Ag Market Commentary

After the double digit losses on Friday erased the week’s gains, corn prices start the new week another 6 to 8 cents per bushel lower. While night time temps remain very high, threatening yield, the weather forecasts got a lot wetter since Friday for IL and IN and SW OH. Corn futures closed 10 to 12 1/4 cents in the red on Friday. Net new selling was noted in the December contract, with preliminary OI rising 8,069 across all months. USDA cut ethanol corn use 50 mbu to 4.85 bbu, feed and residual was down 100 mbu to 5.6 bbu. Old crop carryout was ultimately bumped by 155 mbu to 2.248 bbu. The additional carryover to 2020/21 was offset by a larger than anticipated cut in production. USDA’s corn production forecast is 15 billion bushels, down 995 mbu from June. The cut to U.S. production lowered World production to 1.163 billion MT. US new crop ending stocks dropped by a larger amount than anticipated to 2.648 bbu. The expected cash price for new crop corn was up 15 cents from the previous estimate to $3.35/bu. The CFTC’s weekly CoT report showed funds covered 67,922 shorts in the week ending July 7 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%.

--- provided by Brugler Marketing & Management



Following the weekend break, soybean futures are another 5 to 8 cents lower. The soy complex closed in the red on Friday, with beans down 6 3/4 to 10 3/4 cents, meal down by as much as $5/ton, and soy oil futures 7 to 8 points per lb lower. The 2019/20 USDA carryout estimate rose to 620 mbu. Despite the larger ending stocks, USDA raised the cash average price a nickel to $8.55. The cash average price for the products also increased, $5 for meal to $300/ton, and 25 points for oil to 28.75 cents/lb. Expected cash average prices for next year were $8.50 for beans (+ $0.30), $300/ton for meal (+ $10), and 29 c/lb for oil (unch). New crop ending stocks were also up by more than expected, with a 30 mbu bump to 425. USDA increased soybean oil exports in the supply and demand forecasts. Up 150 million lbs to 2.85 billion for 2019/20, and up 200m lbs to 2.4 billion for 2020/21. 2019/20 soymeal production was increased to 50.623m tons, the additional meal went to domestic use. For 2020/21, USDA sees 50.975m tons of meal produced on 2.16 bbu of beans. In a bearish surprise, Brazilian old crop bean production was hiked to 126 MMT. 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. In the weekly CFTC report, soybean spec traders were 99,243 contracts net long on July 7. That was their largest net long since May 29 of 2018.

--- provided by Brugler Marketing & Management



Wheat markets start the week UNCH (MPLS) to 3 cents lower (CHI). Wheat futures 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. The 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. 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. 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.

--- provided by Brugler Marketing & Management



Live cattle futures ended Friday with gains of 65 to 95 cents, which was near the top of the day’s range. Feeder cattle futures put up triple digit gains 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.. Wholesale boxed beef prices were mixed on Friday, widening the Chc/Sel spread to $10.21 (the highest in nearly a month but still down 58% yr/yr). 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%.

--- 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. 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.

--- provided by Brugler Marketing & Management



Cotton futures are 55 to 60 points lower coming out of the weekend break as the ags and energies are seeing broad selling, while gold and the stock market futures are higher. On Friday, cotton prices closed 33 to 42 points higher on the board. For October that extended the week’s gain to 133 points. USDA reported the weekly average spot price at 59.91 cents/lb, which was 235 points higher. In the WASDE reports, USDA left the 2019/20 cash average price at 59 cents/lb, but raised the 2020/21 by 2 cents to 59 c/lb. 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 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 51.48 cents/lb., with a 0.52 cent LDP.

--- provided by Brugler Marketing & Management






Market Commentary provided by:

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