The Grains Complex: II,I


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Outside Markets

Today is April 20th,2018 and on this day in 1975 Saigon fell to communists forces.


Today we’ve important economic prints today, Personal Income and Expenditures for March. The last print in February showed incomes rose 0.4% and spending rose 0.2% and are expected to be both +0.4% today. Also within the report is the PCE Price Index, which rose 1.8% YoY last month and is expected to be +2.0% and in so doing finally reaching the Fed’s hoped-for 2% inflation rate.

Stocks were higher this morning, with 150 pts on /YM and 12.5 handles on /ES.  Reason being, inflation is subdued in both Germany and the U.S. German retail sales and CPI missed by large sums; the month-over-month was negative for retail sales. CPI missing on month year-over-year expectations and month-over-month expectations. Thus, weaker inflation coming out of Germany, the E.U.’s largest economy.


Turning to the U.S., the Fed’s favorite measure of inflation, the PCE deflator, both YoY and MoM matched expectations so there is no extra pressure on the Fed to raise rates. The 10-year yield was a little higher before the U.S. number and then went to unchanged after the print.


Domestically we also had Mcdonalds Corporation beat their earnings expectations, both on Revenue and EPS.

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Along with two M&A deals, Sainsbury PLC from the U.K.  buying Asda from Wal-Mart in a $10.1(headline)($7.3billion, being the reported number) billion dollar deal.

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Deutsche Telekom offering Sprint a bid for a takeover at $7.5 billion, all of which helping support equity markets earlier in the trading session.

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I’m watching Crude Oil prices today, trading lower overnight and into the morning, however, MoM prices have firmed. This would be the second month in a row, the eighth month out of ten that Crude Oil has been higher. The Iran Nuclear Deal could be withdrawn and combined with the seasonality, has placed a continuous bid for Crude Oil.

To note the economic news of last Friday; the Commerce Department reported that gross domestic grew at a 2/3% annualized rate in the first quarter of 2018. Expectations from the Street were expecting an increase of 2.0%, along with consumer spending has risen 1.1%.

Moreover, the Labor Department reported that its employment cost index rose 0.8% in the first quarter and 2.7 % YoY, both being marginally higher than had been forecasted. Lastly, the University of Michigan reported that its index of consumer sentiment fell from 101.4 in March to 98.8 in April, a marginally beat than that had been expected.

Additionally, the Chicago Purchasing Manager’s report for April will be out at 9:45am. It printed 57 last month and is expected to be unchanged. Highlighting the fact that this index peaked several months ago into last year at 68.

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Pending Home Sales for March out at 10:00am. Noting that it rose just over 3% the month previous, pending sales are expected to be higher but no surprised if a softer 1.0% rise.

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Lastly, the Dallas Fed will release its General Activity Index for April. It was 21.3 last month, having peaked two months ago at 37. Expected to be lower this month figures being as low as 18.

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Corn futures are trading 2 to 3 cents higher this morning. They ended the Friday session with most contracts 2 to 3 1/2 cents lower. Nearby May was 3.45% higher on the week. Friday afternoon’s CFTC Commitment of Traders report indicated that spec traders subtracted 15,367 contracts from their net long position in corn futures and options. Their net position as of Tuesday stood at 122,877 contracts. China sold another 2.448 MMT of corn from state reserves on Friday, totaling 62.06% of the offered amount. Stats Canada’s report indicated 2018 Canadian corn intentions of 3.758 million acres, 5% larger than last year and above most estimates. Argentina’s corn harvest was 30.9% complete on April 25 according to the Buenos Aires Grain Exchange, ahead of the 27.2% average. There were 10 contracts put out for delivery against May futures over the weekend by Rand and stopped by FCS and ADMIS customers.

Corn futures are showing 2 to 4 3/4 cent gains at midday. This morning’s Export Inspections report indicated 1.465 MMT of corn was shipped for the week of 4/26. That was down 15.7% from a week ago but was 29.55% larger than this week last year.

Corn futures closed the day higher with solid demand supporting these higher prices. Large non-commercial and speculative buyers stepping into the market thinking a stronger market is on the horizon. Planting season is here and a weather market correlates to higher volatility near term.

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Soybean futures are currently 5 to 7 cents higher after seeing gains of 13 to 17 cents in most front months on Friday. Soy meal led the way, up $14/ton, with front-month soy oil down 38 points. May meal tested the $400 mark overnight before backing off. Managed money in soybean futures and options trimmed their net long position by 22,874 contracts to 170,094 contracts in the week that ended 4/24. Canola acreage in Canada is seen at 21.383 million acres in 2018, a 7% drop from a year ago and well below most expectations. Stats Canada soybean intentions were 6.452 million acres, down 11.41% from 2017. BAGE estimates that the Argentine soybean crop is 54% harvested, compared to the average of 43.4%. Expectations are for soybean progress to show 4-5% of the crop planted. There were 415 deliveries vs. May soybean futures on FND, with a commercial house the main issuer and a Wells Fargo client the main stopper.

Soybean futures are currently mixed on Monday, with front months 1 to 2 1/4 cents lower. Soy meal is up $2.70/ton, with front-month soy oil 2 points in the green. The USDA reported a private export sale of 120,000 MT of soybeans for 18/19 to Argentina this morning. Soybean export inspections during the week of 4/26 totaled 679,379 MT. That was 43.83% larger than the week prior and 22.53% above the same week last year.

Soybeans closed the day lower; the technicals struggled to keep prices moving higher. This in spite of the funds getting longer on a net basis last week and the fundamental driving news regarding the weather in South America, cutting their crop back which should bolster our Soybean markets higher. Exports remain strong despite the stronger dollar as of late.

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Today’s trading into close showed some heavy selling.

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Wheat futures are mostly 3 to 6 cents higher this morning, with the May CBT contract the outlier with a +9 performance. They posted 9 to 14 3/4 cent gains in the CBT and KC contracts on Friday. MPLS was up 3 to 6 3/4 cents despite the Stats Canada report. Front-month SRW was 6.96% higher on the week, with nearby HRW up 6.11%. All wheat seedings in Canada are seen at 25.259 million acres according to Stats Canada. That is well above most estimates and 12.8% larger than last year, as a 15.44% jump was seen for spring wheat acreage. Spec funds in Chicago wheat futures and options added 4,575 contracts to their net short position of 54,713 contracts. In the week that ended Tuesday, they increased their net long position in KC wheat futures and options to 40,698 contracts. Algeria purchased 420,000 MT of optional origin wheat on Friday, with sources expecting most or all will come from France.

Wheat futures are trading 15 to 16 1/2 cents higher in the CBT and MPLS contracts at midday. KC is up 9 to 10 cents The USDA reported that 376,256 MT of wheat was inspected for export in the week that ended 4/26. That was down 41.57% from last week and 36.21% lower than this week in 2017. We’re clearly not trading exports! Analysts are expecting to see 13-15% of the spring wheat crop planted as of Sunday.

Wheat futures closed the day higher, with solid buying on momentum, commercials and non-commercials are present in the market, a catalyst to propel prices higher. Participants are watching for the numbers coming from the Winter Wheat Crop. A good print could give a boost to the entire grain complex.

Market pundits discussed whether traditional indicators that forecast futures trends in the markets are working as compared to in the past. For example, despite the U.S. Dollar index hitting 92.00 today, grains continue their march higher. This brings up an introspective questioning of our views on the current market.

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Live cattle futures ended the Friday session with most nearby contracts $1 to $2.65 higher. April gained 4.27% on the week to keep up with the higher cash trade, with June up 3.16%. Feeder cattle futures were up a quarter to $1.75. The CME feeder cattle index was up 50 cents on April 26 at $139.99. Wholesale boxed beef values were mixed on Friday afternoon. Choice boxes were up $1.59 at $221.74, with Select boxes 16 cents lower at $204.32. Estimated weekly FI cattle slaughter through Saturday is 624,000 head. That is 1,000 head below the previous week and down 7,000 head from the same week in 2017. Cash trade was late to develop this week, but sales of $124 were shown in the South, with at least a few at $126 in the North. As of Tuesday, managed money in live cattle futures and options held a net long position of just 15,391 contracts. That is their least bullish position since mid-February 2016.

Live cattle futures are mostly 80 cents to $1.05 lower on Monday, with April a nickel higher ahead of today’s expiration. Feeder cattle futures are 95 cents to $1.55 lower at midday. The CME feeder cattle index was up 50 cents on April 26 at $139.99. Wholesale boxed beef values were higher on Monday morning. Choice boxes were up $2.76 at $224.50, with Select boxes 88 cents lower at $204.20. Estimated weekly FI cattle slaughter last week was 624,000 head, down 7,000 head from the same week in 2017. Cash trade was late to develop, but sales of $124 were shown in the South, with at least a few at $126 in the North.

Live Cattle (LE) traded as a mixed bag today, trading higher early in the session which triggered selling and reviealed a near-term cap on the market. News out of the European Union today, indicating that they may let in more of the beef from the U.S., which is great news for relieving a surplus supply in domestic beef pipelines.

Feeder Cattle trading this session was also choppy. All reports indicate that beef demand is improving but prices are kept down from non-commercial selling, from whom are liquidated their long positions. Despite their selling, both Feeders and Live Cattle futures are up MoM, latter being lesser than the former.

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Lean Hogs

Lean hog futures finished last week with losses of 35 cents to $1.375 on Friday. Nearby May was down 5.5% on the week. The CME Lean Hog Index was up 79 cents from the previous day to $61.23 on April 25. The USDA pork carcass cutout value was up 76 cents at $68.61 this afternoon, with the picnic the only cut reported lower. The national base hog weighted average price was 11 cents lower at $58.22. The USDA estimated FI weekly hog slaughter at 2.363 million head through Saturday. That is 73,000 head below last week on lighter Saturday slaughter ideas but still 74,000 head above this week last year.

Lean hog futures are trading 10 to 52.5 cents higher in the nearby contracts on Monday. The CME Lean Hog Index was up 52 cents from the previous day to $61.75 on April 26. The USDA pork carcass cutout value was up 13 cents at $68.74 this morning. The national base hog weighted average price was 7 cents higher at $58.28.

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Cotton futures are trading steady to 8 points higher after settling 19 to 44 points higher on Friday. CFTC data on Friday showed the large spec funds in cotton futures and options adding 2,760 contracts to their net long position on 4/24. Their net position was at 82,871 contracts on that date. Total export commitments for upland cotton are now 18.4% larger than last year. They are well above the normal pace of 95% complete to meet the USDA export estimate at 112% complete. The Cotlook A index was up 2.50 cents from the previous day on April 26 to 93.20 cents/lb. The Adjusted World Price was updated to 74.25 cents/lb this morning, 9 points above the previous week.

Cotton futures are mostly 43 to 74 points lower on Monday. CFTC data on Friday showed the large spec funds in cotton futures and options adding 2,760 contracts to their net long position on 4/24. Their net position was at 82,871 contracts on that date. The Cotlook A index was up 25 points from the previous day on April 27 to 93.45 cents/lb. The Adjusted World Price was updated to 74.25 cents/lb this morning, 9 points above the previous week.

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Brugler Marketing & Management, LLC


CME Group 

ISM Chicago 

Federal Reserve Bank of Dallas 

McDonalds Corporation Investor Relations 

Sainsbury PLC Investor Relations 

Deutsche Telekom Investor Relations 






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