Ag Market Commentary

Corn futures are trading 5 to 6 cents higher this morning on profit taking after an ugly day on Thursday. They finished Thursday with losses of 15 to 15 3/4 cents in the front months. Preliminary open interest confirms long liquidation as the driver yesterday, with OI down 25,469 contracts. USDA reported export shipments of 880,507 MT, which was off last week’s mark by 20.6% and down 29.14% from the previous year. Total corn export commitments are now just 16.37% above last year at this point. The USDA is projecting 2.225 billion bushels in exports for 2016/17. Total commitments are now 99% of that number, vs 103% last year and the average of 102%. China sold 628,009 MT of corn in an auction of state reserves, which saw 1.99 MMT of 2013 corn offered on Thursday. The Buenos Aires Grain Exchange reported that 55.5% of the country’s corn crop has been harvested, just 2.5% higher than the previous week. Exportable supplies are still adequate.

Soybean futures are currently 8 to 9 cents higher. They fell 39 1/2 to 46 cents in most contracts on Thursday, as a Chinese agreement to purchase US beans had little impact.Preliminary open interest data shows long liquidation of 11,371 contracts. That is not a lot, given the size of the price decline. July 17 soy meal was $17.60 the red, as soy oil dropped 42 points in the front month. The USDA indicated weekly export shipments of 407,368 MT, 46.2% above the previous week and 2.2% higher than the same week in 2016. Since the USDA raised their export projection for 16/17 50 mbu to 2,10 bbu, total commitments have now hit 105% of that number, while typically they are at 102%. Current year total export commitments for soybeans are now 16.1% larger than this week last year. Chinese customs data shows that the country imported 44.81 MMT during the first half of the year, a 14.2% increase yr/yr. A Chinese delegation to the US agreed to purchase 12.53 MMT of soybeans in a frame contract. Typically these agreements are followed by a few big sales revealed under the daily reporting system, with the rest of the business coming along later.

Wheat futures are showing gains of 4 to 5 cents this morning in the HRW and SRW contracts, after closing Thursday sharply lower. KC and CBT flirted with limit losses yesterday. MPLS spring wheat is running 8 to 11 higher in early morning activity. Thursday morning, the USDA reported 475,310 MT of wheat was exported during the week of July 6, 39.3% above the same week last year. In July’s WASDE report, the USDA lowered their export projection 25 mbu to 975 mbu. Total commitments are now 33% of that, matching the average pace. In their weekly MOA tender, Japan purchased 62,900 MT of US wheat, with the other 30,865 MT coming from Australia. The EU wheat crop is estimated at 140.7 MMT by analysts from Strategie Grains, down 0.9MM from their previous report as hot and dry weather persists.

Live cattle futures were mixed on Thursday, with most front contracts steady to lower. Feeder cattle futures posted gains of 85 cents to $2.05, as lower corn prices were supportive. The CME feeder cattle index rose $2.02 on July 12 to $150.74. Wholesale beef prices were again sharply lower in the Thursday afternoon report, with choice boxes down $2.84 at $209.85. Select was $1.47 lower, with an average of $197.26. Estimated week to date FI cattle slaughter was 475,000 head through Thursday, 27,000 above the same week last year. A few cash cattle sales @ $120 were reported for Thursday. Weekly beef export shipments of 11,680 MT were announced, 1.7% above last year but 21.5% below a week ago. Total beef export commitments YTD are 10.5% larger than last year at this time.

Lean hog futures ended Thursday with the front months a dime lower to 77 cents higher. The CME Lean Hog Index for 7/11 was 16 cents higher than the previous day at $92.75. The USDA pork carcass cutout value was $2.15 lower in the Thursday afternoon report, with a weighted average of $103.67. The rib primal was quoted $12.32 lower. The national base hog carcass price was 6 cents lower with a weighted average of $86.78 in this afternoon’s report. FI hog slaughter through Thursday was estimated at 1,754,000 head, 62,000 more than last year at this point. Pork export shipments came in at 14,896 MT, as total commitments YTD are 7.3% above this time last year.

Cotton futures are 20 to 60 points higher this morning after they settled mostly 44 to 94 points lower on Thursday, with thinly traded Oct down 159 points. Weekly cotton sales totaled 12,980 RB for old crop, a marketing year low. The marketing year ends July 31, so time to ship is becoming an issue. New crop sales also showed a drop wk/wk to 152,635 RB, but were still 34.3% larger than last year. All upland cotton shipments of 195,281 RB were reported, a 31.36% rise over last year but down 35.44% from a week ago. Total commitments for all upland cotton have reached 63.4% above a year ago, with just under 4 reporting weeks left for the Marketing year. As a percent of the USDA projection, total export commitments are 108%, above the last year and the average of 106% for this date. The Cotlook A index for July 12 was up 25 points to 83.70 cents/lb.

Market Commentary provided by:

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