September 30, 2004
US Market Forecast For Corn, Soy, Wheat, Cattle
Corn
The US corn market has been steadily pressured lower in the last half of September under commodity-fund selling, amid reports of impressive early harvest yields. Harvest is underway in the central Corn Belt and in southern parts of Iowa and Illinois with reported yields well above expectations.
With the larger than expected yields, the market has no choice but to push lower under harvest pressure. With the harvest pressure weighing on prices, commercial support has been limited as they are only buying on a scale-down basis.
Heading into October, expect continued price erosion until at least 50 percent of the crop has been harvested. This means with the slower maturing crop and huge yields, harvest lows should occur later than normal. The market is anticipating the USDA to increase the size of the 2004 crop in the October supply/demand report to at least 11 billion bushels with early estimates up to 11.5 billion bushels. Expect prices to continue to erode under harvest pressure while commercial and end-user buying provides support to prices.
Soybeans
Soybean values have fallen lower in the last half of September under commodity-fund selling, amid reports of impressive early harvest yields. Harvest is underway in the southern and central soy belt and in southern parts of Iowa and Illinois with reported yields well above expectations.
With the larger than expected yields, the market has no choice but to push lower under harvest pressure. With the harvest pressure weighing on prices, commercial support has been limited as they are only buying on a scale-down basis.
Heading into October, expect continued price erosion until at least 50 percent of the crop has been harvested. This means with the slower maturing crop and huge yields, harvest lows should occur later than normal. The market is anticipating the USDA to increase the size of the 2004 crop in the October supply/demand report to at least 3 billion bushels with early estimates up to 3.2 billion bushels. Expect prices to continue to erode under harvest pressure while commercial and end-user buying provides support to prices.
Cattle
As expected, cash cattle staged a quick rebound into mid-September, however the cash rally looks to be short-lived. Without the Asian borders being opened, demand is unspectacular and packers only need to accumulate hand-to-mouth inventory when retailer demand improves. This is what gives us the rallies in the cash market. However heavier weight cattle and the inability of feedlots to clean up week to week showlists gives the packers bearish ammunition.
Until the Asian border can be re-opened, producers need to remain defensive as both the fundamental and technical trends remain lower. Producers are encouraged to not add extra weight to cattle as this will only give packers more leverage when buying cash cattle. Seasonally, prices are normally softer during the fall months and rallies should be viewed as selling opportunities.
Wheat
While wheat has been able to rebound over concerns about the unharvested United States and Canadian spring wheat crop, wheat has effectively priced itself out of the export market.
Increased production in the world will limit the ability for wheat to rally as once the supply rally has run its course, demand will be the main driving force for prices. Egypt, last year's largest buyer of United States wheat, should increase their buying interest ahead of the Ramadan holiday which begins Oct. 15, as they will be out of the market during the religious holiday.
The only other pricing influence will be the seeding progress of the winter wheat crop. Seeding is currently underway in Kansas, Texas, Oklahoma and Nebraska, the leading producing states of winter wheat. Ample moisture across these states has given the winter wheat crop a great start to the growing season. The market has a premium built into prices to attract producers to seed winter wheat, which will be removed once seeding reaches the halfway mark.
