USDA Crop Report, Agriculture Prices Up
USDA Crop Report, Agriculture Prices Up
GIS, SAFM, SDF, ADM
Friday the US Department of Agriculture USDA began a new practice of releasing the monthly crop reports at Noon EST.
January saw a decline in the forecast for the Florida orange crop, down 2.7% from the December forecast as a plant disease affects both the quantity and size of the fruit.
The big news was the 17% drop in Corn stocks. Stocks were at their lowest point in 9 yrs as a result of the drought in Corn-producing parts of the country. Corn consumption is forecast to rise through the end of the MY 2012-2013 crop year on demand for the grain to use as Cattle feed. Corn exports are not expected to rise this year.
Cash Corn prices are expected to average 7.40 bu this year, the same level as last month’s report, but up more than 1.00 bu compared with a year ago.
Higher costs will hit food producers like cereal makers General Mills Inc. NYSE: GIS, poultry and hog producers like Smithfield Foods Inc. NYSE: SFD and Sanderson Farms Inc. NASDAQ: SAFM, and ethanol producers like Archer Daniels Midland Co. NYSE: ADM.
US Agriculture after the Closing Bell Report
LTN Closing Grain Comments; Grains see an interesting Report Day
Grains became more volatile even before USDA’s January reports were released, with all 3 seeing wild price swings. Afterwards, the markets seemed to settle down some.
Wheat futures faced light pressure early Friday’s, but the market rallied after the release of the USDA’s reports at 11 a CST. The market settled well off its highs, with Kansas City leading to the upside. Chicago Wheat finished mostly 4 to 10 cents higher, Kansas City Wheat 10 to 11 cents higher and Minneapolis Wheat 5 to 7 cents higher. Friday’s gains helped Wheat futures to end with slight gains on the week.
Corn futures settled 8.25 to 10 cents higher through the Jul contract. Farther deferred futures finished mostly 5 to 7 cents lower. USDA’s report data and Friday’s price action suggests a short-term low is in place for old-crop futures. But it will take a push above Friday’s highs to confirm a low and attract active speculative buying to the Long side of the market.
Soybean, as expected, price action was highly volatile after USDA released its Key January report data. Jan Soyean ended firmer, while Mar through Jul futures finished weaker, but near session highs. Far deferred futures posted double-digit losses and ended near session lows. Most contracts posted slight gains on the week.
Lean Hog futures ended Friday mixed, but posted sharp losses on the week. April lean Hog futures have dropped below the November low to suggest the contract has posted a near-term high. Follow through pressure early next week would open more near-term Southside risk for lean Hog futures, especially if the cash Hog market continues to soften. February lean Hog futures are now trading in line with the cash market, as traders took the cash premium out this week due to slackened packer demand.
Live and feeder Cattle futures faced stepped-up profit-taking pressure Friday to propel the market to sharp losses for the week. Feb live Cattle are still trading at a premium to this week’s 126 to 128 cash Cattle trade, which raises the risk of follow through pressure next week. The Southside risk should be limited for the cash market and futures as market-ready supplies are tight.
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Heffernan Capital Management
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Paul A. Ebeling, Jnr.
Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster’s Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.
Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.
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