USDA Report Thoughts - 1-11-2013 - Closing Comments
Grains had a volatile trading session as the USDA gave us
another report. No limit moves for the
grains today; but still choppy volatile price action.
As of 2:15 last trades for the markets show corn up 10-11
cents on the nearby with new crop next year off 4, KC wheat up 14, MPLS wheat
up 9, CBOT wheat up 13, equities mixed with the DOW up 3 points, the US dollar
weaker, gold weaker, and crude down about a quarter.
Report thoughts
Report info is below.
My thoughts are that the report is very friendly; but I don’t
know that it is good enough to say we really need to go higher; I think it
gives us fundamental support but I don’t know that it is the headline we need
to really get a bull market going.
Highlights are below as mentioned; but things that standout
as very positive are the corn carryout.
Down to 602 million bushels despite production higher then estimated and
exports being cut. To me that says we
just didn’t get high enough to curb demand for ethanol nor demand for feed
usage. Feed usage was increased for both
corn and wheat. It also says the perhaps
the reason exports are horrible and took even softer today is the fact that we
just don’t have the corn to export.
Going forward if we could somehow see exports pick up and
the feed and ethanol demand stay strong we have the chance for things to get
even tighter.
Looking at new crop corn I think that the old crop starting
tighter gives a little support; but so does where the wheat acres are at. SRW acres up over 1.3 million from last year
says that the area that grows corn has a little less acres to use. Off setting that a little bit is the acres
for HRW; which were below estimates.
The winter wheat acres below estimates gives us a chance for
even smaller production next year; especially when we look at the areas that
lost the acres.. My info tells me plenty
of those acres came from Kansas; so you add less acres in areas that are ok to
the horrible conditions seen in South Dakota to mention a few and one can find
reasons to think supply will be light next year.
Now we have tighter supply going into next year’s balance
sheet as well. Not exactly saying things
are greatly bullish but outlook for smaller supply along with smaller starting
supply isn’t bearish. We just still need
the demand if we really want to get bullish.
World numbers don’t say that has to happen either; but lately we have found
a little bit of demand so if that demand can continue and we can get the funds
back buying there is a chance we see some bullish things happen in wheat as we
move forward. The big key in my opinion
will be money flow and headlines……don’t look for more great bullish headlines
other then demand anytime soon.
The drought situation probably continues to be on the back
burner and really shouldn’t be a headline in the heart of winter.
Looking at the bean market; the big negative is the South
American production along with the fact that we have seen that market going
from a market needing to curb demand to a market needs to keep finding the
demand. 135 million bushel carryout is
not bearish; but the market is also more then comfortable especially when we
look at South American prospects.
For beans to really rally they either need to follow
strength in wheat or corn. Or we need to
see a headline shift with a weather
change in South America; we need to see a production hiccup or the bias remains
to the downside despite the very strong demand.
Bottom line is without the funds deciding to push things we don’t seem
to have the crunch or squeeze play left in the soybean market. The crop simply got too big.
The other thing today’s report tells me we need to watch is
demand. For all of the grains but corn
in particular; can we keep the ethanol guys using corn and other end users
feeding it? If so could things get even
tighter going forward especially if some export demand comes back this way just
because there are not many other games in town?
Bottom line today’s report should keep us overall friendly
prices over the next couple months. But
it will take more demand and or headlines that get money flowing back into the
grains to get super bullish. So when
looking to market don’t be afraid to take some risk off the table if we should
happen to get some bounces. Also realize
that until weather headlines really hit much of the market is going to talk
about 95-100 million acres of corn with yield potential of 150-180 bushels; I didn’t
say that was probable yield but that will be the potential numbers that
advisors and the USDA throw out for trend line and thus what the market will
trade. So being pro-active on some
prices bounces will only be good risk management; because without that weather
scare or headline that gets the funds buying the risk becomes we just slowly
fade lower.
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2012-13 Final January Production Corn & Soybeans
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Todays #
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Previous USDA #
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Avg Guess
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Range of Guesses
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Corn
Total Crop
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10.789
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10.725
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10.626
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10.100 - 10.800
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Corn
Yield Avg
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123.4
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122.3
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122.5
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121.0 - 125.0
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Harvested
Acres
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87.4
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87.721
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86.89
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84.56 - 87.72
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Soybean
Crop
|
3.015
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2.971
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2.996
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2.922 - 3.104
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Soy Yield
Avg
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39.6
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39.3
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39.6
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38.9 - 41.0
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Harvested
Acres
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76.1
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75.693
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75.56
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74.70 - 75.90
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2012-13 January Ending Stocks
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Todays #
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Previous USDA #
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Avg Guess
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Range of Guesses
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Corn
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0.602
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0.647
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0.647
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0.489 - 0.760
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Soybeans
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0.135
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0.130
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0.135
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0.107 - 0.186
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Wheat
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0.716
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0.745
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0.741
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0.637 - 0.792
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December 1st Quarterly Stocks |
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Todays #
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Previous USDA #
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Avg Guess
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Range of Guesses
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Corn
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8.03
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9.647
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8.212
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8.000 - 8.650
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Soybeans
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1.966
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2.370
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1.981
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1.800 - 2.100
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Wheat
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1.660
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1.633
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1.684
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1.553 - 1.750
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USDA Winter Wheat Acres |
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Todays #
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Previous USDA #
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Avg Guess
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Range of Guesses
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Total
Winter
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41.820
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41.324
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42.585
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41.700 - 44.700
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Hard Red
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29.1
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29.863
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30.296
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29.900 - 31.000
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Soft Red
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9.42
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8.120
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8.898
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8.217 - 10.000
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White
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3.27
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3.350
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3.474
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3.300 - 3.920
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South American Production Numbers |
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Todays #
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Previous USDA #
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Avg Guess
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Range of Guesses
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Brazil
Corn
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71.0
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70.0
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70.4
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69.0 - 72.7
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Argentine
Corn
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28.0
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27.0
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25.9
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23.0 - 27.5
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Brazil
Soy
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82.5
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81.0
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81.9
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78.9 - 84.0
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Argentine
Soy
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54.0
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55.0
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54.6
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52.5 - 57.0
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Don’t forget we are offering free delayed price for both
spring wheat and winter wheat.
Jeremey Frost
Grain Merchandiser
Midwest Cooperatives