USDA Delivers Bullish Soybean S&D Data

May 10, 2012 03:00 AM

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Overnight highlights. Following are highlights of overnight trade:

Corn: Old-crop steady, new-crop down 5 to 10 cents. Based on this morning's S&D Report, old-crop corn is expected to be steady, with new-crop weaker as USDA's 2012-13 carryover estimate came in above expectations at 1.881 billion bushels. Old-crop carryover also came in above expectations, as USDA raised it to 851 million bu. (traders expected a tighter carryover figure). But given recent strong demand, bull spreading is expected to be dominate in the corn pit today.

Soybeans: 10 to 20 cents higher. Futures are called to open higher, but could turn sharply higher as USDA's 2011-12 carryover at 210 million bu. and 2012-13 carryover at 145 million bu. were below expectations. The prospects of razor thin 2012-13 carryover puts more pressure on Mother Nature to deliver good weather this growing season -- meaning weather threats will result in extreme price movements.

Wheat: 3 to 5 cents higher. Futures are expected to be supported by smaller-than-expected carryover pegs, as USDA trimmed 2011-12 carryover to 768 million bu. and sees stocks declining to 735 million bu. in 2012-13. Meanwhile, 2012 U.S. wheat production at 2.245 billion bu. came in above expectations, as the all winter wheat crop at 1.69 billion bu. is up from 1.494 billion bu. last year and came in above the pre-report average trade guess of 1.634 billion bushels.

Live cattle: Mixed. Futures are expected to be mixed as traders wait on cash cattle trade to begin -- which is up in the air. Choice beef prices were 69 cents higher yesterday and Select softened by 4 cents on very strong movement of 247 loads. Nearby live cattle are due for short-covering to narrow the discount those contracts hold to the cash index, while upside potential will be limited by expected weakness in the U.S. stock market as worries over Greece's stance in the euro-zone linger.

Lean Hogs: Mixed. Futures are called to be mixed today, with pressure limited by hope demand for cash hogs improves soon. But the pork cutout market can't pull off a string of price gains, as values slipped 71 cents yesterday. The good news is recent weakness in the cash market means packers' profit margins are back near breakeven, but without consistent strength in the pork market, buying in futures will be limited to short-covering.


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