Market Watch

April Showers Bring May Flowers

Market Watch with Alan Brugler

April 26, 2019

April Showers Bring May Flowers

Every country has their weather sayings. The US is full of them, from “make hay when the sun shines” to “if you don’t like the weather in (insert location) wait 30 minutes and it’ll change”.  To buck up spirits of yet another day spent inside due to rain, mud or snow, Moms and Grandmas have also reminded generations that April showers bring (are followed by) May flowers. In other words, things are going to get better seasonally. A lot of US ag producers are hoping the saying is right on target.  An endless winter has been followed by active rainfall and flooding, and folks are tired of being cooped up when they should be farming. The NWS 6-10 and 8-14 day forecasts still have above normal rainfall chances for the first few days of May, but we hope the sunshine and the flowers are coming out where you are!

Corn futures fell 2% this week, all in the first part of the week. Oats were trying to lead the bull charge, up more than 5% for the week and over $3/bus. Export sales commitment are still problematic, almost 9% below year ago as of Thursday’s USDA report. YTD commitments are 78% of the full year WASDE estimate, lagging the 5 year average pace of 87% for this date.  Weekly sales from April 12-18 were below the previous week at 779,900 MT for old crop and 3,000 MT for new crop. Planting progress is behind schedule, with 6% in the ground as of Sunday vs. the 12% average for that date. Traders will be more nervous if we’re still running behind schedule after May 15. On the industrial use side, ethanol stocks rebounded slightly from the lowest level since September. That industry continues to wait on E15 approval from EPA for summer use and an end or sharp reduction to the “hardship” waivers given to obligated parties. The price of RIN’s has dropped significantly, making compliance less of a burden.  More ethanol use would mean more corn use.  The Commitment of Traders report showed the spec funds still adding another 14,686 contracts to their record large net short position. That put it at -322,215 as of April 18.

Wheat futures were lower in all three markets this week. Chicago was down 2.1% as it re-asserted its premium vs. the other two classes (which are usually higher). KC HRW lost on the W/KW spread and was down 4.8%. Minneapolis spring wheat was down 4.8% as well. Traders noted that snow on Saturday and Sunday will further delay HRS planting, but also noted the increase in Canadian planting intentions and the large US stocks of HRW and SRW. USDA confirmed that 9% of the winter wheat is now heading, a bit behind the 18% average pace. To the surprise of no one, spring wheat planting is only 5% done, well behind the 22% average for this week. Weekly US wheat export sales rose to 651,500 MT (old and new crop combined) vs. 545,400 MT last week. US wheat export sales commitments are now  99% of the total, vs. the average of 104% for this date. The marketing year ends May 31.

 

 

	Commodity				Weekly	Weekly
Mon		04/12/19	04/18/19	04/26/19	Change	% Chg
May	Corn	$3.6100	$3.5850	$3.5125	($0.072)	-2.02%
May	CBOT Wheat	$4.6450	$4.4425	$4.3500	($0.093)	-2.08%
May	KCBT Wheat	$4.34	$4.20	$4.00	($0.203)	-4.82%
May	MGEX Wheat	$5.313	$5.233	$4.980	($0.253)	-4.83%
May	Soybeans	$8.95	$8.81	$8.54	($0.268)	-3.04%
May	Soy Meal	$307.90	$303.20	$299.90	($3.300)	-1.09%
May	Soybean Oil	$28.95	$28.80	$27.52	($1.280)	-4.44%
Jun	Live Cattle	$121.45	$122.68	$115.05	($7.625)	-6.22%
May	Feeder Cattle	$150.50	$151.53	$143.95	($7.575)	-5.00%
May	Lean Hogs	$89.60	$90.20	$87.00	($3.200)	-3.55%
May	Cotton	$78.11	$77.31	$76.75	($0.560)	-0.72%
May	Oats	$2.8725	$2.9200	$3.0875	$0.168	5.74%

Soybean futures were down 3% for the week, giving back 26 3/4 and posting new lows for the move. Soybean meal was down 1.1% in choppy action. Soy oil was down 4.4%. Soybean planting was only 1% done as of Sunday. Full year soybean US export commitments are still 17.5% below last year, with sales of 596,300 MT reported on Thursday morning for the week ending April 18. Weekly sales for 2019/20 were only 22,700 MT.  Total soybean commitments are 88% of the full year WASDE forecast. They would typically have reached 96% by now.  The commercial users continue to hedge beans as they get cheaper, with spec funds taking the short side. The specs were record net short beans as of Tuesday, -129,566 contracts.

Cotton futures were down 0.7% this week.   Cotton export sales improved in the week ending April 18. USDA confirmed upland sales of 239,000 running bales. Another 48,900 RB were sold for 2019/20 delivery.  Pima bookings were 10,500  RB.  Cotton export commitments are 98% of the full year WASDE estimate, 1% ahead of the 5 year average pace. Planting is running at the 5-year average pace, with 9% done as of last Sunday. Most of that is in Arizona and Texas. The CFTC Commitments report showed the large specs adding 2,630 this week to take the position to 14,097 contracts of futures and options.

Live cattle futures sank 6.2%, with anyone who bought cattle in calendar 2019 underwater as of Friday morning. The Cattle on Feed report showed more cattle in the lots, and more placed in March than expected. Cash cattle trade was down $3 or more, with trades at $126 in the south at midweek and $127 reported on Thursday in the north. Feeder cattle futures were down 5% for the week. The CME feeder cattle index was $144.24 as of April 25, down 74 cents from the end of last week. Wholesale beef prices were lower this week. Choice boxes were down 51 cents or 0.2%. Select 600-900# carcass values were down 91 cents or 0.4%. USDA weekly beef export sales were 20% below the previous week at 23,100 MT. The Friday Commitment of Traders report showed the large spec funds were still adding to their long position as of April 23. They added 1,916 net on the week to bring the total to 154,550 contracts.

Lean hog futures were down 3.5% for the week. Weekly export sales totaled only 15,500 MT vs. 40,300 MT the previous week.  China was a shipper of 4,600 MT, but a small net cancel on new business. The CME Lean Hog index was $83.40 on Friday, up $3.16 for the week. Last week’s Market Watch was on Thursday due to the holiday. The pork carcass cutout value was down $2.97 or 3.4% from the previous Friday. That put it at $84.27. The wholesale pork belly primal quote dropped $34.59 in a single week, down 21.7%. The large managed money spec funds were still adding to their CFTC net long position in hog futures. They added 3,221 contracts in the week ending April 23, taking it to 61,753 contracts.

Market Watch

Grain traders will begin the week dealing with any surprise futures positions inherited at May options exercise on Friday. The USDA Export Inspections report is scheduled for Monday, along with the weekly Crop Progress report. Tuesday marks the expiration of the April cattle futures contract. The weekly EIA ethanol report will be released on Wednesday, along with the monthly USDA Fats & Oils and Grain Crushings reports. Several countries will be on holiday for May Day (May 1) or May 1-3 in some cases. USDA’s weekly Export Sales report will be out on Thursday.

Visit our Brugler web site at http://www.bruglermarketing.com or call 402-289-2330 for more information on our consulting and advisory services for farm family enterprises and agribusinesses.

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.  

 

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