Soybeans, corn and cattle are higher early Wednesday with wheat and hogs weaker.
Corn Follows Higher Soybeans
Kent Beadle with Paradigm Futures says corn is following the soybean market early Wednesday after USDA shocked the market with a record 188.8 bu. yield and 2 million more harvested acres.
However, the corn market only ended 13 cents lower and Beadle says could have easily been limit down so that price reaction has been positive.
Is This The Biggest Corn Yield of the Season?
Corn didn’t end limit down, according to Beadle, because the huge yield numbers were already priced into the market.
“I had been saying for weeks that the market was already trading in a 186 to 190 bu. corn yield, so it wasn’t a total surprise,” he explains.
The other reason is many in the industry believe this is the highest yield of the season and is likely inflated since USDA didn’t base the estimate on any actual field data.
He says satellite imagery would not detect or account for the pollination, disease and weather issues the crop has encountered.
“Illinois yield was at 221 bu. per acre, but their crop ratings have declined eight points the last few weeks and they are only looking at an average crop right now,” he says.
Is the Low in the Corn Market?
So is the low in the corn market or will prices take out last year’s low of $3.85?
Beadle says it may be too early to tell.
“Well, a lot of people have looked at that $3.85 and say that’s the target. I’m not going to say that we’re not going to do that. Clearly, this additional supply could make that possible if that supply is there.”
Soybeans Extend Gains on Bullish Ending Stocks
Soybeans extended gains early Wednesday, still pricing in the bullish WASDE which lowered ending stocks by 20 million bushels to 290 million.
Beadle says it is questionable if the U.S. farmer can grow a 53.6 bu. soybean yield and if it slips even one bushel that could put carryout down closer to 200 million bu.
Is The Low in the Soybean Market?
Beadle says with the bullish tailwind from the WASDE and talk of China business that may have bottomed the market.
And he is positive China will be back in the market. “They just can’t get by without buying U.S. soybeans,” he says.
The question is when.
Wheat Futures Sag Despite Higher Corn and Soybeans
The WASDE was a non-event for the wheat market but it has been unable to get much traction even with higher corn and soybean prices.
Beadle says the available global supplies are keeping a lid on the market and the funds have been comfortable pushing the short side of the market.
Cattle Futures Close in on Contract Highs
Cattle futures are extending gains and have nearly negated the big reversals from last Friday.
Beadle says the market is likely to retest the all-time highs pushed by tight supplies and a surge in boxed beef prices.
Choice cutout was up over $9 yesterday as the market scrambles to find grinding material for ground beef as those supplies have been cut.
The 50% tariff on Brazilian beef imports have stopped shipments and that’s causing a shortage of trim which will likely raise ground beef prices says Beadle.
Lean Hogs Fall with Lower Cutouts
Lean hog futures are seeing follow through selling and profit taking with cutouts falling $4.39 yesterday and the lean hog index down $.18 at $109.84.
However, Beadle says there is also some hedge pressure in the market after the lower corn prices improved hog margins.
“We have hog crush margins with the lower corn prices at near record levels off of the December or February hog crush margins,” he adds.
