USDA Supply and Demand Report - Market thoughts 12-11-2012

The USDA report was out this a.m. and it showed the following

US 2012/13 Ending Stock Estimates
	USDA Dec '12	Avg. Trade Guess	Avg. Trade Range	USDA 2011	USDA Nov '12
Corn	.647	0.663	0.493 - 0.752	0.988	0.647
Soybeans	.130	0.130	0.063 - 0.145	0.169	0.140
Wheat	.754	0.712	0.612 - 0.754	0.743	0.704

Global Ending Stock Estimates
	USDA Dec '12	Avg. Trade Guess	Avg. Trade Range	USDA Nov '12
Corn	118	118.006	115.700 - 125.100	117.990
Soybeans	59	59.409	56.700 - 60.700	60.020
Wheat	177	173.435	170.000 - 175.680	174.180

A mixed report; neutral to friendly corn and beans and negative/bearish for wheat. 

For corn the market was looking for an increase in US stocks but they came in un-changed; perhaps adding more volatility to the January report?  For soybeans the market was looking for a decrease in ending stocks but only got exactly what they were looking for as the USDA increased crush; some feel there is room to increase more in the export category; but that wasn’t done.  For wheat the USDA decreased our exports by 50 million bushels; mainly in HRW; so that estimate was much higher than expected by many. 

For the world balance sheets the big negative was also in wheat with an increase of 3-4 mmt from estimates and last month; otherwise corn and bean numbers came in line with estimates.  There were some small adjustments that some didn’t care for; such as an increase in the Australia wheat size and not much for decreases in the SA crops despite the slow planting pace.

As for price action the corn and bean numbers help those markets trade positive right after the report but they have since fallen under the pressure that wheat has spilled over to them.  At 8:00 we have corn off 4 cents, beans off 5, KC wheat down 13, CBOT wheat off 16, and MPLS off 8 cents.

Outside markets are supportive to grains with the US Dollar weaker, equity futures firmer, and crude up slightly.

I think we are probably already done trading this report.  The biggest negative I see out of the report is it has took some of the wheat contracts below the range that we have held for months.  I think our biggest risk is more technical selling.  Keep in mind that the dry HRW talk isn’t getting us demand nor does the price we have today have much correlation to where prices could be in several months depending on what happens to supply, demand, and money flow.   Money flow is still very nervous with the increase capital gains taxes, fiscal cliff, and Europe situation.  Today’s report should remind us that we don’t have much for demand yet and odd’s of increase supply down; but that really won’t be known for several months.

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

Thanks

A couple of announcements don’t forget we will have our weekly MWC Marketing Hour Round Table meeting in Onida on Wednesday’s at 3:30. 

Grain Marketing Seminar 2012

We would like to invite you to our

free grain marketing seminars:

Dec. 19^th, 2012 – 1:00 pm MST at the

Ambulance Building in Philip, Tregg Cronin Speaker

Dec. 20, 2012 – 10:00 am CST at the Ramkota in

Pierre, Kevin Van Trump and Tregg Cronin will be speaking on the grain markets.  Lunch will be served

Please RSVP for either location by calling

800-658-3670 or 605-258-2686