Brugler Marketing & Management, LLC -

Ag Market Commentary

Alan Brugler - Barchart - Mon Aug 10, 12:27PM UTC

Corn is fractionally lower to as much as 1 ½ cents higher this morning. On Friday, corn futures were 2 1/2 to 3 1/2 cents lower at the close. Preliminary open interest sank 15,128 contracts, suggesting long liquidation after just a couple up days. Sept futures ended the week 2.6% lower. From CFTC’s weekly update, managed money was 179,820 contracts net short on August 4. That was 29,540 contracts more net short wk/wk with an 11% increase to OI. China sold 3.992 MMT of corn from state reserves this week, and the average selling price was 2,005 yuan/MT (~ $7.31/bu). Traders are expecting USDA to show crop conditions UNCH to perhaps 1 point lower in the good/excellent categories tonight. Some analysts are also indicating that USDA’s August corn production estimate has been larger than the average trade guess in each of the past 5 years.

--- provided by Brugler Marketing & Management

Front month beans are 1 to 2 cents lower coming out of the weekend. Soybeans were 9 to 10 1/2 cents lower on Friday. Preliminary open interest showed net new selling interest for beans, rising 8,875 contracts on Friday. For Sept that meant a weekly loss of 2.75%. Meal and oil futures were also lower on Friday with $1.20/ton and 0.37 cents/lb losses in Sept respectively. Wk/wk Sept meal was $9.20/ton weaker and Sept oil was 38 points stronger. The weekly Commitment of Traders report showed managed money was 44,219 contracts net long on August 4. That was a 29% reduction to the net position wk/wk via long liquidation. Soymeal specs were 20,985 contracts net short on August 4. In bean oil, spec funds added 11,863 new longs and increased the net long position 10,784 contracts wk/wk to 48,333. Analysts surveyed ahead of USDA’s reports next week estimate bean yield will be 51.2 bpa. That would be up 1.4 bpa from the July estimate if realized. That higher yield estimate pushed the average production estimate to 4.26 bbu, which would be up 124.5 mbu. On average, analysts expect USDA to raise 2021 soybean carryout 101 mbu to 526. Carryin for 2020/21 is estimated to fall back 1.6 mbu to 618.4. Trade ideas for USDA crop condition ratings tonight are mostly UNCH to 1 percentage point poorer.

Wheat futures start the Monday session 1 to 3 cents lower. Chicago SRW wheat closed 3 1/4 to 5 3/4 cents lower on Friday, with left Sept contracts 35 3/4 cents lower from Friday to Friday. Preliminary open interest rose 4610 contracts to hint at fresh selling interest . HRW futures were down 3/4 to 1 3/4 cents on the day, which for Sept was a 27 cent drop on the week. MGE wheat fared better wk/wk, as Sept dropped 3.79%. The CoT report showed managed money OI grew 4% wk/wk in SRW wheat. The additional players mostly canceled out as the spec fund net position was 1,178 contracts long. There were new sellers in KC wheat, pushing managed money’s net position to 25,811 contracts short. In HRS futures, managed money was 22k contracts net short on August 4. A Bloomberg survey of analysts shows the average estimate for US wheat production is 1.832 bbu, with 1.218 bbu winter wheat. The average estimate for World wheat stocks is ~314.7 MMT. --- provided by Brugler Marketing & Management

Front month fat cattle futures closed 22 to 87 cents lower on Friday. Feeder cattle futures gave back midday gains and ended the day down by 15 to 75 cents. The August 6 CME Feeder Cattle index was $141.92, which was another $1.13 higher. USDA reported limited cash sales activity in the north from $100 to $102 on Friday. Northern dressed deals were $162 to $164. The bulk of the cash sales were $100 for the week, with some higher in the North and WCB. Dressed sales were mostly $163. The weekly Commitment of Traders update showed cattle spec funds were 38,179 contracts net long on August 4. That was 4,557 contracts more bullish than the previous week. In feeders, managed money was 1,159 contracts more net long to 6,612 contracts. Wholesale boxed beef prices were stronger on Friday, with an 81 cent bump in Choice and a 74 cent increase for Select. USDA estimates FI cattle slaughter last week at 633,000 head. That was 5k below the previous week and down 14k yr/yr.

--- provided by Brugler Marketing & Management

At the closing bell on Friday, lean hog futures were $0.15 to $1.77 higher, with triple digit gains for the 2020 expiry contracts. The triple digit gain for Oct pushed the contract $1.35 higher for th week. The CME Lean Hog index was $52.78 on Aug 4, after pulling back 14 cents. USDA’s National Average Afternoon Base Hog price for Friday was 17 cents stronger to $38.11. USDA’s National Pork Carcass Cutout value was up $1.13 on Friday to $71.93. The weekly update from CFTC showed lean hog spec traders were 2,850 contracts more net long to 13,571 on August 4. USDA’s estimate for the week’s FI hog slaughter is 2.534 million head through Saturday. That is up 184,000 head yr/yr on another strong Saturday kill. YTD slaughter is running 1% higher yr/yr with 77.087 million head so far.

--- provided by Brugler Marketing & Management

Cotton futures open the new week of trading 5 to 13 points below the Friday settlements. The hard selling on Friday left Dec futures 30 points lower for the week. In USDA’s Weekly Cotton Market Review, the average spot price for cotton on the week ending Aug 6 was 59.28 cents/lb. That was 2.55 cents higher wk/wk, with a full range of 58.01 c/lb to 59.77. The Commitment of Traders report with data from the week ending August 4, showed cotton spec fund traders were 31,335 contracts net long. That was an increase of 5,700 wk/wk from short covering. Sales reported on The Seam through Thursday were 55,649 bales at a wtd av price of 57.3 cents/lb. The Cotlook A index was 70.85 cents/lb on Aug 6, a 50 point bump. The AWP for cotton is 49.44 cents/lb through Thursday. The week’s LDP is 2.56 cents/lb.

--- provided by Brugler Marketing & Management

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