USDA Report to bring Sales Opportunity?
Feb 07, 2014
Corn traders are tiring of the same old song and dance..."cold weather and lack of farmer selling." In response all eye's will be keenly focused on Monday's USDA report and thoughts of exports pushing higher and ending stocks tightening just a touch. Before you get all bulled up keep in mind we have confirmation that China has canceled four cargoes of US corn so far this week, bringing the grand total to more than 600,000 metric tons since November. Also keep in mind there is still around 1.8 million metric tons "unshipped." The question is will US exporters even bother sending these "unshipped" bushels, especially considering they may not want to take the chance on a rejection and possibly having to resell them at a discount to another buyer. I am not even sure this whole Chinese vs. US GMO issue is anywhere close to being resolved. Just yesterday there were reports circulating that Syngenta has already SOLD OUT of their "Duracade" corn seed here in the US. the problem is this is yet another seed similar to Viptera, that has still NOT been approved by China importers. Lets also keep in mind while the USDA may actually lower ending stocks, more than likely we still end up double that of last year. Yes, US corn exports are strong and running well ahead of expectations, but I remain suspect in regard to if we will have enough bullish horsepower from the funds to push old-crop corn prices back above $4.65. Simply stated, a $0.20 to $0.30 cent rally from here seems like a GIANT hurdle. Those producers sitting on old-crop bushels need to start paying very close attention as we might be reaching the upper-end of our nearby limits. Bottom-line, if we get a rally on Monday from the USDA adjustments don't be afraid to pull the trigger on a few more sales. Spec's might want to consider throwing on a bearish position of some sort taking a shot on a nearby high being established. Click here for my daily report...
What About The Feed/Residual Number? Unfortunately, the trade will need to continue digesting what appears to be an extremely large estimate of 5.3 billion metric tons by the USDA in the last Quarterly Stocks Report. Keep in mind this estimate was thrown on the market despite the cattle herd being at it lowest levels in over 60 years and the PED virus trimming at least 1% off the hog herd. Net-net many source think the USDA will eventually need to adjust stocks higher by 300 to 400 million bushels to offset the mistakenly large number thrown out in the previous report.