The grain and soy markets will obviously take their direction tomorrow morning from the US Department of Agriculture report. The report is scheduled to be released at 7:30am CST, I have listed a few of the most anticipated numbers below along with my thoughts and comments.
Keep in mind I have spoken with hundreds of producers who found it tougher than ever this year to predict yields in their own fields, therefore I have to believe the US Department of Agriculture is facing a fairly daunting task, a slight move in either direction would not surprise me at this juncture.
If you are looking for specifics or extreme adjustments, I believe it will take more specific data, which the USDA more than likely will not have available until the end of year numbers are released in the January report.
Many producers have actually been surprised by their yields, and had no "real" accurate figures until the corn or soybeans were finally harvested. There was such extreme variances amongst fields and varieties that no one seemed to be able to get a real grip on yield forecasting.
I seriously doubt the US Department of Agriculture has been able to fair much better, so we should go into this report with the mindset that anything is possible. With this in mind, you have to believe regardless of tomorrow's data, the market will continue to keep some premium built into the price until the end-of-year specifics are revealed.
My point is the numbers could be released either way tomorrow and those on the opposite side will discount the numbers to some extent, opting to wait for "true" confirmation in the year-end report. My best overall guess is that the report is viewed as bullish corn over soybeans.
As for today, look for the trade to stay fairly range bound ahead of the numbers. The data below should give you a better idea of what I am thinking and what the trade will be looking for from the report tomorrow morning.
Corn Yield Estimate - The average trade guess is right around 147.8 bushels per acre (which would place us at a six-year low). Last month the USDA was at 148.1 bushels per acre. As you can see, most in the trade are looking for the USDA to lower their yield estimate. The range of guesses is between 145 on the low end to 149.5 on the high end. Some very well respected sources are leaning toward the low end of the range, but I am having a harder and harder time buying into those beliefs. I personally think producers saw their crop stabilize as of late and we will see very little adjustments to the downside. I would suspect a 147 yield number is about as far as we will go to the downside. I may be completely off base, and since we are still very conservatively long from below $6.00, a significant drop would be welcomed, I am just not sure I see it in the cards. If we get a smaller number, or a $0.30 to $0.40 cent rally tomorrow I think it would be a great selling opportunity for producers. Look to pull the trigger on more 2012 sales as well as some additional 2011 bushels. Those who are also speculating in the markets on the long side, may want to reward the rally by banking your profits and exiting your long positions. I would have to believe a bullish report will be an opportunity for the funds to be a seller and bank some profits. Do NOT chase the rally if one occurs! There are just too many bearish cards starting to stack up against us for me to envision a significant rally being able to hold.
Total Corn Crop - Last month the USDA estimated the total USDA crop at 12.433 billion bushels, this month the average trade guess is slightly lower and should come in around 12.380 billion bushels. The range of guesses was between 12.045 on the downside to 12.55 on the high side. You really can't be looking for any change in acreage as there was no FSA survey available for this report.
US Corn Ending Stocks - Average trade estimate for carryout is just a hair under 800 million bushels. Last month the USDA had it estimated at 866 million bushels, so the obvious consensus is lower. The range of guesses is from a low of around 690 million to a high of 900 million bushels.
Ethanol Usage - As usual the Ethanol Usage numbers will be highly scrutinized. Currently the USDA is estimating 5 billion bushels will be used to produce ethanol. With a recent increase in production there are some thinking this number could be adjusted higher, some are thinking +50 million bushels in this report, maybe even jumping by 100 million bushels by the year-end.
Feed Usage - Most seem to be expecting a +50 to 150 million bushel jump closer to 4.750 billion bushels, but with strong demand for DDGs and feed wheat being used in the feed rations it may actually limit corn’s gains in feed usage.
US Corn Exports - Many believe these numbers will be left unchanged, but there is also a strong argument being made by some well respected sources that US exports may actually be trimmed by some 100 million bushels to 1.5 billion.
Chinese Corn Exports - Currently the USDA is estimating China will import about 2 million metric tons of US corn. The trade is obviously looking for this number to increase as China has already booked this many bushels. The question is how much higher will the USDA move their estimates. This number is hard to judge with China in negotiations with Argentina, a larger Brazilian crop, and a huge discount of wheat to corn possibly altering demand.
World Corn Ending Stocks - Currently the USDA is estimating world ending stocks to be around 123.2 million, but the trade seems to be thinking this number will head lower to around 122.4 million depending on how the USDA views Chinese and Brazilian crop. The range of guesses is from 120 to 125 million, so this could be a real wild card. There is certainly better demand than is currently being forecasted, but bigger South American crops could easily offset these numbers.
Chinese Corn Production - Currently the USDA is estimating the Chinese crop at 182 million metric tons. The problem is some recent private surveys have estimated the crop closer to 189 million metric tons.
Brazilian Corn Production - Currently the USDA is estimating the Brazilian corn crop at 61 million metric tons. The US Ag attaché in Brazil has just recently raised its estimate of the country's 2011-12 corn crop to 64 million metric tons, so there is a strong chance the USDA may soon need to raise their estimates as well. They have also raised their Brazilian corn export forecast as well. Remember, there is a strong link between the the USDA attaché report and USDA report for Brazil...More so than other countries for whatever reason, so look for a bounce.
Argentine Corn Production - There is some thoughts that Argentine corn production could go from around 22 million metric tons this past year to as much as 29 million metric tons this year. The USDA is currently estimating Argentine production at 27.5 million metric tons.
Soybean Yield Estimate - Currently the USDA is estimating a yield of 41.5 bushels per acre, most in the trade seem to be thinking this number will remain "unchanged" or slightly lower to 41.4 bushels per acre. Personally, it wouldn't surprise me to see the number actually increase eventually to 42 bushels per acre by year-end. I just haven't heard from many producers who have been experiencing significant bean yield losses.
Total Soybean Crop - The USDA estimated last month we would produce 3.060 billion bushel of soybeans. That number is not really expected to change much, but it is still down considerably from last year's 3.33 billion bushels of soy harvested. If you remember we had an average yield last year of 43.5 bushels per acre. The range of estimates seems to be from 2.950 on the low side to 3.110 billion on the high side.
US Soybean Ending Stocks - The USDA is currently at 160 bushels per acre. Many in the trade are looking for this number to jump to 180 million bushels on less than favorable exports. The range of guesses I have heard are from a low of 150 million to a high of 225 million. This number will be highly anticipated. It wouldn't surprise me to see this number up above 200 million for this report and maybe even closer to 3000 million or even higher by year-end.
US Soybean Exports - The USDA is currently estimating US exports at 1.375 billion bushels. Most in the trade are looking for that number to fall between 1.300 to 1.350 billion. Most are expecting the report to cut 11/12 US soybean exports by 25-75 million bushels. I have heard some estimates though as low as 1.250 so be prepared.
Brazilian Soybean Production - Brazil last year produced 75.5 million metric tons, this coming season they should see a repeat performance at worst with many in the trade talking about a crop that could end up north of 78 million metric tons. Right now the USDA is estimating their production at just 73.5 million metric tons. I am just not sure they will bump the number in this report, so don't bank on it.
Argentina Soybean Production - Argentina produced just under 50 million metric tons last year, and now most everyone believes they will produce more, with some estimating a jump to 55 million metric tons. Currently the USDA is estimating their production at 53 million metric tons, so I doubt we will see any major adjustment at this time.
World Soybean Ending Stocks - This number should jump slightly higher, with most in the trade looking for a move from 63 million last month up above 63.5 million this month. Once again South American production will be the key. The range of guesses I have been hearing is from 62.5 on the low side to 65.5 million on the high side.
US Wheat Ending Stocks - Most in the trade seem to be thinking they will fall from 837 million this past month down to 817 million. The range of estimates is from 653 to 891 million.
Global Wheat Ending Stocks - Most are thinking this number will fall from 202.4 million last month to around 201.5 million this month. The range of guesses was from 195 to 204.5 million.
Thanks for reading, I hope this helps. Remember, this is only a small portion of my Daily Report that comes out every morning.
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