Market reaction to the USDA’s Prospective Plantings Report Friday may realign the acres planted to corn or soybeans, the two main US crops grown in the Midwest, this year.
With soybean acres above expectations and corn getting short shrift, corn futures prices shot higher Friday while soybean prices continued to plunge.
The question then becomes “how much land will the change in corn and soybean prices send back to corn and out of soybeans?”
Residual buying interest in CBOT corn futures helped propel prices sharply higher again Monday to the nearby May contract’s highest level since March 9 when it traded as high as $3.74 a bushel. While corn prices finished strong Monday, the pullback from the day’s high along with the suddenness of price moves the last two days makes it seem as though the jump was a flash that won’t go much higher.
But predicting moves in the futures markets is something akin to reading tea leaves without something fundamental to back it up, at least in the long term. Short-term moves can be based on investor perceptions or feelings, however.
ACREAGE REALIGNMENT COULD COME SWIFTLY, IF IT COMES AT ALL
Planting intentions could change rapidly, if they come at all, market analysts said. The annual Prospective Plantings report is never carved in stone, so it seems likely that some adjustments to this one will be made before all the seed is in the ground.
And some market analysts said farmers made their plans to plant more soybeans not because they liked the price of soybeans so much but because they disliked the price of corn. If this is true, a sudden shift in actual planted acres may be made swiftly based on the futures market’s reaction to the numbers.
However, it appears that a larger shift in corn prices may be needed to make much of a difference to planted acres.
The Livestock Marketing Information Center took the USDA National Agricultural Statistics numbers and forecast national average corn prices, yields, exports, feed and residual use and corn production estimates to arrive at a higher ending stocks figure for corn this year.
Average corn yield and production are estimates based on normal weather for the growing season, and exports and feed and residual use numbers are estimates based on extrapolating current rates. However, the lower ending stocks forecast for this year may not be low enough to generate the type of price assurance farmers will need to plant corn instead of soybeans.
After all, the average annual price for this year was $3.30 a bushel, only a slight bounce after four years of declines from the 2012 record high of $6.89.
At this point, it’s too soon to tell. It’s all up to the weather.
CASH CATTLE QUIET
No cash cattle trade was reported Monday. Only a little follow-up action was reported Friday. For the week, cash markets ranged from $126 to $128 per cwt on a live basis and from $208 to $210 on a dressed basis.
Average fed cattle exchange auction prices Wednesday were $2.34 per cwt lower at $130.97, versus $133.31 a week earlier.
The USDA’s choice cutout Monday was down $0.69 per cwt at $213.43, while select was off $2.65 at $201.35. The choice/select spread widened to $12.08 from $10.12 with 81 loads of fabricated product sold into the spot market.
The CME Feeder Cattle Index for the seven days ended Friday was $133.33 per cwt, up $0.56. This compares with the Apr settlement of $133.07, down $0.87.