A larger-than-expected US corn acreage forecast didn’t seem to bother futures traders much as the crop still was seen as a profitable venture for farmers, said Matthew Diersen, risk and business management specialist at South Dakota State University.
Writing for the Livestock Marketing Information Center, Diersen said, “expectations for higher profits from corn related to other crops drove higher expectations ahead of the USDA-NASS Prospective Plantings report….”
USDA BEATS FORECASTS
The average of pre-release estimates was for 94.4 million acres, versus the actual estimate of 95.3 million, he said. Using a yield of 181 bushels per acre and a 92% harvest percentage would give production of 15.7 billion bushels.
That would exceed 2023’s record production, Diersen said.
The corn acreage was sharply higher from Nebraska east to Indiana, he said. Acreage gains came at the expense of soybean and hay acres.
Sorghum acreage, which has gained acres regionally in recent years, was 6.6 million acres, slightly more than the high end of trade estimates, Diersen said.
OLD CROP CLARIFIED
The old crop corn situation was clarified in the Grain Stocks report, he said. Expectations ranged from 8.06 to 8.31 billion bushels, but the actual level of 8.15 billion bushels was neutral news for the nearby contracts.
That level was down from 8.35 billion bushels a year ago, Diersen said. The distribution was different from last year as off-farm stocks were higher and on-farm stocks were noticeably lower from Iowa east to Ohio.
HAY ACRES
The intended harvested amount of all hay was estimated at 48.5 million acres, versus 49.4 million last year, he said. Hay acres were expected to be lower in Minnesota, Nebraska, South Dakota and especially Texas.
Alfalfa seedings from the January Crop Production report were higher year over year so the acres being lower in the Midwest was a little surprising, Diersen said.
The 10-year average yield for US hay is 2.4 short tons per acre, which would result in a projected production level of 116.4 million tons or a reduction of 6.1 million from 2024, he said.
Heavy fall use meant Dec. 1 stocks were only 81.5 million tons, he said. Typical winter use would imply May 1 stocks of only 17.5 million tons, resulting in an expected 2025 supply that is sharply lower than last year.
MORE FORWARD-CONTRACTED CATTLE
On a different note, higher futures prices have coincided with an increase in the volume of forward-contracted fed cattle, Diersen said. A USDA-AMS release said total new signings can fluctuate widely from week to week, especially around holidays, weather events and market swings.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $210.35 per cwt to $210.95, compared with last week’s range of $202.49 to $214.41 per cwt. FOB dressed steers, and heifers went for $333.65 per cwt to $334.79, compared with $319.17 to $337.40.
The USDA choice cutout Monday was up $2.44 per cwt at $335.26 while select was up $1.33 at $320.01. The choice/select spread widened to $15.25 from $14.14 with 93 loads of fabricated product and 27 loads of trimmings and grinds sold into the spot market.
The USDA-listed the weighted average wholesale price for fresh 90% lean beef was $382.70 per cwt, and 50% beef was $125.46.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.20 to $1.32 a bushel over the May corn contract, which settled at $4.57 1/4, up $0.04.
The CME Feeder Cattle Index for the seven days ended Friday was $291.50 per cwt, up $4.74. This compares with Monday’s Apr contract settlement of $286.45, down $0.22.
IN OUR OPINION
–Cash fed cattle prices remain firm, but estimated packer margins remain in the red, market analysts say. It will take a very strong move in boxed-beef prices to keep them from throttling some chain speed just to boost product prices and back up a pen or two of cattle in the feedlots. Their problem now is contracted demand. No one knows what percentage of plant capacity is spoken for and thus the pressure to produce “red” meat.