Beans Pop 40 Cents on USDA Data, Can Corn Follow?

Today’s Export Flash Sales

• 312,700 metric tons of corn to Mexico
• 150,000 metric tons of soybeans to Mexico

Grain and Livestock Market Wrap-Up  

The USDA backed off their yield estimate a month after shocking everyone with a big increase. Carryout tightened to under 1.8 billion bushels and the market finally got some relief. Prices jumped 15 to 16 cents initially following today’s report before settling back to gains of just shy of a dime. It wasn’t an overly bullish report, so don’t be surprised if prices continue to see some back-and-forth action while we move through the tail end of the harvest season. A smaller yield and smaller carryout should help slow the selling interest from current price levels.

January soybeans erupted to 40 cent gains following the release of today’s reports. The USDA raised yield, but not as much as expected and an increase in the export demand forecast was enough to take carryout down to 300 million bushels from 315 previously. The trade was looking for an increase in carryout on a stronger yield forecast. Carryout at 300 million bushels is tight and will put the emphasis on South America to avoid weather concerns throughout their growing season. We’ll see what the Super El Nino has to say about that. The January contract has room to push into the $12.40 to $12.50 zone if today’s strength continues.

Wheat prices took on a follower role today of row crop market strength. The USDA report was neutral for the U.S. wheat supply/demand balance sheet while an increase in world carryout was the culprit that limited buying enthusiasm. The December Chicago contract is clinging to recent lows set within the $5.85 to $5.90 zone, and will need strength to continue in the corn and soybean markets for a chance to dig out of its hole. 

The cattle markets traded on both sides of even initially before digging in about an hour into the day and added to yesterday’s gains. It was a show of strength to see cattle prices rally on a day that saw equity markets take on downside pressure again. The December live cattle contract is back to a key area within the $219 to $220 zone, a spot that had been key support and now could act as resistance. The trade probably wants to see cash cattle prices move higher following recent weakness to justify further gains.

December hogs climbed to 70 to 80 cent gains early but would backtrack from there to finish the day near unchanged. It would have been too much to ask to get hogs rallying for two straight sessions. A rally beyond the $57 to $58 area is the first hurdle before there’s hope that significant fund selling interest may be out of the way.

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