Mixed, Mostly Higher Overnight In Report Follow-Through

Grain and soybean markets are mixed to mostly higher in overnight trading as Asian and European markets react to Friday’s USDA release of production and stocks data.  The reports showed lower-than-expected US corn yields and production, a reduction from previous estimates, even. \r\n   US markets responded with significant gains on Friday, but the reports came out too late for world markets to respond.\r\n   Analyst comments indicated a belief that grain and soybean prices would continue a general move higher to begin the week, with corn and wheat being the leaders.  \r\n   AgResource said it expects soybeans to be drug along, but with less winter wheat acres than expected, soybeans could be the favored crop, blunting efforts at taking prices higher.  \r\n   “With 2 Mil acres less of US winter wheat, soybeans will be the favored crop and ‘14 US soybean plantings could be a record high above 82 Mil acres,” AgResource said.\r\n   Now that the January crop reports are out of the way, traders likely will pay attention to more mundane data like weekly export sales and shipments.  US planting prospects for this spring, South American weather and export sales may dominate conversations for a while.\r\n   Market analysts also have had time to think about Friday’s USDA reports, especially the lower corn production estimate.  Paul Georgy, president of Allendale Inc., said it was possible that USDA economists made adjustments for lighter test weight on later-planted corn.  \r\n   First-quarter feed usage was a surprise to many, with the livestock market slow to react, possibly a result of the late start to harvesting, although estimated ethanol demand was greater than expected, and the USDA did not change its price targets for corn and soybeans this marketing year.  \r\n   After the report, there was some discussion that the USDA corn numbers were less than accurate and that farmers may use the rally to advance old-crop sales.  Whether this was their reasoning or not, it appears that many famers did crack the seals on their bins as interior basis levels fell in response to increased farmer selling, analysts said.\r\n   Egypt’s GASC bought a cargo of US Soft Red Winter wheat over the weekend as US prices, even delivered, were lower than other sources.  The cost of freight is coming down along with the cost of US wheat.\r\n   And AgResource also reported rumors that Brazil could drop its 10% import tax on non-Latin American wheat.  The rumors have the totals being as much as 2 million tonnes, AgResource said.  The last time Brazil dropped the tax, US Hard Red Winter wheat out of the Gulf was a primary beneficiary.\r\n   Hot/dry weather continues across southern Argentina, and traders are becoming concerned.  Nearly ideal conditions exist elsewhere in the Southern Hemisphere, and forecasts for the next 10 days at least indicate they are expected to continue.  \r\n   However, some are wondering if Southern Argentine crop stress will be a significant drag on South American production and prices.  \r\n   Brazil’s soybean harvest is progressing and gaining speed, traders say.  China continues to buy US soybeans, but many wonder if cancellations aren’t on the horizon as soon as Brazilian supplies hit the market.\r\n   Cash cattle prices established another record high last week, trading $2 to $3 per cwt higher than last week at $139 to $140 and at $220 to $222 on a dressed basis.  \r\n   A Reuters story said the severe cold that hit the Plains earlier this month is slowing the rate at which cattle are being sold for slaughter.  Feedlot managers are electing to keep them on hand for a bit longer to allow the cattle to regain some of the weight they lost to the cold.\r\n   Wholesale beef prices also set a new record high Friday.  The USDA’s choice cutout Friday was reported at $214.98 per cwt, up $2.93 on the day and easily eclipsing the previous record on Thursday of 212.05.\r\n   The USDA’s select cutout value also set a record high at $212.58 per cwt, $2.53 above the previous record high on Thursday of $209.05.\r\n   The Reuters story said traders are wondering just how high consumers are willing to take prices.  Packers were able to recoup some of the higher cost of the cattle, but with beef and cattle prices in uncharted territory, some traders are getting antsy.\r\n   The CME Feeder Cattle Index for the seven days ending Thursday is $171.60, up $0.30 on the day.  By contrast, the Jan feeder cattle contract settled Friday at $168.05 per cwt, down $0.50.\r\n