The December cattle on feed report is considered positive for the cattle industry. The number of cattle on feed was below the average trade guess and down 1 percent from a year ago. It was in line with trade estimates, but is positive long term for the market.
Placements were down sharply from a year ago and below the average trade guess. With the decrease in placements, the spring and summer months of April and June should be the most supported as this would indicate fewer cattle in feedlots during those important months. Marketing has also been a positive surprise compared to the average trade guess and indicates producers have been more aggressive in their marketing than previously believed.
Cattle and calves on feed for slaughter market in the U.S. for feedlots with capacity of 1,000 or more head totaled 11.3 million head on Dec. 1. The inventory was 1 percent below Dec. 1, 2008.
Placements in feedlots during November totaled 1.85 million, 8 percent below 2008. For the month of November, placements were the second lowest since the series began in 1996. Net placements were 1.78 million head. During November, placements of cattle and calves weighing less than 600 pounds were 510,000, 600-699 pounds were 565,000, 700-799 pounds were 395,000, and 800 pounds and greater were 375,000.
Marketing of fed cattle during November totaled 1.63 million, 4 percent above 2008. For the month of November, fed cattle marketing were the third lowest since the series began in 1996.
Analytical firm Informa Economics expects a 3.7 percent increase in U.S. corn plantings in 2010, while soybean seedings should drop by 0.7 percent, trade sources said. Informa estimated 2010 U.S. corn acreage at 89.504 million and soybeans at 76.993 million, traders said.
In 2009, U.S. farmers planted 86.4 million acres of corn and 77.5 million acres of soybeans, the U.S. Department of Agriculture has said. Informa estimated U.S. winter wheat plantings for harvest in 2010 at 39.446 million acres, trade sources said. Informa also adjusted its forecasts of 2009 U.S. crop production, traders said. The firm put the U.S. corn crop at 12.97 billion bushels, down from its November estimate of 13.064 billion, but above USDA’s current forecast of 12.921 billion.
Informa, based in Memphis, Tenn., projected the average U.S. corn yield at a record 164.5 bushels per acre, above USDA’s current forecast of 162.9.
Informa pegged 2009 U.S. soybean production at 3.42 billion bushels, above its November forecast of 3.333 billion and USDA’s current estimate of a record 3.319 billion crop. The firm estimated the average U.S. soy yield at a record 44.7 bushels per acre, above USDA’s current figure of 43.3.
Corn closed the week $.06 1/2 lower. Corn harvest is essentially over, although there is still some corn left in the field that will unlikely be harvested.
Farmers in South and North Dakota and Minnesota, where discounts for drying corn and low test weights are signaling producers harvest corn later, are indicating they will let corn stand all winter even though stalk strength weaker than year.
With the remaining crop unharvested, end users will be concerned they will not be able to get enough crop to meet feed and fuel demand. Producers need to be making sales on rallies into resistance levels. Commercials have also been aggressively selling into this rally and are now short over 91,000 contracts. With the commercial selling, prices have stalled during the last eight weeks of trading. After the calendar turns to 2010, expect increased farmer selling for tax and quality purposes.
Much of the 2010 crop was harvested and binned in wet conditions. Farmers will want to move some grain after the first of the year to make sure grain does not go out of condition.
The weekly export sales report showed net sales of 1.22 million metric tons – a marketing-year high – were up 45 percent from the previous week and 59 percent from the prior four-week average.
Increases were reported for Mexico (291,800 MT), Japan (278,000 MT, including 30,200 MT switched from unknown destinations), Egypt (180,000 MT), South Korea (152,000 MT, including 54,000 MT switched from unknown destinations) and Costa Rica (97,500 MT).
So far, this year’s sales are outpacing last year’s figures, 892 million bushels versus 796 mb. The U.S. needs to export 30.5 mb each week to reach the USDA forecast of 2.050 billion bushels.
Soybeans closed the week $.23 1/4 lower. Soybean demand remains strong as China purchased 522,000 mts of U.S. soybeans last week after purchasing 348,000 mts of U.S. soybeans the previous week.
China is buying aggressively now for two reasons. One, they purchase no soybeans during their lunar holiday and need to have soybeans stockpiled until then. Secondly, they are buying U.S. soybeans as insurance against a short crop in South America. The last two winters have seen drought in South America and higher soybean prices as a result.
These Chinese purchases are for shipments in the future, which means they could cancel these purchases if a large South American crop comes on line and is cheaper than U.S. prices. A
This year’s export profile remains well ahead of last year’s record pace, 1.08 bb versus 708 mb. The U.S. only needs to export 6.7 mb each week to reach the USDA forecast of 1.340 bb.
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