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Wheat prices led the grains complex higher this past week. That’s a statement that hasn’t been made many times in the past year or two, but the wheat futures markets in both Chicago and Kansas City showed unexpected strength this week. Perhaps more impressive than the actual price increases were the changes in the spreads between contract months. In Chicago, the December contract was up 27 cents for the week ended Tuesday, while the March contract gained almost 14. That reduced the carry between the two contracts from almost 36 cents to less than 23. While still relatively wide, that reduction in the carry is a definite bullish move that could indicate a longer-term bullish outlook for wheat. USDA’s Supply and Demand report released early Wednesday morning showed no major surprises for the wheat market. Projected ending stocks for all domestic wheat were reduced nine million bushels from last month’s report, but were still nine million larger than analysts’ pre-report estimates. World stocks were up just a bit from last month’s report. Overall, there should be little market reaction from the wheat numbers.
Corn prices this past week were modestly higher, mostly in anticipation of bullish results from Wednesday’s Crop Production and Supply and Demand reports. The December futures contract gained more than six cents for the week, with the March up almost six and May up more than eight cents. The corn numbers in Wednesday’s report were mixed, with domestic corn production dropping more than expected, to 12.31 billion bushels compared to last month’s 12.43. However, ending stocks dropped only 23 million bushels, while analysts were expecting a reduction of 65 million. World ending stocks also dropped, but overall, probably very little market reaction to the report.
Soybean prices were nearly unchanged compared to a week ago, as the November contract gained only three cents compared to last Tuesday, while the January and March contracts were up less than three. USDA unexpectedly reduced the domestic soybean crop in Wednesday’s reports, but by only a small amount that will likely be offset by an increase in domestic ending stocks that was greater than expected. That increase in ending stocks was primarily as a result of decreased exports caused by the higher dollar.
The cattle markets were mixed this week, with Feeder Cattle futures sharply lower. The November contract was off $1.30 for the week ended Tuesday, with the January down two bucks and March off $1.87. Feeders were responding to firmer grain prices that many thought would be propelled even higher by Wednesday’s USDA reports. However, early-week cash feeder auctions were mostly higher as feedlots continued to seek ownership of increasingly scarce calves and yearlings.
Live Cattle futures were mostly firmer, as the December contract was up $1.15 compared to last Tuesday, while the February gained 60 cents. However, the April contract was unchanged from last week and the June gained only two cents. Boxed beef cutout values were also higher, as the Choice gained $2.01 compared to last Tuesday, while the Select was up 68 cents. The spread between Choice and Select is now approaching $20, which helps explain the wide range of prices paid for cash fed cattle last week. Early last week, hedged cattle feeders, mostly in the Southern Plains, took advantage of strong basis levels and sold fed cattle for as low as $119, down two bucks from the previous week. Then packers started trying to buy higher-grading cattle, mostly in the North, after sharp gains in the futures market, and paid as high as $125 near week’s end. But despite the unusually wide spread in fed cattle prices last week, the average for the week, at $121, was unchanged from the previous week.
Lean Hog futures contracts were lower for the week, responding to weaker economic conditions in China, the stronger dollar and competition from weak poultry values. The December contract was down $2.32 for the week, with February off $2.75 and April down $1.60. Cash butchers in Red Oak were down a dollar, trading Tuesday at $60.
Reaction to Wednesday’s USDA reports will affect the mid-week markets, but continued reactions to the European financial crisis, where the spotlight has now shifted from Greece to Italy, and its spillover effects on other markets will likely be the main impetus for late-week market moves.
Wheat prices led the grains complex higher this past week. That’s a statement that hasn’t been made many times in the past year or two, but the wheat futures markets in both Chicago and Kansas City showed unexpected strength this week. Perhaps more impressive than the actual price increases were the changes in the spreads between contract months. In Chicago, the December contract was up 27 cents for the week ended Tuesday, while the March contract gained almost 14. That reduced the carry between the two contracts from almost 36 cents to less than 23. While still relatively wide, that reduction in the carry is a definite bullish move that could indicate a longer-term bullish outlook for wheat. USDA’s Supply and Demand report released early Wednesday morning showed no major surprises for the wheat market. Projected ending stocks for all domestic wheat were reduced nine million bushels from last month’s report, but were still nine million larger than analysts’ pre-report estimates. World stocks were up just a bit from last month’s report. Overall, there should be little market reaction from the wheat numbers.
Corn prices this past week were modestly higher, mostly in anticipation of bullish results from Wednesday’s Crop Production and Supply and Demand reports. The December futures contract gained more than six cents for the week, with the March up almost six and May up more than eight cents. The corn numbers in Wednesday’s report were mixed, with domestic corn production dropping more than expected, to 12.31 billion bushels compared to last month’s 12.43. However, ending stocks dropped only 23 million bushels, while analysts were expecting a reduction of 65 million. World ending stocks also dropped, but overall, probably very little market reaction to the report.
Soybean prices were nearly unchanged compared to a week ago, as the November contract gained only three cents compared to last Tuesday, while the January and March contracts were up less than three. USDA unexpectedly reduced the domestic soybean crop in Wednesday’s reports, but by only a small amount that will likely be offset by an increase in domestic ending stocks that was greater than expected. That increase in ending stocks was primarily as a result of decreased exports caused by the higher dollar.
The cattle markets were mixed this week, with Feeder Cattle futures sharply lower. The November contract was off $1.30 for the week ended Tuesday, with the January down two bucks and March off $1.87. Feeders were responding to firmer grain prices that many thought would be propelled even higher by Wednesday’s USDA reports. However, early-week cash feeder auctions were mostly higher as feedlots continued to seek ownership of increasingly scarce calves and yearlings.
Live Cattle futures were mostly firmer, as the December contract was up $1.15 compared to last Tuesday, while the February gained 60 cents. However, the April contract was unchanged from last week and the June gained only two cents. Boxed beef cutout values were also higher, as the Choice gained $2.01 compared to last Tuesday, while the Select was up 68 cents. The spread between Choice and Select is now approaching $20, which helps explain the wide range of prices paid for cash fed cattle last week. Early last week, hedged cattle feeders, mostly in the Southern Plains, took advantage of strong basis levels and sold fed cattle for as low as $119, down two bucks from the previous week. Then packers started trying to buy higher-grading cattle, mostly in the North, after sharp gains in the futures market, and paid as high as $125 near week’s end. But despite the unusually wide spread in fed cattle prices last week, the average for the week, at $121, was unchanged from the previous week.
Lean Hog futures contracts were lower for the week, responding to weaker economic conditions in China, the stronger dollar and competition from weak poultry values. The December contract was down $2.32 for the week, with February off $2.75 and April down $1.60. Cash butchers in Red Oak were down a dollar, trading Tuesday at $60.
Reaction to Wednesday’s USDA reports will affect the mid-week markets, but continued reactions to the European financial crisis, where the spotlight has now shifted from Greece to Italy, and its spillover effects on other markets will likely be the main impetus for late-week market moves.
