Opening Comments 9-11-2013 - USDA Report Preview

Markets are called mixed this morning as it appears the trade is a hurry up and wait for the USDA report which is out Thursday at 11 a.m. central time.

In the overnight session corn as unchanged, KC wheat was unchanged, MPLS wheat was up a penny, CBOT wheat was unchanged, and soybeans were up 3 ½ cents.  At 8:00 outside markets have the US Dollar unchanged, crude about unchanged, gold down 2 bucks an ounce, and the DOW futures pointing towards a start of about unchanged.

Very quiet trade last night as well as the past few days.  Basically feels like the market is waiting for some questions to get answered.  How big or big are our fall crops and what is the USDA going to say about crop size as well as demand.  As it sits right now we do have harvest activity happening in different areas of the US and overall I would say the theme seems to be “better than expected” for corn yields.  But it is very early and most seem to be in the camp that corn yields could go either way; with a slight downward bias.  The problem for corn is that unless demand can really pick up a couple bushel an acre drop in yield is still going to leave us plenty of corn.

Bottom line is a headline of 1.5-2.0 billion bushel carryout for corn isn’t attracting money flow’s attention and that is what we are really in need of.  A headline that gets the funds buying some more of our grains; a corn and wheat headline in particular. 

Most thing that the big headline out of the report on Thursday will be the beans and most look for corn and wheat to follow the soybean price action.  Now how much corn and wheat follows will be questioned.

As for the beans most are looking for a big drop in yield; some are in the camp that our crop is smaller than a year ago.  When everything is said and done I think that is a possibility just based on weather; but I also think we have some risk that the USDA looks at the crop conditions being 20% better than a year ago and prints a much bigger production number then most in the market believe.  Plus there are a few analysts out there that actually thing soybean yield isn’t going down as much as what most of the crowd thinks.

Below are the estimates for the report; they come from the Van Trump Report.  The one thing that really stands out to me is the huge estimate range for production.  The soybean range for production is bigger than the last carryout numbers we had a month ago.  When looking for risks heading into reports sometimes we want to look at what everyone is thinking won’t happen.   You will notice below that the every estimate for soybean production is less than last month.  I would be more then shocked if the USDA left bean production unchanged; but we are dealing with the USDA.

Here is link to CHS Hedging Pre-Report write up.  Very good info and good explanation as to the numbers they feel the USDA will print.

https://www.chshedging.com/UserFiles/Documents/2013/Pre%20USDA%20Report%20Comments/090913.pdf

USDA September Crop Report - US Production Cheat Sheet

	Average Trade Guess	Trade Range	August Est.	2012 Final #
Corn Production	13.620	13.330 - 14.013	13.763	10.780
Yield	153.690	150.200 - 157.200	154.400	123.400
Harvested Acres	88.559	87.000 - 89.140	89.100	87.400
Soybean Production	3.140	2.980 - 3.239	3.255	3.015
Yield	41.172	39.000 - 42.400	42.600	39.600
Harvested Acres	76.248	75.100 - 77.000	76.400	76.100

Global Ending Stocks

	Average Trade Guess	Trade Range	August Est.
2012/13
Corn	122.798	115.860 - 125.000	123.110
Soybeans	61.730	59.700 - 62.220	62.220
2013/14
Wheat	172.760	169.350 - 175.720	172.990
Corn	146.927	125.920 - 152.000	150.170
Soybeans	71.167	67.100 - 75.000	72.270

US Ending Stocks

	Average Trade Guess	Trade Range	August Est.
2012/13
Corn	0.718	0.579 - 0.769	0.719
Soybeans	0.123	0.107 - 0.145	0.125
2013/14
Wheat	0.551	0.477 - 0.600	0.551
Corn	1.732	1.147 - 2.296	1.837
Soybeans	0.165	0.114 - 0.230	0.220

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