Thursday, March 31, 2011

USDA Shocker! Small Corn stocks Super Bullish? Or in the end Bearish?

Corn trades today up 60 cents or so synthetically..........as the USDA had corn stocks a couple hundred million bushels below trade estimates............8.00 corn here we come!

The bad thing on the report was 92.2 million corn acres................my personal perdication is we see 8.00 corn on the board before April 8th crop report............I did also joke with co-workers that will see the corn high made April 7th - April 11th; basically day ahead or day after that report............

I guess only time will tell but today's report should leave producers feel rather good; I would caution that everything always looks the best at the top.

The big thing I think happens is we now curve demand for corn and ECON 101 rules out........my off the wall prediction is we see prices take out the 2008 highs for corn; on a percentage basis I would say that it is 50/50.............but I also think that because of those high prices our demand ends up getting crushed at some point and we see values that start with a 4 on the board at some point before Dec corn goes off the board.  I also think the inverse is something to be watching.

Today's report showed 92 plus on corn acres; if you take 4 million acres over last year and assume our high prices don't do anything to demand and it is steady year over year 4 million acres at 150 bushels adds 600 million bushels to the carryout.  Personally I think there is very little chance that the actual acres don't increase just because of the insurance levels and prices for corn; so if we end up at 94 million acres now you have a risk of seeing nearly a billion bushels more in production; what happens if we see corn yield come 10 % above trend line instead of 10 % below? 

As always only time will tell and it really is up to mother nature right now; but today's price action that and fundamental news is bullish; but I personally view it as bearish new crop corn; I think the sky might be the limit on old crop; but the higher it does end up going and the more end users that say enough is a enough the lower it goes later!

None of the above statements are tended to make any recommendation and keep in mind that futures and options are risky and not for everyone.

Here is some of the info from today's reports

1 March 2011 Stocks


USDA
Average Guess
Range
Last year





Corn
6523
6701
6552/6800
7694
Soybeans
1249
1295
1266/1366
1270
Wheat
1426
1399
1285/1488
1356



March 2011 Planting Intentions


USDA
Average Guess
Range
Last year





Corn
92.2
91.662
90.4/92.6
88.192
Soybeans
76.6
76.969
75.0/78.5
77.404
Other Spring WHT
14.4
13.710
13.0/14.3
13.698
Durum
2.365
2.552
2.4/2.8
2.570
All Winter WHT
41.229
41.150
40.5/42.9
37.355


Below are some charts to watch.




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