November cattle placed on feed are expected to be 3.6 percent smaller than last year. Placements had increased four months in a row. Cattle feeders have lower cattle prices and rising corn prices. Total cattle going to market were 2.9 percent larger than last November. The total number of cattle on feed as of Dec. 1 will be 0.4 percent higher than last year.
The drawdown phase of the pork belly stocks storage cycle is over and the stock buildup phase has started. Markets expect the largest end of November stocks since 1992. It is expected that cattle and hog herd reductions may continue into spring. This is bearish for feed sales. The largest use for corn and soy meal remains animal feed despite increasing biofuel usage.
USDA increased 2009-10 exports by 15 million bushels on the monthly supply/demand report. The crush estimates stayed the same. The weekly export sales reported net soybean sales at 927,700 tons, up 41 percent from last week. Shipments were 2,067,300 tons up 59 percent from last week. Soybean meal export sales were 297,200 tons up 30 percent from the prior 4 week average. Soybean oil sales were down 35 percent from last week at 12,300 tons. Soybean crush was up 5 million bushels above last month.
Soybean markets are experiencing short term high demand. World production will increase significantly when Argentina and Brazil harvest beans in the spring. Current weather conditions in South America remain favorable for crop development. Brazil and Argentine production estimates remained the same at 63 million tons and 53 million tons respectively. The increase in South American production is expected to increase by 3 million tons. World supply is expected to reach 57 million tons.
China continues buying soybeans. Europe is also buying soybeans from the United States. They have accumulated half of their annual expected soybean imports in four months of this crop year. Palm oil prices have continued to rise supporting higher soy oil prices. Export demand absorbed farmer selling this fall.
Corn exports were cut by 50 million bushels and added to ending stocks, USDA monthly Supply/Demand report. The average on farm price estimate remained the same as last month at $3.25 to $3.85 a bushel. Export sales were 847,700 tons, in the weekly report, up 29 percent from last week and 25 percent higher than the 4 week average. Export inspections were 28 million bushels as expected.
Corn fundamentals are turning bullish. Farmer selling slowed down once wet corn was harvested and dried. It is estimated that a billion bushels remain in the field due to harvest delays. Another factor is those estimated yields. Corn that remains in the field may yield less than previously anticipated. In addition to yield loss, there may be quality issues. Feed demand in Asia has increased as herds grow to meet demand for meat production.
The monthly USDA Supply/Demand report showed an increase in ending stocks to 900 million bushels. World ending stocks were raised to 190.91 tons. The USDA cut feed use by 15 million bushels but left exports the same at 875 million bushels. Weekly export sales of 245,200 tons were down 37 percent from last week and shipments were down 20 percent at 306,600 tons.
Wheat prices are strangled by low demand on one side and inflation potential on the other. Asian and European wheat are priced lower than U.S. wheat. Australia has experienced a 15 percent drop in exports and falling prices. Export inspections were below market expectations at 13 million bushels.
World rice supply took the wind out of the sails of rice markets. Thailand and Vietnam are both selling rice at prices lower than those in the United States. Shipping continues to be an issue. Mexico, central and south America are all buying rice from the United States. Asian and European nations are buying rice from Vietnam and Thailand. The large tender from the Philippines went to Thailand. India has increased wheat acres looking to find a substitute for rice. India has yet to make an offer on rice for import.
Weekly export sales were 81,700 metric tons USDA monthly Supply/Demand projections. Washington claims it has not had time to catch up with other news and numbers. Therefore world carry over expectations were increased with the Philippines, India, and perhaps Brazil all buying big this year.
Prices in the Far East continue to strengthen; as buying budgets in the Philippines are increased to match Thailand and Vietnam pricing. Sellers entered the markets taking profits on recent price increases. The situation with India may be worse than admitted. The complete story will unfold over the next few months.
USDA weekly export sales report showed net upland cotton sales up 7 percent from last week and 46 percent higher than the previous 4 week average. China, Turkey and Mexico were the main buyers. Export shipments were 27,300 bales, up 12 percent from last week. US cotton production was raised slightly and ending stocks were lowered. Export projections were raised by 500,000 bales because of higher than expected foreign demand. Deliveries declined to 383,000 bales after 466,000 bales were registered for delivery.
Cotton markets continue to follow stock market prices. Cotton fundamentals are bullish. World supplies are declining despite harvest. India has the only increase in cotton for export. Demand is expected to increase. The Chinese and Indian economies are growing at a rate of 15 percent. When dollar values increase, cotton price increases stall. It is bullish when dollar values increase and cotton prices do not move significantly lower. Traders continue to invest in cotton fearing inflation and expecting exports to increase.