|
|
|
The corn crop is likely to be as small as market analysts feared, but high prices may finally be rationing demand. That’s the first conclusion you come to when looking at USDA’s Crop Production and Supply and Demand reports released Monday morning. USDA now expects a fall corn harvest of 12.5 billion bushels, which would still be one of the largest corn crops on record but would also be a quarter of a million bushels less than predicted domestic usage for the 2011-12 marketing year. The predicted harvest came in right at pre-report expectations, but the projected ending stocks for next fall were 36 million bushels larger than expected. In addition, global corn production is expected to rise, with greater corn production in both Argentina and Brazil. As a result projected world ending stocks of corn were higher than last month’s report, as well as pre-report estimates, but were still smaller than the year-end stocks for the marketing period just ended. Those various scenarios resulted in some market acrobatics this week; with Corn futures prices actually up on Monday, but sharply lower on Tuesday after some of the report’s numbers had a greater chance to sink in. For the week ended Tuesday, September futures were down more than 37 cents, with December down almost 33 and March off nearly 32 cents.
Soybean numbers were also bearish, with production and stocks numbers higher than expected, both domestically and globally. September Soybean futures ended the week down more than 32 cents, while the November lost nearly 31. There is now talk of early frosts in the North Central growing areas, which could potentially affect the yields and quality of both corn and soybeans.
Wheat values were hit hard this week, as the global wheat supply situation got more bearish than previously predicted. Domestic wheat ending stocks are now predicted to be larger than corn ending stocks both in the U.S. and abroad, an almost unheard of situation. Feeding wheat may soon become a viable option for livestock producers struggling to pay for corn. In Chicago this week, the September futures contract was down less than 28 cents, but the December dropped 58. In Kansas City the September contract lost more than 68 cents compared to last Tuesday, while the December dropped 63 cents and March was down almost 61. The severe and ongoing drought in the High Plains wheat production area of the U.S. just isn’t enough to dent the bearish global wheat supply situation.
Livestock prices were higher across the board this week. It started with cash fed cattle trading sharply higher on Friday last week, with the bulk of the trade at $118, up $4 to $5 from the previous week. That resulted in higher boxed beef cutout values, as the Choice was up $3.49 compared to last Tuesday, while the Select gained $2.93. Early indications for this week are for another move higher in the cash cattle trade.
Lower grain prices triggered a sharp move higher for Feeder Cattle futures, with the September contract up $1.07, while the October gained $2.55 and November was up $2.45. Early-week feeder auction prices were mostly steady to weak, but the strong move higher by the futures market makes a move higher in the cash market highly likely.
Limited supplies of market-ready hogs supported prices this week. In Red Oak, cash butchers traded Tuesday at $58, unchanged from last week. October Lean Hog futures gained $3.80 for the week ended Tuesday, with the December up $1.57 and February gaining $2.70.
The next major report from USDA is the Cattle on Feed report due to be released on Sept. 23. In the meantime, traders will try to further digest the information in the Supply and Demand reports released Monday, as well as watching the outside markets for clues about the future direction of the ag markets.
The corn crop is likely to be as small as market analysts feared, but high prices may finally be rationing demand. That’s the first conclusion you come to when looking at USDA’s Crop Production and Supply and Demand reports released Monday morning. USDA now expects a fall corn harvest of 12.5 billion bushels, which would still be one of the largest corn crops on record but would also be a quarter of a million bushels less than predicted domestic usage for the 2011-12 marketing year. The predicted harvest came in right at pre-report expectations, but the projected ending stocks for next fall were 36 million bushels larger than expected. In addition, global corn production is expected to rise, with greater corn production in both Argentina and Brazil. As a result projected world ending stocks of corn were higher than last month’s report, as well as pre-report estimates, but were still smaller than the year-end stocks for the marketing period just ended. Those various scenarios resulted in some market acrobatics this week; with Corn futures prices actually up on Monday, but sharply lower on Tuesday after some of the report’s numbers had a greater chance to sink in. For the week ended Tuesday, September futures were down more than 37 cents, with December down almost 33 and March off nearly 32 cents.
Soybean numbers were also bearish, with production and stocks numbers higher than expected, both domestically and globally. September Soybean futures ended the week down more than 32 cents, while the November lost nearly 31. There is now talk of early frosts in the North Central growing areas, which could potentially affect the yields and quality of both corn and soybeans.
Wheat values were hit hard this week, as the global wheat supply situation got more bearish than previously predicted. Domestic wheat ending stocks are now predicted to be larger than corn ending stocks both in the U.S. and abroad, an almost unheard of situation. Feeding wheat may soon become a viable option for livestock producers struggling to pay for corn. In Chicago this week, the September futures contract was down less than 28 cents, but the December dropped 58. In Kansas City the September contract lost more than 68 cents compared to last Tuesday, while the December dropped 63 cents and March was down almost 61. The severe and ongoing drought in the High Plains wheat production area of the U.S. just isn’t enough to dent the bearish global wheat supply situation.
Livestock prices were higher across the board this week. It started with cash fed cattle trading sharply higher on Friday last week, with the bulk of the trade at $118, up $4 to $5 from the previous week. That resulted in higher boxed beef cutout values, as the Choice was up $3.49 compared to last Tuesday, while the Select gained $2.93. Early indications for this week are for another move higher in the cash cattle trade.
Lower grain prices triggered a sharp move higher for Feeder Cattle futures, with the September contract up $1.07, while the October gained $2.55 and November was up $2.45. Early-week feeder auction prices were mostly steady to weak, but the strong move higher by the futures market makes a move higher in the cash market highly likely.
Limited supplies of market-ready hogs supported prices this week. In Red Oak, cash butchers traded Tuesday at $58, unchanged from last week. October Lean Hog futures gained $3.80 for the week ended Tuesday, with the December up $1.57 and February gaining $2.70.
The next major report from USDA is the Cattle on Feed report due to be released on Sept. 23. In the meantime, traders will try to further digest the information in the Supply and Demand reports released Monday, as well as watching the outside markets for clues about the future direction of the ag markets.
