Could The Upcoming USDA Report Hold Some Surprises?
Jun 07, 2011
Most generally all eyes are on the end of month USDA report in June, this time around however traders are increasingly concerned about the data that could be unveiled on Thursday in the June "Supply-Demand" report. There are many now speculating that we might actually see a slight reduction and possibly even an adjustment in yield. A few weeks ago, most thought we would see no more than simply an update in corn and bean ending stocks. You have to believe if the USDA does revise its yield and acreage estimates in any form or fashion, they will be tipping their hand to possibly even further moves in that direction at the end of June. I don't need to point out the fact that the Bulls are calling for massive reductions in both corn acres planted and the projected yield. The USDA might be able to accommodate their request in corn acres planted as new data coming in might provide them with enough evidence to go ahead and reduce the acres by some small amount. Especially now with more signs of flooding along the Missouri River. If I were the USDA, I would prefer to make a few smaller cuts along the way rather than one giant one down the road. This makes it look like you at least have some idea that things are changing, rather than it appearing to hit you all at once like a ton of bricks. If cuts in corn acreage happen, the first place to look will obviously be in Ohio and North Dakota. The current acreage is still at 92.2 million acres for corn. As I have been reporting, many now have that number significantly lower. Some estimating as low as 85 million acres. I am no where close to that number, felling more comfortable somewhere between 90 and 91 million. I remind you however, with this many acres in question no one, including myself, can have a real strong gauge on this thing, that is what makes any number possible. Many trusted and well respected sources are well below my estimates. I just think at these prices and with so much leg work already invested, producers are going to try and plant as much corn as possible. Now obviously what the yield comes in at will be a serious question mark. Right now, the USDA is at 158.7 bushels per acre, already down significantly from their original 161.7 estimate. Having made a cut already makes it tough to rule out another entirely, but I just can't imagine another extreme type cut coming this early. I personally doubt we see any real surprises coming from either yields or acreage. The issue I see is if they decide to cut overall "demand" for corn. With everyone looking over their right shoulder for the USDA to issue "bullish" news, there is the outside chance they pass us by on the left by issuing "bearish" news. With corn trading at substantially higher prices, export totals may now be in question. In addition, the USDA might question long-term ethanol demand and livestock feed usage. All I am saying is don't be surprised if the USDA gives the "Bulls" and the "Bears" a little equal love in this next report. Don't forget wheat will see some very serious data, and all eyes will be waiting to see what reductions are being made in Hard Red Wheat production numbers here in the US, and what type of reduction might be in order for both Canadian and European wheat production.
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