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Bearish Corn, Bullish Soybeans After USDA Report

Thursday's Closing Grain and Livestock Futures

Dec. corn closed at $4.66 and 1/4, down 6 and 1/4 cents
Nov. soybeans closed at $13.96, up 37 and 3/4 cents
Oct. soybean meal closed at $449.20, up $20.00
Oct. soybean oil closed at 42.78, up 6 points
Dec. wheat closed at $6.53, up 5 cents
Oct. live cattle closed at $124.82, down 22 cents
Oct. lean hogs closed at $90.20, down 10 cents
Oct. crude oil closed at $108.60, up $1.04
Dec. cotton closed at 84.75, up 40 points
Sep. Class III milk closed at $18.17, down 6 cents
Oct. gold closed at $1,330.20, down $33.20
Dow Jones Industrial Average: 15,300.64, down 25.96 points

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Market News and ReCap

Soybeans were higher on commercial and technical buying. Production matched the pre-report estimate at 3.149 billion bushels with an average yield of 41.2 bushels per acre. Old crop ending stocks were unchanged at 125 million bushels and new crop was smaller than expected at 150 million bushels, so the supply is tight and may only get tighter, necessitating a big crop out of South America and probably signaling some form of domestic demand rationing. Soybean meal was sharply higher and bean oil was up modestly, with both following beans while responding to their individual demand outlooks.

Corn was lower on fund and commercial selling. USDA actually raised the production estimate to 13.843 billion bushels with an average yield of 155.3 bushels per acre. Old crop ending stocks were down from August, but new crop was up on the month and larger than expected at 1.855 billion bushels. Still, that month to month rise in the production estimate was a lot larger than the month to month rise in the ending stocks projection. Ethanol futures were lower. The International Grains Council projects 2013/14 European Union corn production at 64 million tons, down 1.7 million from the prior estimate.

The wheat complex was mostly modestly higher on short covering and technical buying. Domestic ending stocks were up on the month and larger than expected at 561 million bushels and USDA raised the world ending stocks estimate. Past that – the trade’s watching domestic and international harvest activity. New crop European wheat was lower. Japan bought 113,572 tons of milling wheat (47,403 tons of Canadian western red spring, 25,350 tons of Australian standard white, 21,524 tons U.S. dark northern spring, and 19,295 tons U.S. hard red winter), while issuing a sell-buy-sell tender for 120,000 tons of feed wheat and 200,000 tons of feed barley. The International Grains Council sees 2013/14 E.U. soft wheat production at 135.5 million tons, up 1.3 million on the month.

Feedlot country remained at a standstill on Thursday afternoon with significant business delayed again until Friday. There were a few bids on the table in Kansas at 121.00. In the North some packers were bidding 192.00 to 193.00. Feedlot operators are firm in their resolve and continue to hold out for 125.00 live and 196.00 plus on the dressed basis. The kill was estimated at 113,000 head, 12,000 below last week, and 15,000 smaller than last year.

Boxed beef cutout values were steady on the choice and lower on select on moderate demand and moderate to heavy offerings. Choice beef was .08 lower at 193.85, and select was down 1.24 at 177.24.

Live cattle contracts on the Chicago Mercantile Exchange closed mostly higher with only October lower. Both sides seemed to be very cautious relative to immediate cash market potential. Boxed beef cutout values were weak to lower at midday and that weighed on futures, but lower corn prices were supportive. Some bull spreading was evident. October settled .22 lower the only contract lower at 124.82, but December was up .05 at 128.62.

Feeder cattle settled 37 to 100 points higher. Feeders were well supported, boosted by the new estimate of soon to be harvested corn crop; 13.84 billion bushels, roughly 200 million more than the average trade guesstimate. A bigger harvest means cheaper feed, and cheaper feed means calves and yearlings have more intrinsic value for cattle feeders.  September settled .65 higher at 157.02, and October was up .37 at 158.60.

Feeder cattle receipts at the St. Joseph, Missouri Stockyards totaled 3140 head on Wednesday. Compared to two weeks ago, a good test of both calves and yearlings sold 2.00 to 5.00 higher, with most 600 to 750 pound grass yearlings and many 4 to 6 weight top quality calves selling up to 8.00 higher. Trading was very active with a full house of buyers and a heavy offering for this time of year. Feeder steers medium and large 1 averaging 772 pounds brought 163.50 per hundredweight. 715 pound heifers traded at 160.68.

Lean hog contracts settled 10 to 55 points higher with only October lower. Lean futures were well supported in Thursday’s trade. Bulls credit technical buying as well as further evidence from the cash market that short bought packers still need to secure live inventory to cover short term slaughter needs. October settled .10 lower at 90.20, and December was up .02 at 87.27.

Barrows and gilts in the Iowa/Minnesota direct trade closed 2.02 higher with a weighted average of 94.94 on a carcass basis, the West was up 2.70 at 94.92, and the East was 1.54 higher at 90.89. Missouri direct base carcass meat price is steady from 82.00 to 83.00. Terminal hogs closed steady to 1.00 higher from 59.00 to 64.00.

Pork carcass value FOB plant was down 1.06 at 96.82 with all primal cuts lower with the exception of butts which were slightly higher.

Iowa barrows and gilts last week averaged 270.7 pounds, .5 pound heavier than the previous week and 1.1 pounds bigger than the same time last year.

Hog slaughter was estimated at 431,000 head, the same as last week and down 1,000 from last year.

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