Sue Martin column: Corn exports rebound
Report shows corn sales number not seen since 1991
Posted on Mon, Jan. 30, 2006
Often, the most glaringly evident is the hardest to see. At the time of this writing, no cash trade has taken place in the Southern Plains and feedlot hopes for 98-100 are starting to dim. I think steady money for the week's cash trade would be good.
Live cattle open interest is record high at 239,305 cars. The February contract stands at more than 46,000 cars, and the April stands at 118,000. Floor traders I talk to seem to like the February long and short April spreads. I'm looking for the Goldman roll and all the open interest in the April contract to pressure that contract while cash relates to the February contract with a small marketing hole expected around mid-February.
The cattle slaughter ran above expectations nearly every day last week. Average steer weights jumped 3 pounds late in the week as well. Feedlot conditions are ideal and weight gains are doing well with the highest protein being fed in years. Production seems to be on the increase, and the larger production seems as if it is starting to weigh on wholesale prices.
This commentary is being written before Jan. 27's biannual inventory report. That report is expected to show fairly aggressive expansion of heifer breeding stock and should indicate rising beef production into 2007. On the technical side, I continue to look for April cattle to take the low of 9265 out. It may be possible for this to occur and then see a rebound in prices that should offer a hedge or selling opportunity.
Wheat prices firmed this past week as weather concerns grew in Argentina and as crop conditions continued to deteriorate in the hard red winter wheat areas. Some are looking for Argentine corn and wheat to decline by 10 million to 11 million metric tons from last year's production. Brazil planted less acres of corn. The planted area to wheat in Russia and the Ukraine declined as well because of dry conditions, and now, winterkill has taken its toll on the crops there. That, combined with fewer corn acres in the United States and fewer spring wheat acres, could create a long-term bullish expectation for corn and wheat as global stocks tighten.
Corn export sales got off to a poor start, and USDA responded by lowering exports on the latest supply and demand report. However, this past week's sales report showed corn sales at
84.9 million bushels, a number not seen since 1991 and a very good sales number for the time of year.
Iraq stated that it would be in to buy 1 million metric tons of wheat. Normally, it would buy only 150,000 at a time. What's up?
For some time, I have to be price positive to wheat and like everyone else, the Kansas City especially. I continue to look for Kansas City wheat to trade at more than $4 and be closing over that target consistently.
Briefly, I am into my first potential time for a low on the soybeans. I question whether the market can hold above the fall lows. While South American production is deteriorating to some degree, the hangover from the USDA report is still with us. Therefore, I would suspect soybeans can try to test the fourth-quarter lows albeit that there are outside factors that still should influence this market. While I remain a long-term bull, at this time, color me "cautious to suspect of lower prices."
Got agricultural exposure?
AI
