Harvest Pressure Continues To Weigh On Soybeans and Corn

September 24, 2012 01:06 AM

What Traders are Talking About:

* Harvest pressure continues to weigh on soybeans, corn. As combines continue to actively roll across the Corn Belt, seasonal pressure on soybeans and corn is mounting. While corn yields have been poor, as expected, some soybean yields are coming in better than feared. As a result, some traders are looking for USDA to raise its production and yield forecasts next month, which is adding to the seasonal pressure. Now, traders are waiting on basis and the export market to signal end-users are stepping up purchases.

The long and short of it: Seasonal pressure typically persists until harvest is at least half complete. But with the price structure giving producers no incentive to store this year's crop, seasonal pressure could persist a little longer than normal if most of the new-crop supply comes to market off the combine.

* Informa updates 2012 acreage, issues first 2013 planting projections. Based on the latest USDA Farm Service Agency (FSA) certified acreage data, Informa Economics reportedly increased its planted corn acreage estimate to 97.2 million -- 767,000 acres higher than USDA's June estimate, but 385,000 fewer than Informa previously estimated based on earlier FSA data. Informa raised its planted soybean acreage estimate to 77.1 million -- 1.06 million acres more than USDA's June estimate, but 489,000 fewer than the firm's previous peg. Based on the new acreage estimates, Informa reportedly increased its forecast for the 2012 corn crop to 11.093 billion bu. with a yield of 126.6 bu. per acre and raised its soybean production peg to 2.662 billion bu. with a yield of 35.2 bu. per acre. For 2013, the firm projects corn acreage at 97.5 million (365,000 above its revised 2012 estimate), soybean acreage at 79.9 million (2.7 million above its revised 2012 estimate), all wheat acreage at 57.1 million acres (1.3 million above its 2012 estimate) and cotton acreage at 10.017 million (2.3 below its 2012 estimate).

The long and short of it: The market had little reaction to Informa's acreage numbers last Friday as the focus is more on demand with prices falling and harvest progressing rapidly.

* Cattle on Feed, Cold Storage Reports to guide livestock futures. Last Friday's Cattle on Feed Report showed On Feed at 99%, Placements at 89% and Marketings at 95% of year-ago levels. While feedlot supplies are tightening, numbers aren't as tight as expected and feedlots are falling behind on marketings. In the Cold Storage Report, Beef stocks totaled 429.785 million lbs. on Aug. 31, which was below the average pre-report trade guess of 453 million pounds. Beef stocks declined 6.8% during August and are now just 0.3% above year-ago. Meanwhile, total pork stocks were record large for the end of August at 580.783 million pounds. That was 33.5 million lbs. more than the average pre-report guess. Pork stocks rose 5.7% during August and came in 31.1% above year-ago.

The long and short of it: The combination of lighter-than-expected Placements and Marketings should encourage bear spreading in live cattle futures. Plus, traders sense the cash cattle market has put in a top, which will likely weigh on nearby live cattle. But beef stocks came in less than expected, which along with a tightening feedlot inventory, should help limit selling pressure. The record Aug. 31 pork stocks should weigh on lean hog futures, although a continuation of the strength seen in the cash hog market last week would limit selling interest.


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