Chicago futures prices are weaker this morning following the USDA’s release of its projected planting and production estimates at its annual Outlook Conference.\r\n The USDA projected 2014 US corn plantings at 92.0 million acres, compared with its baseline estimate of 93.5 million and 95.4 million last year. Officials also estimated an average price of $3.90 a bushel on production of 13.985 billion bushels, up 60 million from this year, and a new record. \r\n The USDA projected 2014 soybean plantings at a record 79.5 million acres, up from its baseline estimate of 78.0 million and 76.5 million in 2013. Economists forecast an average price of $9.65 a bushel on production of a record 3.55 billion bushels.\r\n Wheat sowings at 55.5 million acres, are down from the baseline estimate of 57.0 million and the 56.2 million in 2013. An average price of $5.30 a bushel also was projected. Production was forecast at 2.160 billion bushels, up 30 million.\r\n Whatever the reason for the USDA showing fewer planted acres, many traders may decry the corn estimates as being unrealistically low, and the market may discard them as being too early to be valid. There is a lot of weather to go through before planting is done.\r\n The National Weather Services’ Drought Monitor http://droughtmonitor.unl.edu/data/pngs/20140218/20140218_usdm_home.png shows abnormal dryness in the Plains and in Iowa. This isn’t really evident to the casual observer yet, since temperatures are cool or cold, but as spring approaches, the dryness will be more apparent.\r\n Corn traders seemed either satisfied with the projections or willing to put them aside since prices held recent gains in the aftermath of their release. Many will want to wait until planting is closer to get excited about whether farmers will plant corn, soybeans, wheat or even cotton on those acres.\r\n If corn prices go higher and planting conditions are favorable, farmers may decide to go with corn, and acreage may shoot much higher, analysts said. But if prices go back down, and weather conditions delay planting, they could opt for something else. \r\n The next line of attack could be the March 31 quarterly stocks report. This report could change the game for many if the USDA finds more bushels and changes the price outlook matrix, and some are saying the USDA could readjust its acreage estimates in the March Planting Intentions report.\r\n But traders will be watching the pace of planting this spring as much as anything, and the eventual number of planted acres will be a moving target well past the time when the planters are put up for the season.\r\n Broker/analyst Kevin Van Trump said in his morning comments that 80% of expected acres need to be in the ground by mid-May or the trade will become much more nervous about the eventual total.\r\n Soybean markets continue to be overshadowed by China. Crush margins there are moving lower, and there is a flotilla of beans on the way. Soybean shipments are being switched or pedaled in the market, even while US soybean prices continue to move up on a lack of news about expected cancellations.\r\n Van Trump said, “There was some talk that a few of the large commercials are happy sourcing their beans out of the US because this helps keep US crush margins strong.†In other words, rather than switching to Brazil beans, they choose to keep importing US beans as this limits the supply to crushers, and meal prices stay supported.\r\n No cash cattle trading has been reported yet this week. Packer bids were reported at $142 per cwt on a live basis, steady with last week. However, cattle owners were holding out for $144 or more for this week’s showlist cattle since boxed-beef prices are up this week.\r\n Expectations for higher cash prices this week pushed Feb live cattle futures to test contract highs on Thursday.\r\n The USDA reported its choice cutout value Thursday at $214.32 per cwt, up $0.47, although its select cutout faded $0.13 to $211.36. For the week, though, both values are higher.\r\n The CME Feeder Cattle Index for the seven days ended Wednesday was $171.02, down $0.57 while the March futures contract closed Thursday at $171.12, down $0.05.\r\n
Cattle feeding is pretty straightforward - doing it profitably isn't.