Friday in the markets reminds me of one of Clint Eastwood’s classics The Good, the Bad and the Ugly. Maybe not the movie per se, but the title explains the market reaction to USDA’s update. The good? Corn got a rather large present set in their lap, with USDA pegging a carryout below 2 billion bushels finally! The market reaction wasn’t one of pure excitement, as plenty of spec shorts were busy trying to defend their position, but the charts look a little better. The bad? After a week of pushing lower and expecting a mixed report, the soybean market failed to sustain any sort of upward movement. The report leaned bull friendly, but the market is still concerned with a fairly good growing season and closed with another round of losses. The ugly? With some weaker action leading up to the report and larger production expected, the wheat market fell to some new lows, or close to previous ones at the close. A production total over 2 billion bushels was not on the mind of many traders and the market reacted accordingly.
Corn saw some better action for the bulls on Friday, but still managed to close the week lower. September was 8 1/2 cents lower on the week, with December back down 9 ¼ cents. Hurricane Beryl brought rains this week that should have been beneficial to parts of the Eastern Corn Belt. USDA gave the market a little more bull friendly data on Friday, with a 145 million bushel cut to old crop stocks at 1.877 billion bushels. That was widely unexpected and helped to offset a 240 mbu increase to new crop production, as increased demand assisted the 2024/25 US stocks to a 5 mbu cut at 2.097 bbu. Monday’s Crop Progress report indicated 24% of the US corn crop silking as of July 7, 10% ahead of normal. Condition ratings were back up 1% to 68% gd/ex, with the Brugler500 index increasing 2 points to 372. The Wednesday EIA report saw a 10,000 barrel per day drop in ethanol production during the week that ended on 7/5 to 1.054 million bpd. Thursday’s Export Sales data reported corn bookings at 538,331 MT in the week ending on July 4, with just 116,496 MT for new crop. CFTC data showed spec funds expanding to a record net short position in the week that ended on July 9 of 353,983 contracts. That was an additional 17,445 contracts from the week prior.
Wheat was pushed lower into Friday’s close, as the three exchanges were back nearing new lows. Chicago wheat fall 39 ¾ cents in the September contract (-6.73%). Kansas City September dropped a total of 31 1/4 cents (-5.22%). MPLS futures were down 35 ¾ cents (-5.65%) in the September contract. Crop Production data from Friday was not friendly for the wheat complex, as USDA raised the wheat crop by 133 mbu to 2.008 bbu, as both harvested acres and yield were increased (by 2.4 to 51.8 bpa). Winter wheat was up 46 mbu to 1.341 bbu, with other spring wheat tallied at 577.8 mbu, more than 56 mbu above the trade estimates. US new crop ending stocks were up 98 mbu to 856 mbu. Crop Progress data showed the winter wheat harvest at 63% complete by last Sunday, still well above the 52% average. The spring wheat crop was 59% headed, 1% behind the average pace, with conditions up 3% to 75% and 2 points higher to 380 on the Brugler500 index. This week’s Export Sales report showed 24/25 sales dropping off in the holiday week to just 240,351 MT. That was the lowest so far in the very short marketing year. Commitment of Traders data showed CBT wheat spec funds net short 69,137 contracts as of July 9, a 4,837 contract reduction on the week. In KC wheat, they were trimming 2,292 contracts to 40,811 contracts net short by July 9.
Soybeans continued the push lower this week, reversing last week’s rally. August was down 61 ¼ cents (5.25%), as November was down 64 ½ cents. Pressure from the products added to the weakness, with soy meal $18.40/ton lower (-5.15%) since last Friday. Bean oil gave back a chunk of last week’s gains, with a loss of 290 points (-5.85%). Improving crop conditions and ECB rains added pressure to the market. The NASS Crop Progress report showed 34% of the US soybean crop blooming by July 7, 6% above normal, with 9% of the acres setting pods. Crop ratings were up 1% at 68% gd/ex, as the Brugler500 index was up 2 at 371. USDA’s WASDE release on Friday showed a 5 mbu cut to old crop US stocks at 345 mbu, New crop was trimmed by 20 mbu to 435 mbu, on a reduction to production of 15 mbu on fewer acres. Export Sales data tallied bean bookings slipping to 207,952 MT in the week that ended on July 4. New crop business did pick up, to the second largest this MY, but to just 191,255 MT in that week. CFTC’s weekly report tallied managed money spec funds at a record net short as of July 9 at 172,605 contracts. That was an increase of 31,679 contracts during the week.
Live cattle slipped lower this week as cash continues to hold a large premium. A weakening beef component pressured the August contracts $4.05 lower (-2.17%). Cash trade was steady this week with sales of $188 in the south, and northern trade at $198. Feeders were $2.825 lower over the course of the week as they were following the fats. The CME Feeder Cattle Index was up $5.96 week/week to $261.04. Wholesale boxed beef was part of the issue this week, with fallout from the post-4th holiday demand. Choice boxes fell back $8.37 (2.5%) at $322.06, while Select was $2.75 lower to $302.31. Weekly beef production was up 14.8% from last week due to the holiday but 1.7% lower vs. the same week last year at 506 million lbs. That left the YTD beef production down 1.6% from the same time a year ago, with cattle slaughter down 4.5%. Weekly Export Sales data showed a total of just 8,348 MT of beef was sold for export in the July 4th holiday, a MY low. Shipments were the lowest since mid-April at 14,288 MT. CFTC data pegged a 1,517 contract reduction in their net long as of July 9 to 61,426 contracts in live cattle futures and options. The managed money specs trimmed back their net long in feeders by 1,275 contracts to a net long of 2,656 contracts.
Hogs mange to slip another 72 cents lower this week. The CME Lean Hog Index was down 80 cents at $88.65. USDA’s Pork Carcass Cutout found a little bit of strength this week, rallying a total of $3.93 (+4.1%) to $98.84. Just 3 primals were higher this week with the picnic up 2 cents, the belly $4.75 higher and the ham up $15.21 since last Friday. Weekly pork production was back up 16.6% from last week’s holiday driven slowdown, and 3.8% larger than the same week last year at 508.2 million lbs. YTD hog slaughter has run 1.1% above last year, with pork production 1.2% higher. The USDA Export Sales pegged pork export sales totaling 26,543 MT during the week that ended on July 4, a 3-week low. Export shipments were at a 4-week high of 32,409 MT. Lean hog spec traders added 2,568 contracts of futures and options as of July 9 to their net short at 11,412 contracts by last Tuesday.
Cotton managed to squeeze out a 29 point gain in the December contract this week. Friday’s balance sheet update from the USDA showed old crop stocks up 200,000 bales to 3.05 million on a drop to the export number. For new crop, the WAOB raised the acreage to 9.67 million harvested (+540,000) acres, as yield was up just slightly to 844 lbs/acre. That took production up 1 million bales to 17 million. Stocks projected for the end of the 2024/25 crop were 1.2 million bales larger vs. last month at 5.3 million. The weekly NASS Crop Progress report tallied 52% of the US cotton crop squared with 19% setting bolls, both ahead of normal. Cotton condition ratings were down another 5% to 45% gd/ex, with the Brugler500 index at 320, another drop of 11 points for the week. Thursday’s Export Sales report showed old crop sales dropping to 54,138 RB in the week that ended on 7/4. New crop sales picked up to 69,481 RB. Export shipments slipped back down to 160,709 RB during that week. The FSA trimmed the Adjusted World Price for cotton by 172 points on Thursday, to 56.08 cents/lb. Weekly data from CFTC showed spec in cotton futures and options adding another 9,577 contracts to their large net short as of July 9. By that Tuesday they were net short 40,449 contracts.
Market Watch
The next week will begin Monday morning’s Export Inspections report per the usual weekly release. Crop Progress data from NASS will be out later that afternoon, with NOPA giving an updated crush number for June that morning. July lean hog futures and options will expire on Monday. Weekly EIA data will be released on Wednesday morning. Export Sales data will be released on Thursday morning. Finally on Friday to round out the week, NASS will release the monthly Cattle on Feed report.
See Page 4 for Tech Talk!
Tech Talk: December Corn
December corn had a positive move on Friday, with a hammer bottom candlestick and key reversal all in one. The low at $4.03 held the previous contract low at $3.98 and the $4 round number support. In order for to get excited, we need follow through for it to be successful. USDA’s bullish numbers were a start to help kick off some short covering. If the shorts really want to cover, the 18-day moving average at $4.31 and 38.2% Fib retracement resistance of $4.38 ¾ would be targets. MACD still has bearish momentum, but it is dying off. The oscillators are trying to exit oversold. Friday was a step in the right direction, we just need to keep putting one foot in front of the other now!
Austin Schroeder
Brugler Marketing & Management LLC
Phone: 312-264-4333
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.
The Good, Bad, and Ugly. Ag Marketing Report 07/15/2024
Friday in the markets reminds me of one of Clint Eastwood’s classics The Good, the Bad and the Ugly. Maybe not the movie per se, but the title explains the market reaction to USDA’s update. The good? Corn got a rather large present set in their lap, with USDA pegging a carryout below 2 billion bushels finally! The market reaction wasn’t one of pure excitement, as plenty of spec shorts were busy trying to defend their position, but the charts look a little better. The bad? After a week of pushing lower and expecting a mixed report, the soybean market failed to sustain any sort of upward movement. The report leaned bull friendly, but the market is still concerned with a fairly good growing season and closed with another round of losses. The ugly? With some weaker action leading up to the report and larger production expected, the wheat market fell to some new lows, or close to previous ones at the close. A production total over 2 billion bushels was not on the mind of many traders and the market reacted accordingly.
Corn saw some better action for the bulls on Friday, but still managed to close the week lower. September was 8 1/2 cents lower on the week, with December back down 9 ¼ cents. Hurricane Beryl brought rains this week that should have been beneficial to parts of the Eastern Corn Belt. USDA gave the market a little more bull friendly data on Friday, with a 145 million bushel cut to old crop stocks at 1.877 billion bushels. That was widely unexpected and helped to offset a 240 mbu increase to new crop production, as increased demand assisted the 2024/25 US stocks to a 5 mbu cut at 2.097 bbu. Monday’s Crop Progress report indicated 24% of the US corn crop silking as of July 7, 10% ahead of normal. Condition ratings were back up 1% to 68% gd/ex, with the Brugler500 index increasing 2 points to 372. The Wednesday EIA report saw a 10,000 barrel per day drop in ethanol production during the week that ended on 7/5 to 1.054 million bpd. Thursday’s Export Sales data reported corn bookings at 538,331 MT in the week ending on July 4, with just 116,496 MT for new crop. CFTC data showed spec funds expanding to a record net short position in the week that ended on July 9 of 353,983 contracts. That was an additional 17,445 contracts from the week prior.
Wheat was pushed lower into Friday’s close, as the three exchanges were back nearing new lows. Chicago wheat fall 39 ¾ cents in the September contract (-6.73%). Kansas City September dropped a total of 31 1/4 cents (-5.22%). MPLS futures were down 35 ¾ cents (-5.65%) in the September contract. Crop Production data from Friday was not friendly for the wheat complex, as USDA raised the wheat crop by 133 mbu to 2.008 bbu, as both harvested acres and yield were increased (by 2.4 to 51.8 bpa). Winter wheat was up 46 mbu to 1.341 bbu, with other spring wheat tallied at 577.8 mbu, more than 56 mbu above the trade estimates. US new crop ending stocks were up 98 mbu to 856 mbu. Crop Progress data showed the winter wheat harvest at 63% complete by last Sunday, still well above the 52% average. The spring wheat crop was 59% headed, 1% behind the average pace, with conditions up 3% to 75% and 2 points higher to 380 on the Brugler500 index. This week’s Export Sales report showed 24/25 sales dropping off in the holiday week to just 240,351 MT. That was the lowest so far in the very short marketing year. Commitment of Traders data showed CBT wheat spec funds net short 69,137 contracts as of July 9, a 4,837 contract reduction on the week. In KC wheat, they were trimming 2,292 contracts to 40,811 contracts net short by July 9.
Soybeans continued the push lower this week, reversing last week’s rally. August was down 61 ¼ cents (5.25%), as November was down 64 ½ cents. Pressure from the products added to the weakness, with soy meal $18.40/ton lower (-5.15%) since last Friday. Bean oil gave back a chunk of last week’s gains, with a loss of 290 points (-5.85%). Improving crop conditions and ECB rains added pressure to the market. The NASS Crop Progress report showed 34% of the US soybean crop blooming by July 7, 6% above normal, with 9% of the acres setting pods. Crop ratings were up 1% at 68% gd/ex, as the Brugler500 index was up 2 at 371. USDA’s WASDE release on Friday showed a 5 mbu cut to old crop US stocks at 345 mbu, New crop was trimmed by 20 mbu to 435 mbu, on a reduction to production of 15 mbu on fewer acres. Export Sales data tallied bean bookings slipping to 207,952 MT in the week that ended on July 4. New crop business did pick up, to the second largest this MY, but to just 191,255 MT in that week. CFTC’s weekly report tallied managed money spec funds at a record net short as of July 9 at 172,605 contracts. That was an increase of 31,679 contracts during the week.
Live cattle slipped lower this week as cash continues to hold a large premium. A weakening beef component pressured the August contracts $4.05 lower (-2.17%). Cash trade was steady this week with sales of $188 in the south, and northern trade at $198. Feeders were $2.825 lower over the course of the week as they were following the fats. The CME Feeder Cattle Index was up $5.96 week/week to $261.04. Wholesale boxed beef was part of the issue this week, with fallout from the post-4th holiday demand. Choice boxes fell back $8.37 (2.5%) at $322.06, while Select was $2.75 lower to $302.31. Weekly beef production was up 14.8% from last week due to the holiday but 1.7% lower vs. the same week last year at 506 million lbs. That left the YTD beef production down 1.6% from the same time a year ago, with cattle slaughter down 4.5%. Weekly Export Sales data showed a total of just 8,348 MT of beef was sold for export in the July 4th holiday, a MY low. Shipments were the lowest since mid-April at 14,288 MT. CFTC data pegged a 1,517 contract reduction in their net long as of July 9 to 61,426 contracts in live cattle futures and options. The managed money specs trimmed back their net long in feeders by 1,275 contracts to a net long of 2,656 contracts.
Hogs mange to slip another 72 cents lower this week. The CME Lean Hog Index was down 80 cents at $88.65. USDA’s Pork Carcass Cutout found a little bit of strength this week, rallying a total of $3.93 (+4.1%) to $98.84. Just 3 primals were higher this week with the picnic up 2 cents, the belly $4.75 higher and the ham up $15.21 since last Friday. Weekly pork production was back up 16.6% from last week’s holiday driven slowdown, and 3.8% larger than the same week last year at 508.2 million lbs. YTD hog slaughter has run 1.1% above last year, with pork production 1.2% higher. The USDA Export Sales pegged pork export sales totaling 26,543 MT during the week that ended on July 4, a 3-week low. Export shipments were at a 4-week high of 32,409 MT. Lean hog spec traders added 2,568 contracts of futures and options as of July 9 to their net short at 11,412 contracts by last Tuesday.
Cotton managed to squeeze out a 29 point gain in the December contract this week. Friday’s balance sheet update from the USDA showed old crop stocks up 200,000 bales to 3.05 million on a drop to the export number. For new crop, the WAOB raised the acreage to 9.67 million harvested (+540,000) acres, as yield was up just slightly to 844 lbs/acre. That took production up 1 million bales to 17 million. Stocks projected for the end of the 2024/25 crop were 1.2 million bales larger vs. last month at 5.3 million. The weekly NASS Crop Progress report tallied 52% of the US cotton crop squared with 19% setting bolls, both ahead of normal. Cotton condition ratings were down another 5% to 45% gd/ex, with the Brugler500 index at 320, another drop of 11 points for the week. Thursday’s Export Sales report showed old crop sales dropping to 54,138 RB in the week that ended on 7/4. New crop sales picked up to 69,481 RB. Export shipments slipped back down to 160,709 RB during that week. The FSA trimmed the Adjusted World Price for cotton by 172 points on Thursday, to 56.08 cents/lb. Weekly data from CFTC showed spec in cotton futures and options adding another 9,577 contracts to their large net short as of July 9. By that Tuesday they were net short 40,449 contracts.
Market Watch
The next week will begin Monday morning’s Export Inspections report per the usual weekly release. Crop Progress data from NASS will be out later that afternoon, with NOPA giving an updated crush number for June that morning. July lean hog futures and options will expire on Monday. Weekly EIA data will be released on Wednesday morning. Export Sales data will be released on Thursday morning. Finally on Friday to round out the week, NASS will release the monthly Cattle on Feed report.
See Page 4 for Tech Talk!
Tech Talk: December Corn
December corn had a positive move on Friday, with a hammer bottom candlestick and key reversal all in one. The low at $4.03 held the previous contract low at $3.98 and the $4 round number support. In order for to get excited, we need follow through for it to be successful. USDA’s bullish numbers were a start to help kick off some short covering. If the shorts really want to cover, the 18-day moving average at $4.31 and 38.2% Fib retracement resistance of $4.38 ¾ would be targets. MACD still has bearish momentum, but it is dying off. The oscillators are trying to exit oversold. Friday was a step in the right direction, we just need to keep putting one foot in front of the other now!
Austin Schroeder
Brugler Marketing & Management LLC
Phone: 312-264-4333
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.