A Look Inside Today’s USDA Crop Report and “Risk-Off” Day in the Trade
May 11, 2011
As anticipated a "Bearish" report from the USDA is set to send the markets spiraling lower. I have been telling you for the past couple of weeks to be extremely cautious of the bearish implications that could be in this report for soybeans, where as the bearish corn data came as a bit of surprise. Front months in corn were big losers with the July and Sep contracts going limit down ending @ 6.77 and 6.51 respectively. New crop corn Dec ended down .26 cents @ 6.27. Some of the more surprising bearish news in corn was raising old crop ending stocks to 730 million from 635 million. Basically they took out 50 million in exports and added 5 million in imports to get this number. The trade didn’t seem to yet care that they lowered corn yield estimates from 161.7 to 158.7, which is obviously bullish corn. In terms of soybeans, it was quite bearish as has been the norm for beans lately. The trade really didn’t react that strongly, July soybeans held together pretty well going down .05 cents ending @ 13.32 and new crop Nov. down a half @ 13.22. I was thinking that the trade may actually dismiss any bearish implications from the USDA winter wheat numbers on thoughts that the crop has seen significantly more damage and stress in just the past couple of days. 100 degree temperatures, no rain and extremely windy conditions are all weather extremes the USDA was not able to account for in this report. This was not the case as July wheat ended down .40 cents @ 7.59. I still believe that once the market has a chance to digest these numbers the trade will start to refocus attention on the total number of corn acres lost to poor planting conditions (which I believe could be 2 million plus) as well as lower yield estimates. Maintain composure and look for a bounce in both corn and wheat once the market is able to gather its bearings. The only real chance soybeans have at this point is by being pulled higher by the other two.
Just to let you know that I am not the only one who still thinks we have a chance to move higher during the next few months despite this bearish USDA report, I have include the latest numbers Goldman Sachs just released. I am not even this bullish...lol! Hang in there.
3 month wheat forecast $8 vs. previous $7.75
6 month wheat forecast $8.35 vs. previous of $7.50
3 month corn forecast $8.60
6 month corn forecast $7.80
3 month bean forecast $15
6 month bean forecast $15.75
If you are not getting my free report make sure you get signed up by following the link below. You can also click the button below to follow my Team and I on Twitter and get daily updates on what is happening in the grain and livestock markets.
Send Me My Free Report