More USDA 'Surprises'

October 9, 2008 07:00 PM
 

Julianne Johnston Pro Farmer Senior Markets Editor


From Pro Farmer

Updated as of 7:00 a.m. CT

Reports add to bearish momentum... Grain futures were sharply lower in overnight trade based on strength in the dollar and weakness in the crude oil market. USDA reports are expected to add to bearish momentum, with carryover figures for corn, soybeans and wheat coming in above expectations.

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

Corn: 25 to 30 cents lower. USDA raised the size of the corn crop more than expected to 12.2 billion bushels. As a result, USDA raised its corn carryover estimate to 1.154 billion bushels. Outside markets are also seen supplying pressure this morning, with the dollar sharply higher and crude oil under heavy pressure.

Soybeans: 40 to 50 cents lower. Traders, looking for a drop in the size of the soybean crop, were surprised to see USDA raise the crop to 2.983 billion bushels. As a result, corn and soybean carryover estimates came in above expectations, at 1.154 billion bu. and 220 million bu., respectively. Outside markets are also seen supplying pressure this morning, with the dollar sharply higher and crude oil under heavy pressure.

Wheat: 20 to 25 cents lower. Traders were looking for USDA to trim their wheat carryover figure based on higher-than-expected quarterly wheat usage, but USDA raised the estimate to 601 million bushels. Outside markets are also seen supplying pressure this morning, with the dollar sharply higher and crude oil under heavy pressure.


Cash cattle expectations: Cash trade complete. Beef prices have fallen sharply this week, resulting in sharply lower cash cattle trade between $91 and $93.

Futures call: Lower. Futures are called lower based on concerns about outside markets and the beef market. Traders have also kept a close eye on the dollar and stock market this week, with rising concern about the U.S. and global economy lowering demand expectations as consumers' reign in spending.

Cash hog expectations: Steady to weaker. The cash hog market is expected to remain under pressure as packers work to improve profit margins amid falling pork values and plentiful supplies.

Futures call: Steady to lower. Lean hog futures are called steady to weaker, with downside risk for nearby contracts limited by the discount futures hold to the cash index. But given the highly price-negative outside markets this morning, losses could extend sharply.


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