Thoughts On Mondays Upcoming USDA Report
Sep 26, 2013
Below are a few thoughts that have been circulating inside the trade.
- Several traders, investment groups and money managers are thinking we could see a bullish wheat report, a slight bullish soybean number, and a somewhat bearish corn number.
- Corn - Ending Stocks could push higher than the most recent USDA estimate of 661 million bushels. Lots of talk about the stocks number moving above 700 million bushels on less than expected exports, ethanol usage and feed demand. Slice it and dice anyway you like, many traders simply believe the USDA will end up pulling forward some of the early harvested corn from down south and demand simply isn't adding up. The hated term "commingling" cant be ignored!
- Soybeans - This is really a mixed bag of nuts. The bulls are arguing that export demand was higher than the USDA had forecast and hence the stock number is moving lower. Some bulls will even go as far as to say a sub-100 million bushel number would not surprise them. The other side argues the USDA could surprise us all by magically finding more bushels, in essence telling us they underestimated last years crop. There is really not much debate about US "crush" as most view it close to the USDA estimate. Feed & Residual for soy could be slightly lowered. I guess I will lean to the bullish side, but would not be surprised at all to see the USDA pull another rabbit out of their hat. Be careful with this one. Watching from the sideline will be the ONLY safe bet.
- Wheat - Possibly the biggest bullish sleeper on the board. As I explained in the dedicated wheat paragraph above, wheat feeding could be much larger than the market has been estimating. Remember back in Jun/Jul/Aug wheat was trading cheaper than cash corn and soymeal prices were going thru the roof. Hence wheat feeding could have been much larger than anticipated. The problem is we have been banging this drum for a long time now and nothing has come from it, maybe this is our time. Hopefully with US exports being extremely strong the past few months we can catch a bullish tailwind. Ultimately giving us the ability to break free from bearish chains of wheat. Those producers who still need to sell more bushels should keep their fingers crossed, if the numbers come out as some bulls suspect, we could see our lowest stock levels in several years.
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