Ag Market Commentary

Corn traders sold the fact and took profits ahead of the weekend. Futures closed the Friday session 10 to 12 1/4 cents deep in the red. From the mandatory reporting system, USDA announced a huge 1.365 MMT corn sale to China, split 56/44% old/new crop. USDA’s corn production forecast is 15 billion bushels, down 995 mbu from June due to acreage cuts. The trade was looking for a 954 mbu cut. Global corn production was down 25.27 MMT, reflecting the cut in U.S. production, to 1,163 MMT. Domestic old crop carryout increased 145 mbu to 2.248, which was a smaller than anticipated increase. The 2020/21 corn stocks were dropped by a larger amount than anticipated, with USDA showing 2.648 bbu. The expected cash price for new crop corn was up 15 cents to $3.35/bu. The CFTC’s weekly CoT report showed funds covered 67,922 shorts on the week for a net short position of 141,741 contracts. Over the last 2 weeks managed money covered 119,564 shorts, and spec trader OI was down 18%.

Jul 20 Corn closed at $3.40 1/2, down 10 3/4 cents,

Sep 20 Corn closed at $3.37 1/4, down 11 1/2 cents,

Dec 20 Corn closed at $3.44 3/4, down 12 1/4 cents,

Mar 21 Corn closed at $3.55, down 11 3/4 cents,

--- provided by Brugler Marketing & Management

Soybeans closed 6 3/4 to 10 3/4 cents lower in the red with double digit losses in new crop futures. Bean meal traded down by as much as $5/ton. Soy oil futures also closed in the red with losses of 7 to 8 points per lb. USDA estimates soybean production at 4.135 bbu, which was a smaller than expected increase. Shifting residual use from 4 mbu to a negative 46 mbu, 2019/20 carryout was up to 620 mbu. New crop ending stocks were also up by more than expected, with a 30 mbu bump to 425. Despite the larger ending stocks, USDA raised the new crop bean cash price 30 cents to $8.50/bu. World bean carryout was increased 480k MT to 99.7 MMT for old crop, but new crop was 1.26 MMT lower at 95.08. Brazilian old crop bean production was hiked to 126 MMT, larger than any of the published pre-report estimates. In the weekly CoT report, soybean spec traders were 99,243 contracts net long on July 7. That was the largest net long since May 29 of 2018. Managed money’s net short in soymeal was down 58% wk/wk to 21,910 contracts. Managed money expanded their net long in soybean oil to 19,418 contracts (the largest net long since Feb 25th).

Jul 20 Soybeans closed at $8.91 1/2, down 6 3/4 cents,

Aug 20 Soybeans closed at $8.87 1/4, down 9 1/4 cents,

Sep 20 Soybeans closed at $8.85 1/2, down 9 3/4 cents,

Nov 20 Soybeans closed at $8.90 3/4, down 10 3/4 cents,

Aug 20 Soybean Meal closed at $292.50, down $4.80

Aug 20 Soybean Oil closed at $28.22, down $0.07

--- provided by Brugler Marketing & Management

Wheat traded in both directions on Friday. KC HRW futures closed with 3 to 4 3/4 cent losses. HRS wheat was fractionally mixed to 1 1/4 cents lower. SRW wheat was higher on the day, with 8 to 9 1/2 cent gains in the front months. SRW to corn premium was at a monthly high. September SRW to Sept HRS premium was the highest since April 28, and the Chi to KC spread was the highest premium since December 10. USDA announced a private export sale of 190k MT HRS and 130k MT of HRW to China this morning. The NASS wheat production numbers were bullish relative to June, and exceeded trade expectations. USDA’s July estimate for winter wheat production is 1.218 bbu, down by 48 mbu, while the trade was looking for an 18 mbu cut. That came via a 33 mbu cut to HRW and a 17 mbu cut for SRW production. Spring wheat production was estimated at 550 mbu, which was above the trade average guess of 546. In total 2020/21 U.S. wheat production is forecasted at 1.824 bbu. U.S. ending stocks for 2020/21 are forecasted at 942 mbu, that is up 17 mbu from June. Globally, USDA has World wheat production at 769.31 MMT, which is 4.12 MT below the June estimate.

Sep 20 CBOT Wheat closed at $5.34, up 9 cents,

Sep 20 KCBT Wheat closed at $4.52, down 4 3/4 cents,

Sep 20 MGEX Wheat closed at $5.26 1/4, up 1/4 cent,

--- provided by Brugler Marketing & Management

Live cattle futures closed the day with gains of 65 to 95 cents, which was near the top of the day’s range. Feeder cattle futures progressed triple digits ahead of the weekend. The CME Feeder Cattle index for July 9 was $134.92, up by 23 cents. CFTC reported managed funds were 22,908 contracts net long in cattle on July 7. That was a wk/wk increase of 30%, but spec trader OI was down by 1.5%. Managed money had reduced their net long in feeder cattle on the week to 1,579 contracts. In the monthly WASDE updates, USDA estimates 2020 beef production at 26.934b lbs. That is up from June’s 26.674. The increase was mostly to 3Q, up 105m lbs to 7.02 billion. 4Q production is estimated at 6.935 b lbs. Wholesale boxed beef prices were mixed on Friday, widening the Chc/Sel spread to $10.21. Choice boxes were $0.91 stronger to $204.5. Select boxes fell another 54 cents to $194.29. USDA estimated cattle slaughter through Saturday at 664,000 for the week, and 16.516m head on the year. The week’s slaughter is 6,000 head above the year prior, but YTD slaughter is still trailing last year’s pace by 5.6%.

Aug 20 Cattle closed at $100.000, up $0.750,

Oct 20 Cattle closed at $104.575, up $0.650,

Dec 20 Cattle closed at $108.400, up $0.950,

Aug 20 Feeder Cattle closed at $135.750, up $1.225

Sep 20 Feeder Cattle closed at $137.325, up $1.150

Oct 20 Feeder Cattle closed at $138.500, up $1.375

--- provided by Brugler Marketing & Management

Front month lean hog futures closed the day with 35 to 82 cent losses in the front months. July contracts traded higher on the day, with a 12 cent move to $45.97. The 2 day lagged CME Lean Hog index for July 8 was down 17 cents to $45.18, a positive basis of $1.13 from the July 8th and an approximate basis of minus 80 cents from today’s close. The Chinese Dalian lean hog futures contract launched a preliminary test round of trading on Friday. The official release date for the contracts has not yet been established. In their weekly update, CFTC reported lean hog spec traders at 6,635 contracts net long. The net new buying interest increased the net long 1,937 contracts wk/wk. The National Average Afternoon Base Hog price was $0.09 lower to $29.99. In the monthly WASDE updates, USDA estimates 2020 pork production at 28.536b lbs. That is up 770m from June’s 27.766 billion lbs. 3Q was 310 million above the June estimate and 4Q was increased 325 million lbs to 7.485 billion. USDA’s National Pork Carcass Cutout Value was up $1.83 to $68.36. Ribs and bellies were lower, but the other primal cuts were higher. USDA estimated the week’s hog slaughter at 2.606m head through Saturday. That is 187k head above the same week last year, and pushed YTD slaughter to within 10k head of last year’s pace.

Aug 20 Hogs closed at $49.875, down $0.350,

Oct 20 Hogs closed at $49.850, down $0.700

Dec 20 Hogs closed at $51.775, down $0.825

--- provided by Brugler Marketing & Management

Cotton futures closed the Friday session with gains of 33 to 42 points in the front months. USDA’s cotton production forecast is 17.5m bales. That is down 2m bales from June on lower acres and lower yields. 2020/21 yield is estimated at 820 lbs/acre, down by 5 from the previous estimate. USDA cut new crop exports by 1m bales, but stocks were still down by 1.2 million from production losses. New crop ending stocks are estimated at 6.8 m bales. The average cash price estimate went up 2 cents to 59 cents. USDA estimated global ending stocks at 102.77 m bales for 2020/21, compared to June’s forecast of 100.56 m bales. The decrease was primarily production cuts. For old crop, USDA estimates World cotton stocks at 100.92 m bales. The CoT report showed net new buying alongside of short covering from cotton spec traders. Managed money’s net position in cotton was 21,520 contracts net long on July 7. Thursday cotton sales on the online cotton trading platform The Seam were a 6 month daily high 16,288 bales. WTD sales on The Seam were 24,053 bales at a wtd av price of 57.40 c/lb. The July 9 Cotlook A index was up by 70 points to 70.15 c/lb. The AWP for cotton for this week is up 135 points to 51.48 cents/lb. The week’s LDP is now down to 0.52 cents.

Oct 20 Cotton closed at 64.71, up 37 points,

Dec 20 Cotton closed at 64.31, up 42 points

Mar 21 Cotton closed at 64.83, up 34 points

May 21 Cotton closed at 65.34, up 33 points

--- provided by Brugler Marketing & Management

Market Commentary provided by:

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