Another Day, Another Crop Report

Published on: 16:25PM Oct 09, 2009


Market Watch and Soybean Tech Talk with Alan Brugler

October 9, 2009


Another Day, Another Crop Report


The week was all about the crop reports from USDA, which were released by USDA at 7:30 am CDT on Friday. Traders were, and are, struggling with final crop size for the U.S. USDA shed a little light on the subject with its 13.018 billion bushel corn production figure and 3.25 billion bushel soybean estimate. There is a trade axiom that big crops get bigger, and the yield projections for both were larger than the September figures. The national average corn yield was put at a record 164.2 bushels per acre, with soybeans at a more pedestrian 42.4 bushels. USDA did in fact trim harvested acreage numbers as it synched up the FSA data with the regular NASS data. The higher yield numbers nullified the impact.


Now the second guessing begins. The biggest question mark is how the weather affects final yields. Heavy rains are slowing harvest and increasing field losses of mature crops from OK to IN.  A hard freeze was expected this weekend as far south as Kansas, putting an end to the growing season in the western Corn Belt. Some fields weren’t ready for it to end, and some limited yield losses are likely. Quality will be a bigger problem, as dry down has been a real problem.


The soybean complex was higher for the week, as Export Sales bookings continue to be quite stout, and the market needs to entice soybeans out of producer hands and into the export and crush channels. Soybeans were up 9%, with soon to expire October meal up 14% and bean oil up 3.5%. Beans got an extra kick on Friday as USDA tightened up the supply/demand scenarios for soy oil and meal, boosting the product value of the beans. Not to be overlooked, speculators and long term investors have been accumulating soybeans and other grains as a counterbalance to the decline in the US dollar. Bears will note that USDA hiked projected Argentine production next spring by another 1.5 MMT and boosted anticipated world ending stocks to 54 MMT for 2009/10.


The wheat market was higher at all three exchanges. It wasn’t because of the USDA report. USDA cut projected exports by 50 million bushels, and boosted projected ending stocks to 868 million. That’s the most burdensome excess inventory since 2000/01. It appeared to be more of a relief rally, with prices having perhaps gone down further than necessary to discount the excess supply. With corn on the rise, there was room for wheat to rally. A flurry of export deals helped support the advance. World ending stocks were very close to last month’s estimate, with offsetting adjustments around the world. Australia’s estimated crop size was increased to 23.5 MMT, and Canada was raised 2 MMT.  

Below is a table showing the net weekly changes and 4 week history of selected agricultural futures:


Market Watch













% Change

December Corn







December CBOT Wheat







December KCBT Wheat







December MGEX Wheat







November Soybeans







October Soy Meal







October Soy Oil







October Live Cattle







October Feeder Cattle







October Lean Hogs







December Cotton







December Oats







November Rice








 Cotton futures rose 3.9% for the week. USDA did cut estimated US production to 13 million bales, but the ending stocks figure of 5.4 million bales was right at the average trade guess. Chinese production was trimmed 1 million bales, but USDA made no change in expected imports from other countries. The larger story was the extremely limited interest in delivering cotton against October futures. That made it save for spec longs to stay in the market. More was also willing to commit to owning cotton as an inflation or economic recovery play.


Cattle futures were the sole loser for the week among the ag commodities we track. There was no mystery. Wholesale beef prices continue to be depressed by the poor performance of the restaurant industry. US consumers are staying home, and they tend to eat cheaper cuts there than they do in restaurants. Cash cattle were down $1 to $1.50 for the week. There were also heavy deliveries of “tanks” (1450-1500 pound cattle) against October futures. That kept a lid on the nearby futures. Export interest has picked up with the weaker US dollar and some limited economic recovery overseas, but a lot more tonnage is needed to get prices into a more positive sloping trend.


Hogs were up 3.25% for the week. The pork cutout dropped to $52.95 on Friday, with hams down $4.63 for the week. October futures were keeping close to the CME Lean Hog Index ahead of expiration, however, and didn’t need to go down much. Back month hogs were able to look past the current big market runs to the tighter numbers at the end of the year and into 2010. The weak dollar also offered hope of improved export sales. There is no weekly export data from USDA for pork, however, so any improved sales trend could only be confirmed or denied by a few key wholesale outfits.


Market Watch:  US government offices are closed on Monday, which will delay routine weekly reports like Export Inspections and Crop Progress until Tuesday. NOPA will issue its monthly soybean crush report on Wednesday morning. That will also be expiration day for October meal, soy oil and Lean Hogs. The weekly Export Sales numbers will be delayed until Friday morning, with USDA’s monthly Cattle on Feed report to be released on Friday afternoon.  


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