What's In Store for Tomorrow's USDA Report
Jul 11, 2011
I believe there is still one piece of bearish data looming that has a few bulls still on the sideline, and that is the USDA report scheduled for release tomorrow morning before the open. With the last USDA report delivering a Mike Tyson like uppercut to those who were long, very few "bullish" traders are willing yet to step back into the ring, fearing a possible repeat performance could be in the cards. Once the report is behind us, I would suspect those counting cards will see the deck being stacked with more "bullish" possibilities rather than "bearish." After the latest round of USDA data is digested the trade will immediately start to focus on weather, yields, and the results of a "re-survey." I like buying the breaks, and believe we might get an opportunity over the next couple of days to see another push lower. Remember, a serious "weather" play will happen in the blink of an eye. It will not continually give you opportunities like a "demand" type play. If you are wanting to make the play, I urge you to be extremely cautious. Look to use "calls" or other types of bullish strategies that provide you with "limited-risk" or downside exposure in case the weather card never hits the table. Look for the weight of the "outside" markets to continue to add pressure through the first half of this week.
Tomorrow's USDA Numbers
I wanted to give you quick guide to what most in the trade will be looking for in tomorrow's report that is scheduled for release at 7:30am CST. Hope this helps give you a better idea.
I am hearing several analyst suggest that corn ending stocks for both 2011 and 2012 will be raised substantially. Remember, the USDA was at 730 million bushels for 2011 in their last report, and 695 million bushels for 2012. There are guys talking that the numbers could now be closer to 1 billion bushels... I am hearing a few trusted sources throwing out more realistic numbers in the low to mid 800 million bushel range for 2011, and lower to upper 900's for 2012. It will certainly be interesting to see how much more corn is now being estimated than just a few weeks back. Most are thinking they will add 175 million bushels to 2011, and up to 300 million bushels in 2012.
Most are under the belief that the USDA is going to raise their 2011 soybean ending stocks from their recent 180 million bushel estimate. I have heard numbers anywhere from 190 million upwards to 220 million. My best guess is we see something right around 200 million bushels, on thoughts that several cargoes of Chinese purchases will be rolled forward or possibly even canceled. On the flip side you have to believe the USDA could actually reduce their 2012 number on thoughts of fewer acreage and increased exports. In their most recent report they had the 2012 ending stocks estimated at 190 million bushels. I am hearing talks ranging substantially lower for 2012, and a number closer to 160 million bushels would not surprise me.
Another interesting number out tomorrow will be US spring wheat production estimates. Remember, last years crop was estimated at 616 million bushels, this time around most are thinking we will see a number between 540 and 550 million bushels.
Look for the USDA to raise their 2011 wheat ending stocks number from 687 million bushels up closer to 700 million bushels despite the reduction in Spring wheat.