Opening Grain Market Comments - two days ahead of big USDA report

Markets are called mixed to firmer this a.m. behind a mixed to supportive overnight session and weaker outside markets.

In the overnight session corn was up 2 on the old crop, new crop corn was down a penny, KC wheat was up 3-5 cents, MPLS wheat was up 1-3 cents, and CBOT wheat was up 5 cents.  At 9:15 outside markets are not providing any support with the equities near unchanged as the DOW is off 11 points, crude oil is down a little over 2.00 a barrel, the US dollar is bouncing up 201 at 79.248 on the cash index, gold is off 12 an ounce, and European Wheat is unchanged.

Another day of consolidating/position squaring or at least anticipating Friday’s report.  Don’t forget that this afternoon we will have our regular weekly MWC Marketing Hour Roundtable in which we will cover some strategies heading into Friday’s report as well as pre-report ideas; plus we will have a couple of guest speakers.  Taylor Smalley a wheat buyer for CHS and Tregg Cronin a Market Analyst for Country Hedging.

Here are the latest estimates for Friday’s report.

Planted Acerage Estimates (in millions of acres)
	Low Guess	Average Guess	High Guess	USDA Outlook	USDA Last Year
Corn	93.6	94.75	95.6	94.0	91.921
Soybeans	74.0	75.45	76.7	75.0	74.976
All Wheat	55.5	57.422	58.2	58.0	54.409
Winter	41.5	41.963	42.6	na	40.646
Spring	12.0	13.30	14.5	na	12.394
Durham	1.4	2.30	2.5	na	1.369

US Quarterly Grain Stocks as of March 1st (in billions of bushels)
	Low Guess	Average Guess	High Guess	USDA 3/1/11	USDA 12/1/11
Corn	5.925	6.150	6.288	6.523	9.642
Soybeans	1.270	1.387	1.585	1.249	2.366
Wheat	1.181	1.223	1.251	1.425	1.656

For the acres  you can see that the market is expecting an overall increase year over year due to less prevent planting and less CRP acres.  Bottom line is market is expecting acres to be a little on the bearish side; but just how bearish or bullish will really depend on weather as that will really make our break our crops.  Also very important will be where we start or our ending carryout this year.  Overall it looks like year over year the market expects corn to be tighter then last year with beans higher then last year.  Wheat is also expected to be less then a year ago. 

Just looking at the above table for estimates versus last year you can see where some risk may lie.  Corn average quarterly stock estimate of 350 million bushels less then last year.  That to me seems like a big risk; the possibility that stocks come in 100-200 million bushels but we sell off anyways because that would be less then the trade estimate.

Please give us a call if there is anything we can do for you.