US Cash Grain Outlook: USDA Gets Bullish, Harvest Gets Going

By Gary Wulf
of DOW JONES NEWSWIRES

SUPERIOR, Neb. (Dow Jones)--Economists at the USDA turned bullish on the cash grain market Tuesday, forecasting higher season-average farm-gate prices for all commodities, except wheat.

The agency raised its mid-point estimate of prices on the farm-level by 15 cents for oats, 20 cents a bushel for corn/soybeans, 25 cents for grain sorghum and 40 cents for barley. Expectations for wheat prices were unchanged.

The USDA sliced its forecast for domestic 2009-10 corn carryout by about 3%, despite an autumn swoon in foreign demand for the nation's most-important crop.

"Corn production is forecast 97 million bushels lower, with a 1.3-bushel-per-acre reduction in the [U.S.] forecast yield," said the agency in commentary accompanying Tuesday's monthly crop report. "U.S. corn exports are projected 50 million bushels lower, reflecting the slow pace of sales/shipments in recent weeks and prospects for increased competition from larger Black Sea corn/wheat supplies."

USDA now forecasts that U.S. farmers will harvest 12.921 billion bushels of corn, a record 3.319 billion bushels of soybeans - on a 69 million bushel increase from forecasts made last month - and 2.216 billion bushels of wheat, which represents a 4 million bushel decline from October levels.

Intense harvest pressure had basis backsliding for most fall crops throughout the U.S. interior Tuesday - by a daily-average of 5 1/2 cents a bushel for soybeans, 4 cents for grain sorghum and 2 1/4 cents on corn.

"Grain movement has spiked considerably, and likely will be heavy all week. Harvest is making considerable advances," said Iowa commodity trade advisor Karl Setzer.
"Producers [are] also moving more grain into the supply line, mainly soybeans...likely to make room for more corn. This [is] allowing buyers to ease off on spot bids, especially at grain processors."

U.S. grain futures were weak overnight, registering cash-contract declines of about 1 cent for soybeans and 3-6 cents for corn/wheat. The trend is forecast to carry over into Tuesday day-trading, as well.

"Futures look ready for a lower open this morning, across the board, following mostly bearish USDA November production and supply/demand reports," said Farm Futures analyst Bryce Knorr.

National cash price indices maintained by the Minneapolis Grain Exchange stand at $9.13 1/4 for soybeans, reflecting an average basis of -58 3/4 cents relative to yesterday's settlement of January CBOT futures. Domestic cash prices also average $3.49 for corn (-37 cents basis December CBOT), $4.36 1/4 for hard red winter wheat (-85 1/2 cents basis December KCBT wheat), $4.07 for soft red winter wheat (-$1.13 basis December CBOT wheat) and $5.36 1/4 for hard red spring wheat (-9 3/4 cents basis December MGE wheat).

CROP WEATHER

Rain was falling in the eastern half of the corn belt and throughout the Southeast Tuesday, with much of the moisture carried inland by the overnight landfall of Tropical Storm Ida. The precipitation ended what had easily been the biggest harvest week of this fall season, in those areas.

At 75% complete nationally, U.S. farmers took nearly one-quarter of their entire soybean crop out of the field last week alone.

"With good weather for much of this week in major growing areas of the nation...I think that next week's report will show the national soybean harvest right around 90% done," said a forecaster for Freese-Notis Weather.

Thirty-seven percent of the U.S. corn crop had been binned as of Sunday, which remains the slowest picking-pace seen in the past 30 years; fully 45 percentage points behind the five-year average.

"Even with farmers finishing the soybean harvest and thus able to concentrate on corn, it is going to be a slow corn harvest, due to how wet the crop is in the fields...[there are] still lots and lots of reports of corn that is testing over 30% moisture," said the service. "As slow as this year's harvest is, it would probably be best to accept the fact that all of this year's corn crop will not be harvested before the first big snowstorm...we will be harvesting corn next spring."

-By Gary Wulf; Dow Jones Newswires; Gary.Wulf@dowjones.com

(END) Dow Jones Newswires
11-10-09 1008ET
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