Tuesday’s drop in corn futures was linked to Monday’s USDA crop reports and disappointment that the USDA did not cut acreage more than it did, but it may have been a case of “buy the rumor, sell the fact” as some analysts say the reports should have been more price supportive.
The post-report futures trade came as heavily long funds liquidated, possibly because the USDA cut feed and residual use estimates by 100 million bushels and boosted Dec. 1 corn stocks to 11.203 billion bushels, 80 million more than the average pre-release analyst estimate and 750 million more than a year ago. Some also were disappointed with winter wheat plantings, saying the lower-than-expected figure could open the way for more corn acres.
Reports that ethanol production margins now are below breakeven along with gasoline blender margins also were said to have weighed on corn futures, although the USDA predicted increased ethanol use for the year, moving the estimate to 5.175 billion bushels, 25 million more than the previous estimate.
But the USDA figures should fuel a more bullish response in coming days, said Darrel Good, agricultural economist at the University of Illinois.
Last year’s corn acres were cut by only 288,000, and the estimate of harvested acres rose by 39,000, but pre-release estimates showed that many were thinking the trickle of Farm Services Agency reports into December might mean the USDA would slash planted acres even more.
However, world ending stocks were lowered to 189.15 tonnes from December’s estimate of 192.2 tonnes and the average trade guess of 191.19 million.
The 2014 US corn crop was estimated at 14.2 billion bushels, down 191 million from the November forecast and 133 million less than the average pre-release estimate. Yield was estimated at 171 bushels an acre, down 2.4 bushels from the November estimate as some high-producing states reported larger-than-expected declines.
Corn exports through the first quarter of the 2014-15 marketing year were up 58 million bushels more than the 2013-14 marketing year at 408 million.
And ending stocks of corn were estimated at 1.877 billion bushels, 121 million less than last month’s estimate and 50 million below the average trade guess.
CASH CATTLE MARKETS MOSTLY QUIET
Cash cattle markets remained fairly quiet Tuesday as futures prices continued to plummet. A few trades were reported in Iowa and Nebraska at $264 to $265 per cwt on a dressed basis, $5 to $6 below last week.
No packer bids were reported elsewhere, but asking prices ranged from $170 to $172 per cwt on a live basis and around $275 in Nebraska’s dressed market.
Cattle traded last week at mostly $170 per cwt live and $268 to $270 dressed, and the Feb futures contract settled Tuesday at $157.45, down the daily limit of $3.00.
Sources said further futures market declines are possible today after Tuesday locked limit down, so cash-market bids may wait another day.
BEEF CONTINUES TO RISE
Boxed beef markets moved up every day this year, something the liquidating futures traders ignored Tuesday.
The USDA’s boxed beef cutout report Tuesday reported choice beef up $2.85 per cwt at $261.63 with select up $1.30 at $251.68. There were an estimated 90 loads of fabricated product sold into the spot market, and the choice/select spread widened to $9.94.
The choice cutout was up $11.30 per cwt, or 4.51%, from $250.33 a week ago. Select was up $11.63, or 4.84%, from $240.05 a week ago.
Feeder cattle futures also were down Tuesday, but the Jan contract, at $221.47 per cwt is well below the CME Feeder Cattle Index at $232.65.