as of 5/26, now 2% above average. The initial cotton condition ratings score was 60% gd/ex, with the Brugler500 index at 362, the best start since 2017. USDA’s Export Sales report showed a 9.71% wk/wk improvement in old crop sales to 222,632 RB in the week that ended on May 23. New crop sales totaled just 78,102 RB. Export shipments were at an 18-week low of 172,195 RB. The FSA raised the Adjusted World Price for cotton by 429 points on Thursday, to 64.37 cents/lb. CFTC data did show some short covering in the week that ended on May 28, with specs trimming 10,607 contracts from their net short position. They took it to 12,765 contracts as of May 28.
Market Watch
Next week starts out normally, with the Monday morning Export Inspections report, and the NASS Crop Progress report that afternoon (with corn conditions reported). Monthly demand reports will also be released that afternoon, via the NASS Grain Crushing, Fats & Oils, and Cotton Systems reports. On Wednesday, we will get updated EIA ethanol stocks and production data. Export Sales data will be back to the normal release on Thursday morning, with the Monthly Census data also out that day. Finally, on Friday, June Live cattle and July Cotton options will expire.
See Page 4 for Tech Talk
The December Corn contract had a rough week. We failed to break above the 61.8% Fib retracement resistance (not pictured), with the 200-day moving average at $4.92 also not letting anything through. After a failed rally on Tuesday out of the long weekend, we posted a key reversal, and boy was there follow through. There were several key moving averages in the $4.73-$4.78 range that failed to hold things up, as well as the uptrend line off the Feb low on Friday. There is a 2/3 speedline off that low at $4.66, with the 61.8% Fib retracement support at $4.65 ¼. If those fail to hold, the 78.6% is at $4.56 ¾. The 4-day RSI argues they should hold and Monday gets some fresh money to come into the market after the 4-day selloff this week. MACD is bearish, with ADX rising and DMI-(negative momentum) increasing. Finally, as if the bearish tones weren’t enough, there is a Head & Shoulders top with a count at $4.54.
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 2024 Brugler Marketing & Management, LLC. All rights reserved.
Austin Schroeder
Brugler Marketing & Management LLC
Phone: 312-264-4333
There is a risk of loss in futures and options trading. Past performance is not necessarily indicative of future results.
Copyright 2024, Brugler Marketing & Management LLC. All rights reserved.