USDA Report - Grain Markets March 10th 2011

Today was a rather harsh day to the grain markets as the outside macro economic's helped lead our grain markets under pressure in the overnight session.  Then this a.m. we had a USDA report out that put a little pressure on our markets.


How much of the pressure seen today in the grain markets was due overall fund liquidation that stemed from macro events such as crude and the equities under severe pressure will probably never be truely known; but  any way you spin it our grain markets had a little presure today.  As i write this corn is off about 9, KC wheat is down 12, MPLS wheat is down 22, and CBOT wheat is off 15; while outside markets have the dollar stronger up 544 points, crude is off about 1.50 a barrel, and the equity markets have the DOW down about 200 points.  I did forget to mention that there is at least one shinning star out there in today's markets and that is beans as they are up around a dime on old crop ; nearly 40 cents off of thier previous lows.

As for the crop report numbers came in at 675 million bushels for US corn carryout.  Which was unchanged from last month; but slightly above the estimates that the media had out.

Beans where 140 million bushels on the US carryout; which is also unchanged from the last USDA forecast; projections for soybean carryout where 142 million bushels so we should consider those numbers as neutral to friendly.  Anytime we have seen solid up trends and prices and don't see much demand rationing one could consider it  friendly thing to our prices as it says that we need to go higher to curve demand.  Now once tht demand curve starts we do need to be careful as to how price action goes.

Wheat did see a little bit of negative action in it's newest USDA report as they raised the US Wheat ending stocks to 843 million bushels versus 818 last month and estimates that had pegged wheat to be unchanged.  Spring wheat was the market that lost the most as it did see it's exports dropped in this a.m.'s report.

The negatives on the report steam from the world situation; which saw an increase in all three major grains in terms of world carryout.

Here is a little table and chart that shows how the market has been trending and how today those trends perhaps changed.

The first table is the US carryout numbers; these are shown

in billion bushels.  You can see that corn back in May was pegged at 1.8 and except the little hiccup in Dec the trend of smaller numbers has been steady up until this March Report.  Now perhaps we can have the January stocks report follow this report up much like what happened back in Dec-Jan.

The other big thing that the numbers should remind us is that wheat's story isn't on quanity as we are at carryout levels that are as high as we have seen; the good thing is it has improved slightly over the past year and several months.

US Carryout Numbers
	Corn	Beans	Wheat
’00	1.899		0.876
’01	1.574		0.687
’02	1.087	0.178	0.491
’03	0.958	0.112	0.547
’04	2.113	0.256	0.54
’05	1.967	0.449	0.571
’06	1.304	0.574	0.456
’07	1.624	0.205	0.306
’08	1.673	0.138	0.657
’09	1.708	0.151	0.976
10-May	1.818	0.365	0.997
10-Jun	1.573	0.36	0.991
10-Jul	1.373	0.36	1.093
10-Aug	1.312	0.36	0.952
10-Sep	1.116	0.35	0.902
10-Oct	0.902	0.265	0.853
10-Nov	0.827	0.185	0.848
10-Dec	0.832	0.165	0.858
11-Jan	0.745	0.14	0.818
11-Feb	0.675	0.14	0.818
11-Mar	0.675	0.14	0.843

Here are the world numbers; what sticks out here to me is the fact that wheat despite the production problems and high prices seen for feed products has seen it's carryout go back to the highest levels since July.  Even with the breaks seen recently we still have plenty of downside price risk if we are going to trend towards the price levels seen in May-June.

The other thing that these numbers tell us is that the whole grain complex has either increased supply or decreased demand as we have carryout number increases accross the board; only the fact that is one month and not a trend is good.  If in the coming months we see this trend continue then so will the price action we have seen lately.

World Carryout Numbers
	Corn	Beans	Wheat
’00	6	1	7.5
’01	5.8	1.2	7.4
’02	4.8	1.5	6.1
’03	3.6	1.2	4.8
’04	5.1	1.8	5.6
’05	4.9	1.9	5.4
’06	4.3	2.3	4.7
’07	5.1	1.9	4.4
’08	5.7	1.5	6.1
’09	5.7	2.2	7.3
10-May	6.071	2.428	7.279
10-Jun	5.8	2.461	7.126
10-Jul	5.554	2.49	6.872
10-Aug	5.48	2.378	6.421
10-Sep	5.337	2.337	6.534
10-Oct	5.211	2.257	6.418
10-Nov	5.085	2.256	6.339
10-Dec	5.118	2.209	6.493
11-Jan	5	2.141	6.54
11-Feb	4.823	2.138	6.531
11-Mar	4.848	2.143	6.684

Here are a couple of Graphs that also help show the above information from the USDA; just in a different manner.

For more good information make sure to check out http://www.youtube.com/watch?feature=player_detailpage&v=cmKdo-A9hyE

It is Country Hedging's commentary on today's supply and demand changes for the commodities.