Weak grain markets this past week set the stage for the monthly Crop Production and Supply and Demand reports released early Wednesday morning, March 10. At first glance, that report looks to be mostly bearish. U.S. Corn Production this past year was revised down 20 million bushels after USDA’s resurvey of some states with delayed harvest. But that was still six million higher than the average pre-report estimate. More significant was the reduction of 100 million bushels in expected exports for the 2009-2010 marketing year, increasing projected ending stocks by a net of 80 million. World corn ending stocks were also increased by more than six million metric tons, with an increase in Argentinean production. Corn prices worked lower this past week, with the March futures contract off nearly 12 cents, while the May contract lost most of 13 cents and new-crop December dropped a dime. Exports have remained slow and lower numbers of livestock on feed are also putting pressure on corn prices.
Soybean prices also dropped this past week, as South American harvest picks up momentum. The projection for that harvest was raised a million metric tons in Brazil in Wednesday morning’s report, more than offsetting a slight 2 million bushel drop in U.S. production. And, while U.S. ending stocks were decreased by 20 million bushels on an increase in exports and crush, world ending stocks were increased. This past week, the March futures contract lost nearly 13 cents, with the May down 16 cents, and new-crop November dropped more than eleven.
Wheat prices sagged again this week. For the week ended Tuesday, the March futures contract in Chicago dropped more than 13 cents, with the May off 15 cents. In Kansas City, the March contract lost almost nine cents for the week, with the May and new-crop July both down 11 cents in the same time-frame. Massive supplies, a good start for the current winter wheat crop and limited demand, particularly for export, all helped push wheat values lower. The report was bearish for wheat as well, with a decrease in expected exports raising both U.S. and world ending stocks.
Feeder Cattle prices shot higher again this week, fueled by lower grain prices and good fed-cattle values. The soon-to-expire March futures contract was the exception, down two cents for the week, as the spread between futures and the feeder index price narrowed as the contract nears expiration. However, the April contract gained $1.60 for the week ended Tuesday, with May up $1.30 and October up $1.40. Strong demand for feeders, as well as lower grain prices, stronger fed cattle values and the hint of spring in the air all helped pull feeder prices higher. Early-week cash feeder auctions were all called steady to higher as well.
Fed cattle values were mixed this week, with the futures higher, while cash sales were steady to a little softer. April Live Cattle futures were up $1.62 for the week ended Tuesday, while the June contract gained $1.07 and August and October both rose 80 cents. Continued wet weather and mud across much of cattle-feeding country depressed performance and supported prices. However, cash fed cattle traded late on Friday at $91-92, steady to a dollar lower than the previous week, as packers cut slaughter rates in an effort to raise boxed-beef prices while pressuring cash sales. But, boxed-beef prices slid lower compared to last Tuesday, as the Choice lost $1.75 per pound and Select dropped 48 cents. Even more alarming to some was the narrow spread between Choice and Select, favoring Choice by only 48 cents. Early-week indications are for a stronger fed-cattle market, as smaller showlists and tighter supplies pull values higher.
Hog prices were mixed, with April Lean Hog futures down a nickel compared to last Tuesday, while the May contract gained 27 cents and the June lost 90 cents. In Sioux Falls, cash butchers traded Tuesday at $53, while in Red Oak prices were up a dollar at $49.
This coming week will be dominated by response to the Crop Production and Supply and Demand reports, with weather also playing a factor in both grain and livestock markets.
La Junta, Colo. —
