First Look at Winter Wheat Crop

May 10, 2009 07:00 PM
 

Julianne Johnston Pro Farmer Senior Markets Editor


From Pro Farmer

Winter wheat production expectations... USDA will release their first survey-based estimate of the 2009 U.S. winter wheat crop on May 12 at 7:30 a.m. CT. The following numbers "imply" a spring wheat crop of 565 million bushels.

Winter Wheat

Avg.

Range

USDA 2008

in billion bushels

All wheat

2.091

1.994-2.145

2.500

All winter

1.526

1.446-1.550

1.868

HRW

0.881

0.820-0.915

1.035

SRW

0.434

0.413-0.482

0.614

White

0.211

0.181-0.220

0.219

 


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

Corn: 2 to 3 cents lower. Futures saw light profit-taking overnight. Futures ended last week on a strong note, with July corn closing above the $4.20 level for the first time since early January. For the week, corn finished "just" 7 cents above last week's close, but improved the technical outlook. More focus will be put on the new-crop situation this week after USDA releases their first 2009-10 Supply & Demand table. Lower acreage this year has traders expecting a drawdown in stocks. However, the old-crop stocks situation remains ample, which will limit upside potential for old-crop futures.

Soybeans: 15 to 17 cents lower. Futures faced profit-taking overnight, with crude oil under pressure. Old-crop contracts led price gains last week amid strong export demand and tightening supplies. Soybean traders will be focused on two factors this week -- USDA's Supply and Demand Report Tuesday morning and China. USDA's 2008-09 balance sheet will show a smaller carryover figure, although there is a wide range of pre-report estimates. The initial balance sheet for the upcoming marketing year will feature bigger carryover. The focus on China will be on whether or not they cancel any U.S. soybean purchases after rumors of such action hit the market last week.

Wheat: 2 to 4 cents lower. Futures saw light profit-taking overnight on spillover from neighboring pits. Futures posted strong gains last week, with July Chicago wheat closing 20 cents above the previous week's finish. Wheat traders will more closely monitor weather this week as the winter wheat crop is advancing and there are concerns with the slow planting pace for the spring wheat crop. Traders' other focus will be on USDA's Winter Wheat Production and Supply & Demand Reports. While the report will show winter wheat production down sharply from year-ago, 2008-09 and 2009-10 carryover figures will be abundant.


Cash cattle expectations: Watching beef market. Cash sources will be watching the beef market early this week to determine the cash tone for later. Beef values slipped last week, but movement surged. As a result of tightening supplies, some packers will be in need of supplies. However, unless beef values stabilize, the cash market will be weaker again.

Futures call: Firmer. June live cattle finished about 50 cents above the previous week's close on Friday, inching closer to the cash cattle market. Beef improvement improved last week at lower prices, signaling a near-term low may be close at hand. In order for cattle futures to build on last week's slight gains, beef prices need to stabilize. Tightening cattle supplies have helped to limit downside risk in the cattle market, but while supplies are tightening, cattle weights remain above year-ago levels.

Cash hog expectations: Mixed. The cash hog market is expected to see a mixed tone this morning, as packers' profit margin have moved into the red. This will limit cash improvement, although some packers will be willing to raise bids amid improved demand.

Futures call: Mixed. Futures closed sharply higher Friday. Strong late-week gains allowed hog futures to close higher for the week. If H1N1 flu concerns continue to ease, both cash hog bids and lean hog futures should build on late-week strength. While attitudes have improved, the market isn't completely out of the woods as some key countries still have export bans on some U.S. pork shipments. Unless there's a setback, more export restrictions on U.S. pork should be lifted over the next month.


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