Traders Expect Larger Corn Carryover

December 9, 2008 06:00 PM
 

Julianne Johnston Pro Farmer Senior Markets Editor


From Pro Farmer

Updated as of 7:00 a.m. CT

USDA will release December S&D Report Thursday... With trade volume typically down at this time of year, there usually isn't a lot of focus put on the December USDA Supply & Demand Report. That attitude mainly prevails this year, but because most of traders' focus is on outside markets.

Traders look for USDA to raise corn carryover by more than 100 million bu. from last month due to ongoing global economic woes, which have trimmed demand for U.S. corn. Meanwhile, soybean demand has held up fairly well, resulting in expectations for carryover to be trimmed slightly from last month. Wheat carryover is also seen down just slightly from November.

2008-09 carryover

Avg.

Range

USDA Nov.

2007/08

in billion bushels

Corn

1.232

1.124-1.40

1.124

1.624

Soybeans

0.200

0.161-0.215

0.205

0.205

Wheat

0.596

0.575-0.606

0.603

0.306

USDA will release the Supply & Demand Report on Thursday at 7:30 a.m., CT. Make sure you check "Leading Edge Reports" for full details and analysis.

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

Corn: 9 to 11 cents higher. Futures were higher overnight on weakness in the dollar. Futures posted a choppy day of trade yesterday, but finished mostly 1 to 2 cents lower and near session lows. Strength in the dollar and weakness in the crude oil market caused corn futures to turn lower into the close. The stock market was also under pressure most of the day following a two-day rally.

Soybeans: 20 to 22 cents higher. Futures were higher overnight on help from crude oil overnight. Futures finished 7 1/4 to 10 1/2 cents lower yesterday, which was near session lows. Soybeans quickly rebounded from a weaker open to trade higher for much of the morning. But the inability to push above Monday's highs triggered late-session profit-taking pressure.

Wheat: 5 to 6 cents higher. Futures were firmer overnight on spillover from neighboring pits. Futures finished fractionally to 2 cents lower in Chicago and Kansas City, while Minneapolis wheat closed mixed with most contacts 2 to 4 cents lower. Wheat favored the upside for much of the day, although price action was mixed. But late weakness in corn and soybeans along with price-negative trade in outside markets caused wheat to favor the downside into the close.


Cash cattle expectations: Watching beef market, futures. Choice beef cuts firmed 69 cents, while Select cuts dropped 89 cents Tuesday. If Choice values continue to firm and Select prices keep dropping, it could signal a shortage of higher-graded beef. With feedlots very current on marketings and supplies tightening, there could be reduced Choice-graded cattle.

Futures call: Mixed. Futures traded on both sides of unchanged yesterday, but closed slightly to moderately lower and near session lows. Pressure came from the stock market, which was under pressure yesterday. Price action could easily remain choppy as traders wait on cash trade to develop.

Cash hog expectations: Mostly steady. Cash hog bids are expected to remain mostly steady across the Midwest today. Packers are still looking to fill up slaughter runs given profitable margins -- if they can get hogs bought at steady cash prices. But some packers are willing to run smaller late-week kills instead of actively chasing after hogs as temps are expected to be below-normal and another snow storm is forecast for Thursday through Saturday in the Midwest.

Futures call: Mixed. Futures closed with a mixed tone yesterday after favoring the downside in early price action. Lean hogs were lightly traded as neither bulls nor bears could gain much traction. While the upside was limited by the premium futures hold to the cash index, seller interest was also limited. The mixed close means no momentum is carried into this morning's session.


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