Markets Brace For WASDE Report

5-9-14 – The USDA’s World Agricultural Supply and Demand Estimates are scheduled for release today, and the markets seem to be braced for declines in the corn carry-out as export sales have exceeded prior expectations.\r\n Growing availability of South American corn, however, could change that as prices there undercut US values seasonally. \r\n Corn prices have been a little flatter over the last month after rising steadily since January. The contract high for the May delivery period was set on April 9 at $5.17. Since then, repeated attempts to retest this peak have failed at around $5.14 to $5.16. \r\n Corn was up Thursday as hedgers and speculators positioned themselves for a bullish report. Pre-release estimates indicate an average feeling the USDA will report ending stocks of 1.314 billion bushels, down 1.28% from the April estimate. \r\n In addition to the change in the export outlook, prices are being held down by mild Midwest weather conditions and what is thought to be rapid planting progress this week. Held back from normal planting progress by cold temperatures and wet fields, farmers this week were said to be working around the clock to catch up before the May 15 date when “yield drag” begins to set in.\r\n\r\nHRW WHEAT HAMMERED BY DROUGHT\r\n\r\n Wheat stocks are estimated at 0.588 million bushels, up slightly from April’s 0.583-million-bushel estimate. However, some traders may be looking past this estimate as the southern Plains crop gets hammered by exceptional drought for another year. \r\n The National Oceanic and Atmospheric Administration’s weekly drought monitor Your text to link… Thursday showed a mass of exceptional drought centered on the Texas Panhandle. Exceptional drought covered 4.45% of the contiguous US in the latest report, up from 3.88% just a week ago and even higher than the 4.38% of a year ago. And just three months ago, only 0.88% was listed in the worst drought category.\r\n The latest outlooks have drought spreading across the Southwestern states and back up into western Kansas by the end of the month. The extended dryness won’t help the wheat as it tries to head out.\r\n The USDA’s National Agricultural Statistics Service is to include its first estimate of winter wheat production, and there are thoughts that many traders are awaiting these estimates before making further position adjustments.\r\n\r\nMEAT SUPPLIES RISING FOR SUMMER\r\n\r\n Meat supplies appear to be rising for the summer as the USDA reported that broiler egg sets last week were 1.8% higher than a week earlier, marking the fourth straight week of increases. This means broiler supplies and slaughter can be expected to rise in July and August as the latest bumps in egg sets matures.\r\n Producers are responding to improved margins and near-record prices for beef and pork, but the projected supply gains come at a time when beef supplies are expected to rise in tune with higher first-quarter feedlot placements and larger-than-expected pork supplies as producers market larger hogs to make up for losses to the PED virus.\r\n\r\nBEEF MARKET CONTINUES SLIDING\r\n\r\n The USDA’s boxed-beef cutout value slipped again Thursday as buyers, already booked for Memorial Day move to the sidelines. Choice was $225.65 per cwt, down $1.50 from Wednesday as select declined $0.75 to $212.51.\r\n The choice/select spread narrowed to $13.13, and there were 133 loads of fabricated product sold into the spot market.\r\n Lower beef prices are weighing on market psychology, and technical traders may be backing away from the nearby market for a while. Cash prices are holding above futures for now, but this week’s beef-market slide has many thinking the market will slip as well.\r\n\r\nIN OUR OPINION\r\n\r\n–Anything more than 1.314 billion bushels of corn ending stocks could be seen as bearish since the market seems reluctant to go much higher without fundamental backing.\r\n–A secession vote this weekend in eastern Ukraine will be nothing more than a referendum on the people’s desire to leave Ukraine and become part of Russia. No one will recognize it, and official parliamentary elections are set for May 25.\r\n–Larger-than-expected new weekly jobless claims Thursday is further sign of economic strength and possible increased consumer demand for meat.\r\n