Joe Victor: Acreage numbers got next
Corn: Though corn did finish lower for the week it was not as bad as soybeans. Corn has the benefit of resurging exports which are helping counteract ideas of problematic ethanol and feed demand. We may have two to four more weeks of these strong levels left.
Argentina: The Buenos Aires Grain Exchange today estimated their corn crop hitting 14 million metric tonnes. This is actually an increase from their January 23 estimate of 12.3 to 13.7 mmt. Not only did they raise their estimate but they are also now right in line with USDA's latest 13.5 mmt estimate. The key issue here is the BAGE is no longer continually revising their estimates lower. USDA may be about right and therefore Argentina's hold over this market may be fading slightly. Also, though the overall forecast is for dry conditions in Argentina, as long as it gets rains every five days or so the trade will not pay it as much notice.
Direction: Old crop information is clearly bearish while new crop levels are, at best, neutral. In the coming weeks the trade will turn its attention towards acreage. Allendale's annual Acreage Survey, starting on the 23rd and lasting for two weeks, will be key for helping the trade make some decisions. There are 5.5 million acres (4 from wheat, .5 from CRP, .5 from small grains, and .5 from cotton) which will be divided among corn and soybeans. While most Corn Belt farmers will choose soybeans do not be surprised to see the chance of corn acres getting some of that increase from winter wheat and the south. If you want to cling to a bullish new crop scenario then corn must lose acres AND have a yield decline. For now you much plug in trend yields of 157 bushels per acre. Once the market feels acres are decided, which may happen even before planting, then this market could start setting itself up for 339 on December futures.
Closing Cattle Commentary
Cattle: April live cattle futures closed up a mild 30 cents this week. The trade would like to believe the economy will improve. It would like to believe the stimulus package will help things. At this point, we have not seen much of a change in beef consumption patterns. Through this afternoon, boxed beef is down $1.08 and down $.52 for choice and select boxed beef respectively for the week. Of key interest, the Dow is currently down 420 points for the week. Today will mark the second lowest close since 2003. On the lineup of bull and bear factors this week is mixed, instead of straight bearish. This week we learned beef exports in December were better than expected. The weekly beef export reports are showing current rates equal with last year. That is also better than expected. In the big picture you can make a reasonable argument the low in cattle is in. However, we find it hard to think this market is ready for a big bull run with this stock market problem.
Dairy Dragging on Beef: We purposely do not cover dairy much in the livestock comments. Speaking plainly, our subscribers are not interested in it and dairy rarely impacts beef prices (dairy cow slaughter). However farm radio, and the general public, is picking up on the fact dairy farms are losing serious money now and liquidating herds. In December milk futures were 15 cents per cwt.