USDA Data Positive for Corn/Soybeans

March 11, 2009 07:00 PM

Julianne Johnston Pro Farmer Senior Markets Editor

From Pro Farmer

Updated as of 7:00 a.m. CT

Report data positive for corn and soybeans... Yesterday's USDA report provided positive news for the corn and soybean markets, as USDA trimmed carryover. Traders expected USDA to trim soybean carryover, but they raised exports more than expected; traders expected USDA to raise corn carryover, so any drop from last month would have been viewed as price-positive.

Corn and soybeans started the day on strong footing, but as crude oil dipped sharply lower on bearish inventory data, buyer interest dried up in the grain markets and resulted in session-low closes.

Meanwhile, yesterday's wheat data was bearish, as USDA raised wheat carryover more than expected. Wheat futures opened under pressure and extended losses to post sharp 20-plus cent losses for the day.

While traders are taking note of fundamental data, without support from outside markets, gains are viewed as selling opportunities.

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

Corn: Steady to 3 cents higher. Futures to firmest overnight to maintain the recent choppy tone. Futures closed around a dime lower yesterday after a higher start to the day. Corn futures were higher for much of yesterday morning after USDA unexpectedly lowered its carryover estimate due to higher ethanol grind. But as crude oil prices extended losses, corn futures saw buyer interest fade and sellers emerged.

Soybeans: 1 to 5 cents higher. Futures were firmer overnight to erase part of yesterday's losses. Futures opened stronger based on USDA's positive March Supply & Demand Report, but softened as crude oil weakened. Soybeans closed 14 to 17 cents lower to finish near session lows. Traders expected USDA to cut their carryover figure from last month, but USDA trimmed carryover more than expected to 185 million bu., down from 210 million last month. USDA upped their exports more than enough to offset the drop in the crush forecast.

Wheat: 2 to 3 cents higher. Futures were firmer overnight on light short-covering. Futures opened under pressure yesterday, with USDA's negative Supply & Demand Report providing early pressure. Futures at all three exchanges closed mostly around 20 cents lower, which was near session lows.  Traders expected USDA's report to show wheat carryover up from last month, but USDA trimmed usage estimates more than expected. USDA raised carryover 57 million bu. from last month to 712 million bu. -- coming in above the top end of the pre-report guess range.

Cash cattle expectations: Watching beef market. Light cash cattle trade was reported in Nebraska at $1 lower prices than week-ago Wednesday afternoon. That has caused some to reel in cash expectations, which were steady to firmer. Price action in cattle futures today could have the final say on whether cash cattle prices in Kansas and Texas are lower, steady or higher compared to last week's mostly $82 trade.

Futures call: Mixed. Futures posted a low-range close yesterday, but are called mixed as traders wait on cash trade to begin. Cattle futures continue to trade very closely with the stock market, which is a direct reflection of concerns about the economy on beef demand. April live cattle inched to a new contract low and remains in a long-term downtrend yesterday.

Cash hog expectations: Steady to lower. Very poor packer cutting margins have caused some plants to reduce or cancel Saturday kill plans. As a result, demand for cash hogs is expected to be very limited the remainder of the week, which will pull cash hog bids lower across the Midwest. Weaker cash hog bids could weigh on hog futures even though futures are at a slight discount to the cash index.

Futures call: Weaker. Futures saw another choppy day of trade yesterday, but favored a firmer tone on the close. Hogs were mixed again today amid spreading, with downside risk limited by hopes of seasonal price improvement. Outside markets provided mixed signals for the hog market. The cash market is expected to remain under pressure this week, which will limit upside potential to short-covering.

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