Grain Market Opening Calls day ahead of April USDA Supply and Demand Report - Ideas on USDA report

Markets are called better a day ahead of the April USDA S & D report which is out in the a.m.

In the overnight session old crop corn was up 7-8 cents, new crop was up a penny, beans where up 3-5, KC wheat was up 4, MPLS wheat was firmer by 4, and CBOT wheat was up 6.  Outside markets have the US dollar up 233 with the June at 75.990, European wheat is nearly unchanged, and crude is up a quarter or so.

The big thing in the markets the past week or so has been the supply and demand situation for the grains; last week the USDA threw out a very bullish stocks number for old crop corn and beans.  Tomorrow the USDA will take from the stocks report and give us updated supply and demand tables for old crop grains; in May we will see the first 2011/12 S & D’s for wheat.

Estimates for the April 8^th USDA Report for ending stocks are pegged at 595 million bushels on average for corn, 137 million bushels for soybeans, and 861 million bushels for wheat.  Last month corn was at 675, beans 140, and wheat 843.  Historically our corn balance sheet is as tight as it has been since 1995-1996, beans are also historically tight, wheat on the other hand isn’t tight by any means.

When I look at stocks numbers seen last week indicate that perhaps we see an even tighter balance sheet but most throwing out estimates don’t think the USDA will cut things that tight at this point.

Below is a good table from RJOMRT that should help show that there is plenty or room for surprises in the report out in the a.m. but past history would say that Friday’s report probably doesn’t see a big jump in ending stocks.  The blue bars below are the March stocks report versus estimates while the red would be Friday’s change versus the March carryout; below shows that in the last several years that direction has been the same and usually 50-100 million bushels of each other.

Bottom line is we are expecting some friendly revisions in the report.  The report won’t look at the 2011/12 balance sheets but the planting intentions indicated that we are adding plenty of acres into the grains; so if our old crop balance sheets do end up seeing softer demand or find more bushels we won’t have the big need for all of the acres provided we see decent yields. The other thing big thing in the markets has been and will continue to be weather. 

Basis in most of the grains feels firmer other then spring wheat which is a little softer with the freight softening up and the mills done buying in late shipments due to the end of the month.  I do thing that perhaps nearby coverage is on the decent side for some of our markets so basis appreciation could be tough but producer interest is quickly turning to field work versus hauling grain; so if demand can stay steady or firm up the cut in supply interest should help basis stay on the friendly side for nearly all of the grains.  Spring wheat with the protein and how the rail systems have performed could be very volatile and either direction is very possible; plus we do have a huge basis inverse in the crop.  Bottom line don’t be afraid to sell something at historically high basis levels because those buyers can quickly pull there interest with little or no reason.

Sunflowers and other birdseed grains also remain very friendly in terms of supply and demand but we have entered the seasonal time when we see demand slow down.  So those markets basically see bid and ask spreads very wide; as buyers show little interest in purchasing unless they feel like they absolutely have to.  Many comment that they would rather pay market price at the time they ship (be it old or new crop) then be long and wrong trying to compete via owning product at levels higher then present markets.  These statements basically say to me that they lack coverage in some spots which gives us plenty of upside potential but remember those buyers also like to run for the hills when prices to get softer.

This a.m. we did have export sales out that continue to show good demand;

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

April US Grain, Soybean Carryout

  CHICAGO (Dow Jones)--The following are analysts' estimates in billions of
bushels for 2010-11 U.S. grain and soybean ending stocks, as compiled by Dow
Jones Newswires.

  The U.S. Department of Agriculture is scheduled to release updated supply
and demand tables at 8:30 a.m. EDT (1230 GMT) Friday. Parentheses denote the
number of estimates in that average and range.

                                       March
                                       2010-11  2009-10
               Average     Range       USDA     USDA
Corn (18)      0.595    0.560-0.660    0.675    1.708
Soybeans (18)  0.137    0.121-0.150    0.140    0.151
Wheat (16)     0.861    0.835-0.893    0.843    0.976

Thanks

Jeremey Frost

Grain Merchandiser

Midwest Cooperatives