Afternoon MarketWatch: USDA Crop Production numbers more bearish than anticipated

Tuesday, November 10, 2015
***** Corn futures settle 6 1/4 to 7 3/4 cents weaker; soybeans drop 9 to 11 3/4; Chicago wheat finishes lower by 9 to 11.  ***** 

   # Report day was a bearish one for the grains as USDA crop production estimates come in well above trade expectations.       
   # Yields surprise:  USDA ups corn yield from 168 to 169.3 bushels per acre with soybean yield climbing from 47.2 to 48.3 bpa.  
   # Usage estimates fall for corn and wheat, rise for soybeans.  Corn exports and ethanol grind were cut by a combined 175 million bushels while soybean exports and crush together gained 50 million bushels over the October targets.       
   # USDA analysts called it a mis-estimation of past feed use that contributed to a 19 million ton addition to corn inventories held in China.  Production gains for other major producers also helped boost the world’s 2015/16 corn carryout projection by 24 million tons.        
   # World soybean output predictions were left largely unchanged, but additions to exports carried through toward a smaller ending stocks estimate.  Higher exports were seen for Brazil and Argentina.      
   # A 227 million metric ton ending stocks figure for wheat still paints a bearish picture for prices.  Some trade estimates were adjusted on the WASDE, including a 50 million bushel trimming of U.S. exports, but production estimates were rather minimal this time around.    
   # Corn and soybean futures notched in fresh contract lows throughout the session before making a shallow rebound into the closing bell.  Chart traders will look to see if $8.50 holds up for support for the most-active January soybean contract while a settlement below $3.57 1/2 likely brings more selling of December corn.     
   # The grains were headed lower even before the bearish report was released.  Corn was pressured early by news of China’s plan to shrink corn domestic corn inventories.  Soybeans were trading weaker under the weight of higher Brazilian soybean production from Conab.     
   # The dollar gained against the majors but fell against the Brazilian real on Tuesday.  Oil futures were higher in a bid to halt a four-day price slide.  Stocks and bonds were higher as traders remain back and forth on expectations for the Fed’s initial interest rate hike.    

***** Live cattle down $1.57 to $2.75 as feeders drop $1.37 to $3.92; hog futures finish $0.90 lower to $0.45 higher. *****
   # Cattle futures continued lower after being locked limit down on Monday.  The board was locked limit down again by the expanded limits before prices recovered slightly into the early afternoon.  Higher midday wholesale values took a bit away from the earl cash pessimism.          
   # Hog futures made new contract lows by midday as cash and cutout values continued lower.  Some short-covering was triggered late in the session, but liquidation of longs still dominate market action.