The following commentary does not necessarily reflect the views of AgWeb or Farm Journal Media. The opinions expressed below are the author's own.
The Hueber Report is a grain marketing advisory service and brokerage firm that places the highest importance on risk management and profitable farming.
click here for free trial
While there was really nothing overtly negative that was delivered on the first day of the annual USDA Ag Symposium, neither was any of the news particularly friendly and that was what grain/soy markets needed if they were to uncover any renewed buying interest at this time. After releasing the acreage number yesterday of 90 million corn, 88 million beans and 46 million wheat, yield estimates have been added in this morning. For corn they are using a trend line figure of 170.7 bpa, which would be nearly 4 bushels below last year and gives a projected production figure of 14.065 billion or a reduction of 1.083 billion versus last year. Bean yields are pegged at 48 bpa, which is 4.1 bushels below last year so even with the boost in acreage, total production is forecast to be down 127 million from last year at 4.180 billion. Wheat yields are projected to be down 5.5 bpa to 47.1 which provides a projected production of 1.837 billion, down 473 million. For the key ending stocks figures corn is projected to come in at 2.215 billion, down 105 million, beans at 420 million, which is unchanged from the current crop year projection and wheat finally back below the 1 billion mark at 905 million, down 234 million. Granted, we all recognize that these are little more than statistical projections that anticipate a normal growing season but the fact that we may finally be looking at a drawdown in stocks bodes well for a better outlook in prices for the year ahead. With these estimates the USDA projects a seasonal average farm price for corn of 3.50, up $.10 from this crop year, beans at 9.60, also up $.10 and wheat at 4.30, up $.45 from the current year.
While the next meeting of the FOMC is still weeks away, the Federal Reserve has been a topic of discussion again this week with the release of the minutes of the meeting held at the end of January. According to the notes there are a number of the members who are in favor of continuing to boost rates higher. That led to some speculation that there were decent odds that this would happen this next month but note the actual verbiage in the minutes “fairly soon” were less than definitive in regards to timing. In fact, it stated that due to the uncertainty surrounding potential tax cuts and other economic policies that could be presented by the new administration it could be “some time” before the outlook becomes clearer. That would not sound like the words of a group that is ready for immediate action. I suspect that this could at least partially explain the failure of the US Dollar to maintain strength so far this week. By no means have we collapsed just yet but I continue to believe that the strength over the past couple weeks has been little more than a technical bounce and look for this market to extend lower in the month ahead. If correct, it could be just the elixir commodities need to restore a little positive vigor.