Marketing Strategies Blog: USDA January Crop Report

Rather choppy trade today ahead of the USDA updated Supply and Demand report which is out tomorrow January 11^th at 11 central time.

Corn was up 4, beans were off 6, KC wheat was off 5, MPLS wheat was off a penny, CBOT wheat was off a penny, equity markets closed firmer with the DOW up 80 points, crude was up around a dollar, gold was firmer, and the US Dollar got hammered.

Overall a little disappointing day for the grains. Corn up for the 4^th session in a row was good; but to see beans weaker and wheat weaker despite the US getting a little Egypt wheat business and very weak US dollar has to be disappointing to say the least.

As mentioned above we get do a cargo of wheat business with Egypt but so did Canada. One positive from this is that Egypt who just a few days ago claimed to be covered for the next several months came in and bought. Perhaps showing that “cheap wheat” does attract a little demand?

Exports sales this a.m. where horrible for corn at only 500,000 bushels; the bean and wheat number was also on the soft side of expectations.

As we go forward it really comes down to tomorrow’s report. One thing that should make one a little nervous is the fact that we have had a few up days in a row for corn and the bias of the market seems to be one that is looking for a bullish report. I would not have said this a week or two ago; but it really feels like the market is looking for a bullish report; so that adds in the risk of is the report bullish enough?

I do not think the same thing can be said for wheat and beans; and no one is really looking for any big bullish surprises for them so perhaps that is where the bullish surprises happen?????

I am not going to give any more reasons to be bullish or bearish into the report. Rather just lay out the numbers and say as far as marketing goes the thing one needs to look at doing is getting themselves comfortable. If you haven’t done that and want to do something ahead of the report please give us a call.

Thanks

Below is from the Van Trump Report and it shows the estimates for Friday’s USDA report which will be out at 11:00 central time January 11^th.

2012-13 Final January Production Corn & Soybeans
	Todays #	Previous USDA #	Avg Guess	Range of Guesses
Corn Total Crop	???	10.725	10.650	10.325 - 10.800
Corn Yield Avg	???	122.3	122.6	121.3 - 125.0
Harvested Acres	???	87.721	86.89	84.56 - 87.72
Soybean Crop	???	2.971	2.993	2.935 - 3.104
Soy Yield Avg	???	39.3	39.6	38.9 - 41.0
Harvested Acres	???	75.693	75.56	74.70 - 75.90
2012-13 January Ending Stocks
	New #	Previous USDA #	Avg Guess	Range of Guesses
Corn	???	0.647	0.647	0.489 - 0.760
Soybeans	???	0.130	0.135	0.114 - 0.186
Wheat	???	0.754	0.741	0.637 - 0.792
December 1st Quarterly Stocks
	New #	Dec 1 Last Year	Avg Guess	Range of Guesses
Corn	???	9.647	8.219	8.000 - 8.750
Soybeans	???	2.370	1.981	1.800 - 2.100
Wheat	???	1.633	1.684	1.553 - 1.750
USDA Winter Wheat Acres
	New #	Previous USDA #	Avg Guess	Range of Guesses
Total Winter	???	41.324	42.585	41.700 - 44.650
Hard Red	???	29.863	30.296	29.900 - 31.000
Soft Red	???	8.120	8.898	8.217 - 10.000
White	???	3.350	3.474	3.300 - 3.920
South American Production Numbers
	New #	Previous USDA #	Avg Guess	Range of Guesses
Brazil Corn	???	70.0	70.4	69.0 - 72.7
Argentine Corn	???	27.5	25.9	23.0 - 27.5
Brazil Soy	???	81.0	81.9	78.9 - 84.0
Argentine Soy	???	55.0	54.6	52.5 - 57.0

Jeremey Frost

Grain Merchandiser

Midwest Cooperatives

800-658-5535

800-658-3670

605-295-3100 (cell)

605-258-2166 (fax)

jeremey.frost@chsinc.com

www.midwestcooperatives.com

http://grainmarketingplans.blogspot.com/

Grain markets closed mixed today in trade ahead of Friday’s Big USDA Supply and Demand report.

When things where said and done corn closed up 3 cents, beans were off 2, KC wheat was up 1, CBOT wheat was off 1, MPLS wheat was off 1, the dollar near unchanged, and equities softer with the DOW off 55 points.

Very quiet day; one that saw grains firmer most of the session but we tailed off towards the close. Perhaps some index fund reallocation?

Big thing remains the report which is out on Friday.

Below is from the Van Trump Report/Farm Direction and it shows the estimates for Friday’s USDA report which will be out at 11:00 central time January 11^th.

2012-13 Final January Production Corn & Soybeans
	Todays #	Previous USDA #	Avg Guess	Range of Guesses
Corn Total Crop	???	10.725	10.650	10.325 - 10.800
Corn Yield Avg	???	122.3	122.6	121.3 - 125.0
Harvested Acres	???	87.721	86.89	84.56 - 87.72
Soybean Crop	???	2.971	2.993	2.935 - 3.104
Soy Yield Avg	???	39.3	39.6	38.9 - 41.0
Harvested Acres	???	75.693	75.56	74.70 - 75.90
2012-13 January Ending Stocks
	New #	Previous USDA #	Avg Guess	Range of Guesses
Corn	???	0.647	0.647	0.489 - 0.760
Soybeans	???	0.130	0.135	0.114 - 0.186
Wheat	???	0.754	0.741	0.637 - 0.792
December 1st Quarterly Stocks
	New #	Dec 1 Last Year	Avg Guess	Range of Guesses
Corn	???	9.647	8.219	8.000 - 8.750
Soybeans	???	2.370	1.981	1.800 - 2.100
Wheat	???	1.633	1.684	1.553 - 1.750
USDA Winter Wheat Acres
	New #	Previous USDA #	Avg Guess	Range of Guesses
Total Winter	???	41.324	42.585	41.700 - 44.650
Hard Red	???	29.863	30.296	29.900 - 31.000
Soft Red	???	8.120	8.898	8.217 - 10.000
White	???	3.350	3.474	3.300 - 3.920
South American Production Numbers
	New #	Previous USDA #	Avg Guess	Range of Guesses
Brazil Corn	???	70.0	70.4	69.0 - 72.7
Argentine Corn	???	27.5	25.9	23.0 - 27.5
Brazil Soy	???	81.0	81.9	78.9 - 84.0
Argentine Soy	???	55.0	54.6	52.5 - 57.0

You can see that we have rather big ranges of estimates; but you will also notice that overall the market is looking for a somewhat neutral to bullish report for corn and wheat and neutral to bearish report for beans.

I have a hard time trying to decide if we have more risk than upside potential as I think we are starting to see some positives that could allow us to partially brush off a negative report. Such as the fund length not being nearly as long as it was and the fact that we are getting competitive on some of the export business. If the funds didn’t like to help our markets over due the moves I would lean a little towards the friendly price side; but money flow and human emotions like to really over do things. So there is nothing that says we can’t see more pressure from this report should it be bearish. On the bright side of things a bullish report should leave us plenty of upside; after all the funds are no longer massive long.

Bottom line is for marketing purposes one wants to get them self comfortable heading into the report. Realizing that this could very well be the report that adds another dollar or more weakness to our markets or if it is bullish gives us a chance to run up; maybe even testing the higher from last summer?

For many the thing to consider might be getting squared up in either sales or protection. Most like the idea of using options to give one a floor should we see prices crash or re-own with limited risk should we see prices run. So the simple choices are really buy a put option or do a min price option.

If you want more info on either of them please give us a call.

As for other news today we really didn’t see much. We had seen spreads firm up until the close happened in corn. Basis feels firm for both wheat and corn; but not really from super hot demand more from a lack of producer selling. I much prefer to sell a rally from demand versus supply destruction; so I also prefer to see basis rally from demand versus producers simply not needing to sell. I have seen a few times the last couple of years where producers not having to sell spills over to end users finding replacement products or simply softer demand.

Tomorrow we will have our marketing meeting in Onida at 3:30 and we will at that time cover pre-report thoughts as well as potential strategies heading into the report.

Birdseed market is very quiet; with no real buying interest seen at all.

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