Corn markets got a boost Wednesday from the USDA’s Prospective Plantings report, which foretold of tightening stocks for old and new crop.
Soybeans also got a boost from the report as it predicted lower-than-expected planted acreage. Contracts for delivery months through this year and into 2022 settled locked limit up in corn and soybeans.
Market analysts said the report highlights the need for near-perfect growing weather throughout the planting, growing and harvest seasons. Any glitch could tighten ending stocks further and push prices.
Another analyst pointed out that many uses for corn and soybeans are somewhat limited in their elasticity. For instance, laws are in place demanding a certain level of ethanol use in gasoline and a certain level of biofuel production.
Livestock and poultry feeders can cut back on production, although with the amount of investment producers have in their facilities, cutting back can be as expensive as paying up for corn, the analyst said.
The fly in the ointment for market analysts is that farmers can change their minds about planted acreage. Some acreage plans are set as crop rotations and fertilizer applications preclude switching, but enough acres are still up for grabs. The market analyst said the markets will try to “buy” acreage until the crops are in the ground.
CORN STOCKS SEEN BELOW ESTIMATES
March 1 corn stocks were placed at 7.701 billion bushels, which was below the average pre-release estimate of 7.770 billion and ranged from 7.573 billion to 7.980 billion bushels.
March 1 stocks last year were pegged at 7.952 billion bushels.
Collectively, farmers said they intended to plant 91.144 million acres to corn this year, well below the average pre-report estimate of around 93.1 million. The USDA figure even was below the range of pre-report estimates of 92.0 to 94.5 million acres.
Corn futures may get a further boost from technical traders after the higher close. Some months now are above the 40-day moving average, and stochastics studies are giving bullish signals, but these studies also show the market may be overbought.
That means there could be some short-term profit taking by weak longs on Thursday, especially ahead of a three-day futures market weekend.
Wheat markets got some spillover business from the corn market as rising corn costs could cause some feeders to look at wheat as an alternative.
SOYBEAN STOCKS SEEN BELOW ESTIMATES
March 1 soybean stocks were pegged at 1.564 billion bushels, which was more than the average estimate of 1.528 billion with a range of 1.440 billion to 1.775 billion and less than last year’s 2.255 billion.
However, with planting intentions of 87.6 million acres, versus an average estimate of 90.1 million, there is no room for a growing-season hiccup.
CATTLE, BEEF RECAP
Fed cattle trading this week was at $116 to $118 per cwt on a live basis, up $1 to $2 from last week. Dressed-basis trading was at $184 to $185 per cwt, unchanged.
The USDA choice cutout Wednesday was up $2.29 per cwt at $247.12, while select was up $2.21 at $238.13. The choice/select spread widened to $8.99 from $8.91 with 84 loads of fabricated product and 32 loads of trimmings and grinds sold into the spot market.
The USDA reported Wednesday that basis bids for corn from livestock feeding operations in the Southern Plains were unchanged at $1.25 to $1.27 a bushel over the May CBOT futures contract, which settled at $5.64 1/4 a bushel, up $0.25.
The CME Feeder Cattle Index for the seven days ended Tuesday was $139.91 per cwt, up $0.16. This compares with Wednesday’s Apr contract settlement of $143.87 per cwt, down $2.95.