Chicago corn futures Wednesday closed sharply higher, with Sep, Dec, Mar and May delivery months up the daily $0.40 per bushel limit after the USDA issued a new planting intentions report showing less of an increase in acreage than many had expected.
The USDA’s National Agricultural Statistics Service Wednesday estimated 2021 corn planted acres at 92.7 million acres, up 1.6 million, or 1.76%, from 91.1 million in the March 31 report and but 1.1 million, or 1.17%, less than the 93.8 million that was expected in a pre-release survey.
The market reaction hit feeder cattle futures as the implied higher cost of feed would limit the amount feedlots could pay for replacement cattle, a market analyst said.
Live cattle futures ended narrowly mixed to mostly higher as investors assumed tightening supplies would underpin prices.
WEATHER GAINS IMPORTANCE
Without the expected boost in acreage, harvested bushels of corn becomes more important to the futures and cash corn markets through harvest, the market analyst said. This puts greater emphasis on weather through the growing, pollinating, filling, maturing and harvesting seasons of the crop.
Until the crop is “under roof,” or harvested and stored safely, corn futures and cash prices will be very volatile, the analyst said.
Added to that were forecasts for less-than-optimal weather through July for the Midwest corn crop, the analyst said.
Because of the lower-than-expected acreage numbers, the USDA’s estimate of ending corn stocks also fell below trade estimates. Wednesday’s stocks number was 4.112 billion bushels, 88 million, or 2.10%, short of trade estimates for 4.2 billion.
With corn futures locking limit up on Wednesday, it’s more than possible that prices will continue higher on Thursday, the analyst said. Not only did US corn acreage fall short of expectations, but the Brazilian crop this year was crimped by dry weather there. And China could step up and open its wallet for more US corn as their hog herd recovers from severe African Swine Fever cullings.
Ethanol demand also could pull on available US corn stocks, the market analyst said. With more people moving around as fear of COVID fades, more gasoline is being consumed, and this means more ethanol to dilute gasoline.
Weekly ethanol production was up about 1% from last week and up 17% from last year.
SOYBEANS UP HARD
Soybeans also traded sharply higher after the acreage report. An estimated 87.6 million acres suggests a carryout of 70 million to 148 million bushels. Some analysts feel soybean demand could outdistance this, especially if China comes on strong.
CATTLE, BEEF RECAP
Fed cattle traded this week at $120 to $126.50 per cwt on a live basis, down $2 to up $1.50 from last week. Dressed-basis trading was at $198 to $203, up $1 to $6.
The USDA choice cutout Wednesday was down $1.05 per cwt at $291.29, while select was off $1.13 at $269.27. The choice/select spread widened to $22.02 from $21.94 with 110 loads of fabricated product and 21 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 $1.05 to $1.12 a bushel over the Jul futures and for southwest Kansas were unchanged at $0.70 over Jul, which settled at $7.20 a bushel, up $0.25 1/2.
No live cattle delivery notices were tendered Wednesday against the Jun contract.
The CME Feeder Cattle Index for the seven days ended Tuesday was $147.10 per cwt up $0.38. This compares with Wednesday’s Aug contract settlement of $154.62 per cwt, down $2.77.