Market Closes - May 9, 2014

Posted on May 10, 2014
CBOT futures closed mixed following the midday USDA reports.  Although 2013/14 corn ending stocks of 1.146 billion is over 160 million bushels smaller (friendly) than the average trade guess, the projected 2014-15 ending stocks of 1.726 billion is over 50 million bushels larger than the trade expected.  What hurt corn futures was probably USDA’s increased estimate of world corn stocks for both 2013-14 and 2014-15. Rising stocks estimates tend to weigh on prices. Corn futures traded higher going into the USDA report and responded quickly and sharply; thus the corn charts have a negative appearance with “bearish outside down days”. But prices still are higher than this week’s lows.

The wheat data from USDA also showed tighter U.S. stocks than expected but it was larger global wheat stocks that was credited for eventually bringing wheat prices down.  Wheat futures were very volatile right after the report’s release but sold off from noon to the 115 pm close. Even with the losses, wheat futures closed slightly higher for the week.  U.S. Winter Wheat production is forecast at 1.403 billion bushels, or 65 million below the average trade guess.  Last year, the US produced 1.534 billion bushels of winter wheat.

KENTUCKY WHEAT: 2014 Yield Forecast = 73.0 bushels vs 75.0 in 2013.    Production = 36.5 million bushels vs 45.7 million in 2013. Acres Harvested forecast at 500,000, down 110,000 from a year ago.

Soybean futures were also very volatile in the minutes following the reports’ release, but traders eventually decided to be buyers leading to strong closes in old-crop soybeans and near steady closes in new-crop contracts. USDA increased 2013-14 exports and crush but increased soybean imports by 25 million bushels to a total of 90 million bushels – this tightened US carryout to 130 million bushels.  Global soybean stocks tightened as well from the April report.  However, 2014-15 ending soybean stocks will become much more comfortable if trend line yields are achieved.

This is what USDA said today about the 2014 crop: “Soybean production is projected at a record 3.635 billion bushels, up 346 million from the 2013 crop on record yields and harvested area.  Yield is projected at a trend level of 45.2 bushels per acre, up 1.9 bushels from 2013.   Global oilseed production for 2014/15 is projected at a record 515.2 million tons, up 2.4 percent from 2013/14.”

CME/CBOT Hedge margins changed effective today for several agricultural futures. Corn decreased from 1750 to $1500 per contract (5000 bushels). Soybean increased from 2500 to $3000 Soybean Meal decreased from 2000 to $1800 CBOT and KC Wheat Increased from $1400 to $1500 Live Cattle futures closed slightly higher on optimism for this week’s cash cattle price.  USDA reported late today that cattle traded in light volume at mostly steady to $1 higher prices.  Boxed beef values kept sliding today with Choice carcasses down 2.39 at 223.26 and Select carcasses down 0.30 at 212.21/cwt.   Feeder Cattle futures responded to lower corn prices and closed strongly higher near the day’s highs.  MAY FC set a new contract high.

Lean Hog futures closed narrowly mixed and had fairly narrow ranges. Cash hog prices dropped sharply today but the pork cutout finished 35-51 cents/pound lower. Cash hog price remains at a steep discount to the June futures which will become the nearby contract on May 15.   The increase in average slaughter weights is making up for lower animals coming to market.

HAY STOCKS on May 1, 2014 KY:  700 thousand tons vs 470 thousand tons a year earlier. US: 19.2 million tons vs 14.2 mil. tons a year earlier. Corn Jly -9 507 (506-23); Dec -13 499 (497-515) Bean Jly +17 1487; Aug +15 1423; Nov +2 1226 (1210-28)  Meal Jly +7 487; Oct +1 393  Oil +6 4118 Wheat Jly -13 722 (722-39); Dec -12 745  KC -14 829;  MGE -10 795 Oats unch 353 Rice -7 1543  

LC Jun +12 13805; Oct +20 14245; Feb +77 14625 FC May +107 18457; Aug +110 19137; Oct +102 19205 LH May -22 11467; Jun +2 12017; Oct +5 10415 Milk May -13 2271; Jun -46 2123

US$ +.6%

Dow +32 16583 SP +3 1878 NAS +20 4072 Tran +16 7719 VIX -.51 12.92

WTI -27 9999 Brent -7 10797 Gas -1 290 NG -4 453 HO -1 291 Eth +1 216

Gold unch 1288 Slvr -2 1912

2-yr -.004 0.387% 5-yr +.01 1.628% 10yr +.02 2.623% 30yr +.04 3.465%

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Tagged Post Topics Include: Economics, Market updates