Analysts will be watching for some specific numbers when USDA releases its Jan. 10 crop reports.
Friday’s onslaught of USDA crop reports could have a dizzying effect on markets, but analysts will be paying close attention to certain reports and several numbers immediately following their release.
On Jan. 10, USDA will release four major crop reports: Annual Crop Production, Grain Stocks, Winter Wheat Seedings, and World Agricultural Supply and Demand Estimates (WASDE).
"No doubt, the number one report will be the Grain Stocks report," says Rich Nelson, director of research for Allendale, a brokerage services firm in McHenry, Ill. "The Grain Stocks report is the one that typically causes the big price swings in January."
Corn Stocks Closely Watched
The quarterly Grain Stocks report will provide the first snapshot of feed use of corn for the 2013-14 crop, and the average trade estimate for corn stocks as of De. 1, 2013, is 10.79 billion bushels, with a range of 10.025 billion to 11.25 billion bushels. A year ago, corn stocks were much lower at 8.033 billion bushels.
"We don’t think there was a large first-quarter feed usage because not a lot of corn was harvested in August," says Nelson. That means old-crop supplies were still being fed, limiting the feeding of new-crop corn.
Nelson thinks the Grain Stocks report will be a non-event for soybeans. The average trade estimate for Dec. 1 soybean stocks is 2.161 billion bushels, with estimates ranging from 2.027 billion to 2.266 billion bushels. This year’s estimates are also much higher than year-earlier stocks of 1.966 billion bushels.
Soybean Exports on Tap
As for soybeans, the WASDE report should provide the biggest clues into world supply and demand. Allendale expects USDA to raise soybean exports by 25 million bushels, but cautions not to become too bullish on beans.
"We do think there will be cancellations. There are 633 million bushels of beans sold that have not yet been shipped. That is a record," says Nelson. "And 80% of those sales are to China. Later this month, we could start to hear of the first cancellation."
Cancellations could become more frequent as the South American crop moves into the global market. Allendale expects USDA to raise Argentina’s soybean production by 500,0000 metric tons to 55 million and Brazil’s output by 1 million metric tons to 89 million.