Markets called higher following USDA reports

Corn futures are expected to open higher on Monday. The USDA reports released on Friday were bullish for old crop corn, with lower than expected March 1 stocks, but bearish for new crop with the highest acreage in 75 years. The stocks-to-use ratio for this crop may be record low providing support to nearby futures. There is a lot of uncertainty about the size of the 2012 crop, but production could easily soar past 14 billion bushels, leading to much higher stocks next summer. Nearby contracts are expected to be up about 6 to 8 cents on the open with much smaller gains for new crop contracts.

Soybean futures are expected to open 10 cents to 14 cents higher. Both the stocks data and the planting intentions data released on Friday was bullish for the soybean market. The data suggests that 2011/12 ending stocks will be lower than indicated in USDA’s March forecast and stocks could get even tighter in 2012/13 if soybean acreage actually does decline. With an expected increase in exports next year in response to the poor crops in South America, soybean supplies will be tight even if producers boost acreage by 1 million acres, instead of cutting acres by that much. Soybean prices need to try to “buy” more land from other crops.

Wheat futures are expected to be mixed on Monday. The market fundamentals for winter wheats are still generally bearish, while the outlook for spring wheat is bullish. March 1 wheat stocks were a little lower than expected, but not enough to really change the outlook. The bullish news was the decline in spring wheat acreage. The lower acreage should support futures prices in Minneapolis and higher prices for spring wheat and for corn and soybeans may be enough to pull up wheat futures prices in Chicago and Kansas City. However, prices in Chicago and Kansas City are expected to open lower on Monday.

Cattle prices are called 10 cents to 40 cents higher on Monday. Beef prices remain weak which is limiting gains in both the cash cattle and the cattle futures markets. However, futures prices are already far below cash prices which provides some support to futures. There is hope that beef demand will improve with good grilling weather, but there have been few signs of a significant increase during the good weather in March. Cattle feeders will expect feed costs to decline this fall with the potential for a big corn crop and they will try to push placement off until later in the year. However, grazing conditions may have a big impact on that.

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