***** Corn futures gain 1 1/4 to 1 3/4 cents; soybeans finish fractionally weaker; Chicago wheat down 2 to 2 3/4. *****
#Report day featured a host of surprises, starting with larger than expected cuts to corn and soybean yields. A significant cut was made to the U.S. soybean export forecast. And drastic changes were produced on the world corn balance sheet due to revisions made to Chinese supply estimates.
#Corn yield dropped from 180.7 to 178.9 bushels per acre and fell short of the average trade guess of 180 bpa. Illinois yield was down 2 bushels to 210 bpa while Iowa dropped 6 bushels to 198 bpa. Sizable cuts were also made to yields for Minnesota and South Dakota.
#Soybean yield was reduced from 53.1 to 52.1 bushels per acre to compare with a consensus estimate of 52.9 bpa. Illinois soybean yield was down 2 bushels to 64 bpa and Iowa was down 3 bushels to 58 bpa.
#Corn carryout was pegged at 1.736 billion bushels, down from 1.813 bbu last month and comparing to an estimate near 1.773 bbu. The yield cut led to a 152 million bushel reduction for production, which more than offset at 25 mbu lowering of the export target.
#Lower soybean yield pulled U.S. production down by 90 million bushels, but that wasnt enough to keep carryout from rising to 955 mbu. The domestic crush forecast was up 10 mbu but the export prediction shrunk by 160 mbu.
#Analysts guessed that world corn ending stocks would come in near 159 million tons. The actual number? 307.5 mt. USDA found guidance from a recent census in China that increased crop production estimates back to 2007. The change was certainly bearish, but traders recognize that Chinese corn stocks are not available to the rest of the world.
#Notable for wheat was an addition to U.S. seed usage, indicating the thought of a possible acreage increase. On the global balance sheet, wheat ending stocks were raised as a result of extra bushels counted in China.
#Brazils CONAB crop agency released a report of its own this morning, showing a forecast for the countrys soybean crop at 116.7 to 119.266 million tons versus last years crop of 119.281 mt. Brazil corn output potential was called 90.018 to 90.95 mt versus 80.786 mt last year.
#Weather currently serves a mixed influence for the market. Conditions are favorable for a final harvest push in the Western Corn Belt, unless the expected snow event at the end of the week turns out bigger than expected. Cold temperatures could be a detriment to new U.S. winter wheat crops. Farmers in Brazil are benefitting from a healthy rain pattern at the start of their new row crop season, but parts of Argentina are running on the dry side. Still unknown is whether or not the expected development of El Nino will impact South American production this winter or U.S. production next spring.
#Stocks were lower and the dollar higher as investors priced in an outlook for aggressive interest rate policy from the Fed. Central bankers see strong U.S. economic data as reason to support further rate hikes. The dollar rises along with interest rates as capital flows into the U.S. to take advantage of better relative yield prospects. Money also flows out of the stock market as investors flock toward a more attractive bond market.
***** Live cattle up $0.27 to $0.55; feeders steady to $0.45 higher; hogs up $0.10 to down $1.10.*****
#The supply and demand report included a fourth-quarter beef production estimate that was lowered by 0.5 percent while projected exports for 2018 were raised by 0.6 percent.
#Hog futures again featured a bull spread trade that allowed the December contract to finish fractionally higher while the February dropped hard. The WASDE report was a little friendly with pork production estimates falling for the fourth quarter and also for the 2019 marketing year. But, bearish today was a move lower for cash and wholesale markets.