The Grains Complex IIII

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The National Index continues to push higher, with $4.00 being the next test in price resistance in the near term. Prices can continue to rally with an overflow buying from the Wheat market.

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Corn futures closed the Friday session with most contracts 2 to 3 1/2 cents lower. Nearby May was 3.45% higher on the week. This 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. This morning’s Stats Canada 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 estimated at 30.9% complete on April 25 according to the Buenos Aires Grain Exchange, ahead of the 27.2% average.

May 18 Corn closed at $3.89 1/2, up 3 1/2 cents,
Jul 18 Corn closed at $3.98 1/2, up 3 1/4 cents,
Sep 18 Corn closed at $4.05 1/2, up 3 1/4 cents
Dec 18 Corn closed at $4.14 1/2, up 3 1/4 cents

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 Soybeans (ZS)

Contract Size: 5,000 bushels

Tick Size: 0.0025

Dollar Value/ Tick: $12.50

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Soybeans surged on Friday. The current futures spread between various Soy products indicate that the long-term bullish sentiment is here and entrenched. 1068 now looks to be the next high to beat in the next leg higher in price. The price targets were reached early in the week testing the lows of 1030 from the beginning of the month which gave the soy market a green light higher. The market also in a weather market now and continued arid climate in Argentina supports higher prices. However, the risk is in whether the bumper crop from Brazil could push prices lower with more supply and the seasonal improvement in weather domestically. Additionally, exports from the United States is rising but canceled out by the stronger dollar.

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Soybean futures saw 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. 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 acreage intentions were reported at 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%. Recent production estimates have been around 38 MMT, with crushers drawing down stocks and importing soybeans in an attempt to maintain soybean meal exports at typical May levels.

May 18 Soybeans closed at $10.45, up 17 cents,
Jul 18 Soybeans closed at $10.56 1/4, up 16 3/4 cents,
Aug 18 Soybeans closed at $10.58, up 16 1/2 cents,
Nov 18 Soybeans closed at $10.47, up 13 3/4 cents,
May 18 Soybean Meal closed at $393.20, up $14.00,
May 18 Soybean Oil closed at $30.43, down $0.38

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Wheat futures 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 this morning’s Stats Canada report. Front-month SRW was 6.96% higher on the week, with nearby HRW up 6.11%. 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. 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. Algeria purchased 420,000 MT of optional origin wheat on Friday, with sources expecting most or all will come from France.

May 18 CBOT Wheat closed at $4.95 1/2, up 14 3/4 cents,
May 18 KCBT Wheat closed at $5.12 1/4, up 10 1/2 cents,
May 18 MGEX Wheat closed at $6.06 1/4, up 6 3/4 cents

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Contract Size: 40,000 lbs (18 metric tons)

Tick Size: 0.000025

Dollar Value/ Tick : $10.00

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Live Cattle was holding steady and firmed into the close on Friday. The monthly range in price is a sign of consolidation around the 110 level where we saw a gap down in price at the beginning of April. The cattle markets are still looking for a catalyst from news relating to new tariffs to come out of the politically charged atmosphere.

Exports of live cattle have slowed given the solid strength was seen in the dollar most recently. Moreover, the continuous rise in interest could also skew risk in commodities as a whole to the downside. That being said, internationally, consumer demand for the beef hasn’t waned despite the slow in imports.

Moving to Feeder Cattle, which ended Friday strong throughout the trading session. The decline in the supplies has unpinned this steady market. Perhaps, if the price of 149.00 is broken and holds to the upside a breakout in feeder is probable. Exports have risen as of late, but domestic consumption has slowed, contributed to the colder weather experienced in the Northeast and Mid-West.

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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 $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.

Apr 18 Cattle closed at $124.450, up $1.925,
Jun 18 Cattle closed at $107.000, up $2.650,
Aug 18 Cattle closed at $105.975, up $1.950,
May 18 Feeder Cattle closed at $142.025, up $1.725
Aug 18 Feeder Cattle closed at $148.250, up $1.750
Sep 18 Feeder Cattle closed at $148.350, up $1.100

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Lean Hogs

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Lean hog futures finished the week with losses of 35 cents to $1.375. 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.

May 18 Hogs closed at $66.100, down $1.225,
Jun 18 Hogs closed at $72.625, down $1.375
Jul 18 Hogs closed at $76.225, down $1.075

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Cotton futures settled the day with most contracts 19 to 44 points higher. 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.

May 18 Cotton closed at 85.330, up 34 points,
Jul 18 Cotton closed at 84.510, up 34 points
Oct 18 Cotton closed at 80.860, up 44 points

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Brugler Marketing & Management, LLC


Federal Reserve Bank of Chicago 

CME Group 




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