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Grain Hedge

RSS By: Brock Schimbeno, AgWeb.com

Grain Hedge is a self-directed discount brokerage that saves farmers money when trading in the futures and options market. For $7 commissions per side producers can execute their marketing strategy with authority, any time the markets trade.

Revisions to USDA Estimates to be a Catalyst?

Nov 07, 2011

There has been a relative lack of fresh fundamental news for the better part of a month in the grain pits.  As expected, the grains have generally traded in a sideways to drifting-lower pattern as a result.  The markets are really looking for a catalyst to spark a move higher and out of the recent ranges.  Even though corn and soybean harvest is nearly complete at 87% and 92% respectively, the supply side of the pricing equation is still up in the air. 

Wednesday brings us the latest round of USDA/WASDE reports for the grain markets to digest.  The general consensus of analysts is for revisions lower in both total production and yield for corn and soybeans.  The average guess has corn production slipping 52 million bushels and yield falling 4/10ths of a bushel to 147.7 bushels per acre.  Estimates varied from 12.049 billion bushels to 12.549 billion bushels on production, while yield estimates ranged from 145 bushels per acre to 149.5 bushels per acre.  Soybeans had analysts guessing in much tighter ranges.  Production is estimated between 2.951 billion bushels and 3.110 billion bushels.  Yield estimates range from 40.4 bushels per acre on the lower end to 42.2 bushels per acre on the higher.  If the average of the analysts comes to realization, this could shape up to be a moderately bullish scenario for corn and soybeans.  Ending stocks could prove to be the market mover, however.

Ending stocks for corn on average is looking to fall by 71 million bushels to 795 million bushels with a range of 692-900 million bushels.  This would add to the bullish sentiment that is estimated for production.  Soybeans, on the other hand, are looking for ending stocks to be revised higher by 22 million bushels to 182 million bushels with a range of 150-254 million bushels.  This would have a neutralizing effect on a slightly bullish production estimate.

If these average estimates are realized, then a moderately bullish reaction in corn and mostly neutral reaction in soybeans is to be expected.  In tomorrow’s Technical Tuesday edition, we’ll examine the price areas that will provide resistance and support in the post-report session.  GrainTV will air tomorrow as well at 9:25 AM CT at www.graintv.com.  For more information about this or our other services, please sign up for a free demo!

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