Feed Grains Get Short Shrift In Acreage Estimates

The USDA, at its annual Outlook Forum Thursday, kicked off the annual guessing game about the number of acres that would be planted to various crops this year, and feed grains drew the short straw.

Such a scenario could raise feed prices for cattle, hog and poultry producers in the months ahead – that is, if nothing changes between now and planting time.  The USDA’s Outlook Forum planting estimates were based on farmer surveys.  It’s early, though, so most analysts are using the latest figures as a jumping-off-point for planting estimates until it is too late to plant any crop.

Grain acres, and feed grains in particular, were falling out of favor with growers.  Soybeans were a big winner in the fight for acres as prices so far this month averaged nearly 2.6 times as much as corn.  Analysts said the soybean acreage estimate was above trade expectations, adding to the bearish sentiments from the USDA estimates.

Robert Johansson, USDA chief economist was quoted in news sources as saying the price ratio hadn’t been this favorable to soybeans since 1997.

Specifically, corn acres were estimated at 90.0 million acres, down 4.0 million from last year; soybean acres were placed at 88.0 million, up 4.6 million; all wheat acres were forecast at 46.0 million, down 4.2 million; cotton acreage was estimated at 11.5 million, up 1.4 million; rice acres were put at 2.6 million, down 600,000, and other feed grains were estimated at 11.7 million acres, down 900,000.

 

IDLED ACRES SEEN UP AMID LOWER INCOME

 

The total of the top eight crops was 249.8 million acres, down 3.6 million, implying an increase in idled acres.  Johansson was quoted saying that lower commodity prices were credited with the plans for reduced planted acreage.

Overall, US farms were expected to see net farm income of $62.3 billion this year, half of what they saw in the 2013 peak, Johansson said.

The USDA projected the season average cash corn price at $3.50 a bushel this year, versus $3.40 last year.  Wheat was estimated at $4.30 against $3.85 and the average soybean cash price was put at $9.60, up from $9.50 last year.

 

FUTURES WEAKEN

 

Grain and soybean futures prices weakened after the USDA Outlook Conference numbers were released.  Market analysts credited much of the weakness in corn and soybeans to the USDA numbers, but corn also saw some weakness as weekly ethanol production fell, but ethanol stocks grew.

KC wheat found some support from worries about continued dryness in the Plains, AgResource said.

But soybean prices took the hit as traders took the acreage figure, assumed trend yield this year and came to the conclusion that the soy crop could reach a record 4.150 to 4.175 billion bushels.  Total consumption in the 2016/17 crop year was 4.080 billion, so end stocks could build again.

 

CASH CATTLE TRADE QUIET

 

Cash cattle trading was quiet Thursday.

Average fed cattle exchange auction prices Wednesday were $3.09 per cwt higher at $122.11, versus $119.02 a week earlier.  Cash cattle trading was reported at mostly $124 to $125 per cwt on a live basis, compared with last week at $119 to $120.50.  Dressed-basis trading was at $195 to $196, compared with $185 to $188.

The USDA’s choice cutout Thursday was up $1.66 per cwt at $196.19, while select was up $2.02 at $192.83.  The choice/select spread narrowed to $3.36 from $3.72 with 88 loads of fabricated product sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Wednesday was $127.41 per cwt, up $0.29.  This compares with Thursday’s Mar settlement of $125.15, up $0.05.