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Ag Market Commentary
Alan Brugler - BRUG - Mon Oct 26, 7:22AM CDT

After last week’s gains, corn is 1 to 2 cents lower to start the new week. On Friday, corn rallied in the afternoon and Dec futures were up 4.29% for the week. Short covering was noted in December, with net new buying for March and May. CFTC data released Friday using Tuesday’s close showed managed money was 218,825 contracts net long for corn. That was up 47,956 contracts in a week on 17,404 contracts more OI. Managed money has not been this net long corn since March of ’18. Commercials added 118,385 new shorts, expanding their net short 80k contracts to 469,159. Trade ideas for US corn harvest completion are running 73 to 78%.

--- provided by Brugler Marketing & Management



Soy futures come out of the weekend fractionally higher. On Friday, soybean futures rallied from midday losses to new life of contract highs. They ended the week with 4 to 10 cent gains as options traders went for the 1080 pin at expiration. November outgained Jan by 3 cents from Friday to Friday, adding to the inverse/backwardation. Preliminary open interest dropped a steep 40,083 contracts on Friday, due to expiration of the November bean options. Meal futures also rallied off of midday losses and closed the session $2.10 to $4.10/ton higher. That added to the week’s gain of $18.90/ton from Friday to Friday. Bean oil futures closed the session with 34 to 42 point gains. Soybean spec traders covered 6,176 shorts (64% of LW’s remaining MM short OI) on the week ending 10/20. That left spec traders 231,892 contracts net long as of the 20th. The CoT report also showed a 4,556 contract stronger net long in soymeal. Bean oil specs were reported at 82,034 net long. Trade ideas for US soybean harvest progress are in the 87-90% range. NASS will put out their number this afternoon.

--- provided by Brugler Marketing & Management



The wheat complex is trading lower this morning, by 5 to 13 cents. KC HRW is the weakest following welcome snow fall across a portion of the Plains growing area. Good rain coverage is also expected over the next week. SRW wheat closed the with 4 3/4 to 10 cent gains on Friday. KC HRW gained 7 to 9 1/2 cents. MGE HRS futures closed the Friday session up 2 1/2 4 1/4 cents. December HRS futures gained 17 3/4 cents from Friday to Friday. CFTC’s weekly data release showed CBT wheat spec traders were 49,728 contracts net long on 10/20. The 11,138 contract increase to the net long came via a 12,818 contract increase for managed money’s OI. Managed money’s HRW open interest decreased by 4,335 contracts. The HRW short covering increased the net long to 38,146 contracts. Spec traders had flipped to 4,492 contracts net long for HRS on 10/20. That ended the longest lasting spec trader net short for spring wheat on record (110 consecutive weeks (using Tuesday data)). Egypt’s GASC purchased 165k MT of Russian wheat. US winter wheat condition ratings are expected to be <48% good/excellent in tonight’s USDA weekly update. Dryness and germination issues are the theme.

--- provided by Brugler Marketing & Management



Cattle closed mixed ahead of the COF report, with 2 to 10 cent gains in 2020 expiry months. The back months were 15 to 60 cents in the red. Feeder cattle went into the weekend with 30 to 77 cent losses. The 10/22 Feeder Cattle Index dropped another $1.52 to $134.01. The bulk of the Northern deals were near $104, with $106 for Southern trade last week. The full range was $102 to $106.50 LW. The Commitment of Traders report showed a 21,097 contract reduction to managed money’s net long in cattle. For feeders, CFTC data showed managed money extended the net short to 8,531 contracts. USDA said there were 11.717m head on feed on Oct 1. That was about 100k more than the average of pre report estimates. Sept placements were 73k head above the trade average guess with 2.227 million head placed. That was up 5.9% yr/yr, and the largest Sept placements since 2011. Marketings were down from August, but 6.21% higher yr/yr @ 1.846 million head. Wholesale boxed beef prices were mixed tightening the spread to $16.09. Choice boxes were $207.49 cwt, down by $1.37. Select boxes were up 32 cents. USDA estimated last week’s FI cattle slaughter at 643,000 head. That was up 3k yr/yr, but YTD still trails by 3.8%.

--- provided by Brugler Marketing & Management



After trading in the red at midday, Friday hog futures closed 2 to 82 cents higher. May futures stayed 32 cents in the red at the close. For December hog futures, that reduced the week’s loss to $2.78. The CME Lean Hog Index for 10/21 was $78.60, 9 cents weaker. USDA’s National Average Base Hog price was $59.55 on Friday, down by $1.27. Through short covering on the week ending 10/20, managed money extended their lean hog net long to 42,058 contracts. USDA’s National Pork Carcass Cutout value was a sharp $5.59 lower Friday at $93.25. USDA estimated FI hog slaughter at 2.679 million head for the week through Saturday. That was down 11k yr/yr, but YTD slaughter still has a 1% lead over 2019’s pace.

--- provided by Brugler Marketing & Management



Cotton comes out of the weekend with 22 to 26 points gains on the board. Friday trading left futures 64 to 75 points lower. Despite the Friday draw down, Dec contracts had a 137 point gain for the week. CFTC data showed managed money’s net long increased 5,253 contracts to 65,195 on 10/20. The net new buying on the week pushed spec traders to their most net long since 9/11 2018. The week’s sales on The Seam were 17,641 bales for a wtd average price of 66.48 cents through Thursday. USDA’s Cotton Market Review had the week’s average cash price at 65.27 cents for the week ending 10/22. That was up 2.19 cents wk/wk and 3.78 cents above the same week last year. The Cotlook A index was firm at 76.85 cents/lb on 10/22. The AWP for the week is 55.71 cents/lb.

--- provided by Brugler Marketing & Management



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