USDA report day........Limit up here we come???
Markets are called sharply higher beans, wheat, and old crop
corn behind a bullish USDA report.
Here is the report recap.
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USDA NUMBERS
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Planted
Acreage Estimates (in
millions of acres)
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USDA #s
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Low Guess
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Average Guess
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High Guess
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USDA Outlook
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USDA Last Year
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Corn
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95.86
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93.6
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94.75
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95.6
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94.0
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91.921
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Soybeans
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73.90
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74.0
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75.45
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76.7
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75.0
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74.976
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All Wheat
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55.9
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55.5
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57.422
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58.2
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58.0
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54.409
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Winter
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41.7
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41.5
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41.963
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42.6
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N/A
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40.646
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Spring
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11.976
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12.0
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13.30
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14.5
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N/A
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12.394
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Durham
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2.23
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1.4
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2.30
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2.5
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N/A
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1.369
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USDA NUMBERS
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US
Quarterly Grain Stocks as of March 1st (in
billions of bushels)
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USDA #s
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Low Guess
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Average Guess
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High Guess
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USDA 3/1/11
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USDA 12/1/11
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Corn
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6.01
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5.925
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6.150
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6.288
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6.523
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9.642
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Soybeans
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1.37
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1.270
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1.387
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1.585
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1.249
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2.366
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Wheat
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1.20
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1.181
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1.223
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1.251
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1.425
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1.656
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The above has what I call bullish numbers highlighted in green
and bearish numbers in red. You can see
that one of the major headlines is corn acres and that is bearish versus last
year as well as the estimate. But the
old crop quarterly stocks number probably more than off set’s the acreage and
it could cause more diversion between the two also.
The spring wheat acre number is very bullish on surface; but
I do think we need to remember what happened on last year’s small crop; it
ended up destroying demand. We can’t
afford a small crop with the low acres; but we also need to find a way to add
some demand. The birdseed sunflower
market is a good example of what can happen; last year we had one of the
smallest crops ever; but we also killed demand so much that today’s report
shows sunflower stocks ahead of a year ago at this time. Granted we almost ran out of sunflowers last
year; but the fact that we haven’t exactly ran sunflower prices up should tell
us too high of prices don’t help demand.
Bottom line even though this report is friendly for wheat we
still need to add some demand; because if we just cut supply there is no gtd that
a long term rally is sustainable.
The one thing this report should do a little bit is fuel a
little acre war debate; if you plug in the latest USDA demand projections with
the bean acres you end up with a carry out that is in the red. The report however doesn’t tell us how many
acres have switched the past month.
I did notice a major buyer already up their spring wheat
basis bids for new crop today. That is
one positive.
The lower corn stocks number also brings back into play
possible needed price rationing and the China card. What could happen to our stocks if China
comes back in to buy; keep in mind their corn has been $10 or so; and with our
price levels a couple of days ago they could buy our corn for their domestic
market and make around $70 a ton from what I was told.
Overall this report should be took as bullish; but don’t
forget to use proper risk management. (Don’t
be afraid to sell a little bounce) Keep in mind the price action we have seen
the past couple of weeks; nothing fundamentally really changed it was simply
money flow and with the funds at or near record soybean length we have be watch
out for a turn in money flow. After all
eventually everything runs out of buyers or runs out of sellers as we near
extremes.
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you.