The USDA’ World Agricultural Supply and Demand report Wednesday surprised many traders by pushing US corn and soybean yields to record highs. It was the first back-to-back records or soybeans yields since the 1930’s.
The USDA estimated 2016/2017 US corn output at 15.226 billion bushels, up 168 million from last month on a 1.9-bushel-per-acre increase in yield to 175.3 bushels.
US oilseed production for 2016/17 was projected at 128.7 million tonnes, up 2.5 million from last month on increased soybean and cottonseed production. Soybean production was forecast at 4.361 billion bushels, up 92 million, on record-high yields of 52.5 bushels an acre, up 1.1 bushels, mainly on production gains in Minnesota, North Dakota and Kansas.
Many expect even larger totals once the final tally is published in the January report.
In spite of the increase in estimated yield, corn and soybean futures closed higher. Live cattle and feeder cattle futures also settled higher.
Market pundits credited the bullish euphoria to expectations that President Elect Donald Trump will undo much of what is seen as over-regulation that has shackled the economy for the better part of President Obama’s tenure.
The Dow Jones Industrial Average surged to a fresh high, running past its previous record of 18,668 points at the opening bell and rising 218, or 1.18%, by the close. The index demolished a closing record of 13,636.05 set in August by ending at 18,807.
Many traders would like to see the removal, or at least modification of the Dodd-Frank law and the repeal and replacement of Obamacare and allow the economy to grow and not just inch along. The stock market was showing big moves in industrial metals like copper, platinum, palladium and silver.
Oil and gas production could grow as OPEC appears to be falling apart as individual countries give only lip service to plans to curtail production.
MARKET IGNORING BEARISH WASDE
The WASDE report was seen as mostly bearish by traders since it increased the estimated yields of corn and soybeans, surprising most traders in the process. However, the report was being overlooked as growth in world vegetable oil markets took over the driver’s seat in the market.
Palm oil settled higher and set a new contract high as data from the Malaysian Palm Oil Board showed output falling 2.2% from a month earlier in October and a decline of 17.6% from a year earlier.
The Malaysian palm oil situation also rallied Asian vegetable oils to new highs in overnight trading.
Some doubted the Malaysian oil situation was enough to hold Thursday’s gains in soybean futures, though, in the face of much higher estimated US bean production. But for the day, the markets were higher.
MEAT PRODUCTION ALSO UP
2016 total red meat and poultry production estimates were raised amid higher fourth-quarter beef and pork production more than offset reductions in poultry production.
Beef production was up on the pace of slaughter and heavier carcass weights, and pork production was raised on current slaughter rates.
CASH CATTLE MARKETS QUIET
Cash cattle markets Thursday were quiet. Cattle in the Superior Auction ranged from $103 to $104.25 per cwt. Cattle sold last week at mostly $105 live and $162 to $164 dressed.
The USDA’s choice cutout Thursday was $1.04 per cwt higher at $185.59, while select was off $1.78 at $168.67. The choice/select spread widened to $16.92 from $14.10 with 98 loads of fabricated product sold into the spot market.
The CME Feeder Cattle Index for the seven days ended Wednesday was $125.99 per cwt, down $0.25. This compares with Thursday’s Nov settlement at $125.20, up $0.65.