Corn Export Sales Pace Slips Further Behind

January 15, 2009 06:00 PM
 

Julianne Johnston Pro Farmer Senior Markets Editor


From Pro Farmer

Updated as of 7:00 a.m. CT

Update on export sales pace...  With USDA raising the soybean export forecast by 50 million bu. and lowering the corn export forecast 50 million bu. from last month, I thought it would be a good time to provide an update on how exports were stacking up compared to the pace needed to reach USDA's forecast. USDA left their wheat export
forecast unchanged in Monday's Supply & Demand Report. The following statistics signal USDA's corn export forecast is still too high. 

Corn: With 33 weeks left in the 2008-09 marketing year, total corn bookings are running 50% behind year-ago levels. USDA projects corn exports in the current marketing year to drop 28.2% from the previous year to 1.75 billion bushels. This signals USDA's export forecast is still high, although there is still a lot of the marketing year ahead. USDA reports total bookings as a percent of total exports are 48%, which is behind the 5-year average pace of 57% for this time of year and well behind last year's pace of 71%.

Soybeans: With 33 weeks left in the 2008-09 marketing year, total soybean bookings are running 2% over year-ago levels. USDA projects soybean exports for 2007-08 to be 5.3% below last year at 1.10 billion bushels. This pace signals USDA's export forecast may be a little bit too low, but once South American supplies become available, our export pace will decline. USDA reports total bookings as a percent of total exports at 74%, which is in line with the 5-year average of 73%.

Wheat: With 20 weeks left in the 2008-09 marketing year, total wheat bookings are running 26% behind year-ago levels. USDA projects wheat exports in the current marketing year to decline 20.9% from the previous year to 1.0 billion bu., signaling USDA's export forecast could be a little bit too high. Total commitments as a percent of total exports are running at 81%, which is in line with the 5-year average of 82%.

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Opening calls. These calls originate more than three hours before the open -- use caution, things change:

Corn: 8 to 9 cents higher. Futures were higher overnight on short-covering. Futures closed mostly around a penny lower, which was a mid-range close. Futures saw two-sided trade, but upside potential continues to be limited as traders have Monday's bearish USDA report on their minds. Yesterday's poor showing in the weekly export sales report contributed to early losses. Futures corn is "pausing" (at least for now) around the $3.60 level as traders reevaluate positions. A drop below $3.50 could trigger a fresh round of sell stops.

Soybeans: 14 to 15 cents higher. Futures were higher overnight on spillover from yesterday's gains. Futures closed 20-plus cents higher yesterday on a combination of strong weekly export sales and South American weather concerns. March soybeans finished below the $10 level to post a mid-range close. A close back above $10 would signal a return to the January high of $10.60 1/4. Support lies at this week's low of $9.57 3/4.

Wheat: 7 to 8 cents higher. Futures were higher in overnight trade amid short-covering. Chicago wheat closed mostly 4 to 5 cents lower yesterday on a disappointing weekly export sales report. March Chicago wheat posted a narrowly traded inside day on the charts. Violation of support at this week's low of $5.60 1/2 could trigger a round of sell stops to extend the decline from the December high.


Cash cattle expectations: $1 to $3 higher. Very light cash cattle trade was seen at higher prices Thursday, but most Plains feedlots haven't pulled the trigger on making sales yet. Active trade is expected in the $85 to $87 range today, which would be $1 to $3 higher than last week. Cattle futures trade could have the final say on cash cattle levels.

Futures call: Steady to firmer. Futures are called to open steady to firmer on spillover from yesterday's gains, as traders expect higher cash trade to materialize today. February live cattle are trading in line with last week's cash trade, which opens additional near-term upside potential if the cash market can see active trade at higher levels. Resistance lies at this week's high of $84.90 and extends to the January high of $89.10.

Cash hog expectations: Steady to lower. The average pork cutout value was a nickel higher Thursday to stop a recent price plunge in the product market. But the minuscule uptick in pork cutout prices won't help packers ailing cutting margins, which are deep in the red. Cash hog bids are expected to be steady to lower across the Midwest today as packers have this week's slaughter needs covered.

Futures call: Mixed. Futures are called mixed amid spreading, but concerns about near-term cash direction are expected to pressure most contracts. February hogs are now trading at just a $2 premium to the index, which is much more in line. However, the near-term cash outlook is bearish given red ink packers are dealing with.


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