Market Watch

Last week, cattle feeders held out for higher money and, rather unexpectedly, got it on a relatively light volume of cattle. The futures market was apparently caught a little off guard by the roughly $1.50 higher cash cattle prices, and nearby Live Cattle futures raced to catch up, adding over $2 in Friday’s trading. Higher fed cattle prices were supported by stronger wholesale beef prices. The Choice cutout added almost $2 over the course of last week, ending up at $154.68 on Friday. Feeder cattle futures also gained back some ground on Friday as the corn market took a breather from its recent rally. Cash calf markets were hit pretty hard last week, though, with prices (especially on stocker cattle) dropping in response to the prior week’s corn market shock. At Oklahoma City, feeders were called $2 to $3 lower while stockers were called $5 to $8 lower. Sources: John Michael Riley, Ph.D., Asst. Extension Professor, Department of Agricultural Economics, Mississippi State University...

December 2010 corn futures traded to a high of $5.235 on September 27 and closed at $5.05 on Sept. 29. On Oct. 4, the surprisingly large USDA Sept. 1 corn stocks estimate released on Sept. 30 sent that contract to a low of $4.56, said University of Illinois agricultural economist Darrel Good. Similarly, the November 2010 soybean futures contract traded to $11.295 on Sept. 27, closed at $10.99 on Sept. 29, and declined to $10.44 on Oct. 4, he said. "Price declines came to a halt with the release of USDA's October Crop Production report on Oct. 8. That report contained a unexpectedly small forecast of the size of the U.S. corn and soybean crops," he said. The corn crop is now forecast at 12.664 billion bushels, 496 million smaller than the September forecast and 446 million smaller than the 2009 harvest. Although the estimate of harvested acreage was increased by 258,000 acres, the forecast yield was lowered by 6.7 bushels, to 155.8 bushels, he said. "The decline from ...

In the October 8 2010 Crop Production and World Agricultural Supply-Demand Estimate (WASDE) reports, the USDA made changes in its supply-demand projections that have strong positive impacts on U.S. and World feedgrain price prospects, as well as positive direct and cross-crop market effects on soybean and wheat price prospects. Market Implications for U.S. Corn and Grain Sorghum: Projections for MY 2010-11 of U.S. corn ending stocks below 1 billion bushels (902 mb) and % stocks-to-use of 6.7% (nearing historic lows of 5% in MY 1995-96) provide strong supply-demand support U.S. corn and grain sorghum prices for the remainder of 2010 and into 2011. With improved U.S. cash corn price projections for MY 2010-11 in the $4.60 to $5.40 /bu range, it is likely that price rationing will have some impact on feedgrain use. MY 2010-11 appears to be a “short crop” marketing year for U.S. corn and other feedgrains. If a typical short crop corn price pattern emerges in MY 2010-11, then s...

The USDA's September Grain Stocks report indicates that the corn that went missing in June was found in September. The USDA's June 1, 2010 corn stocks estimate released on June 30 showed a surprisingly small inventory of corn. That estimate helped ignite a three-month rally in corn prices, says University of Illinois agricultural economist Darrel Good. "At the time of its release, the June corn inventory estimate created a lot of discussion about what happened to the 250 million bushels of corn that had gone missing. The small stocks estimate resulted in a very large estimate of feed and residual use of corn during the third quarter (March - May 2010) of the 2009 -10 marketing year." That large estimate resulted in the USDA increasing the projection of feed and residual use for the entire marketing year by 175 million bushels, to a total of 5.525 billion bushels. And that projection appeared to be unrealistically large but was maintained in the balance sheet through S...