Where Do Grains Move From Here?
Nov 09, 2011
As you know, the highly anticipated USDA report came out at 7:30am this morning and shook the grains up a bit before they all finished down on the day.
Below is a quick look at a few of the more important numbers and the particular adjustments made by the USDA. The corn yield was a bit of a surprise being dropped to 146.7, but the ending stocks were higher than many had thought, and there was no jump in ethanol or feed usage. In fact, feed usage was actually lowered. I wouldn't advise chasing any rallies at this time.
* Don't foget that Europe is obviously still at the forefront of everyone's thoughts, with political and financial uncertainty in Greece, Italy and possibly even Spain. It is of my opinion that we are beyond what the European politicians are saying and we must carefully watch what the growth, inflation, and deficit numbers are saying out of Europe in the coming weeks. I promise you now, if a recession starts to spread through Spain, France or even Germany the budgets and balance sheets will get extremely difficult for Italy and others to maintain. What many readers may not realize is Italy's GDP (economy) is actually larger than that of Canada, larger than Russia, larger than India, and larger than Australia. My point is, if I were to tell you any of the four countries mentioned above were in jeopardy of a default or going under there would be a much greater sense of fear and urgency. Understand, Italy is a big deal!
Corn Yield Estimate - Reported at 146.7 vs 148.1 last month. The average trade guess was right around 147.8 bushels per acre. The range of guesses was between 145 on the low end to 149.5 on the high end.
Total Corn Crop - Reported at 12.310 vs 12.433 billion bushels last month. The average trade guess came in around 12.380 billion bushels. The range of guesses was between 12.045 on the downside to 12.55 on the high side. There was no FSA survey available for this report so hence very little change.
US Corn Ending Stocks - Reported at 843 vs 866 million bushels last month. Average trade guess was just a hair under 800 million bushels. The range of guesses is from a low of around 690 million to a high of 900 million bushels.
Ethanol Usage - Reported at 5 billion vs 5 billion bushels last month. Some were thinking the number could have been adjusted higher by +50 to +100 million.
Feed Usage - Reported at 4.6 vs 4.7 billion bushels last month. Most were expecting a +50 to 150 million bushel jump so a cut was unexpected to say the least.
US Corn Exports - Reported at "unchanged" vs 1.6 billion last month. Many thought these numbers would be left unchanged, but some well respected sources were thinking they would be trimmed by some 100 million bushels to 1.5 billion.
Chinese Corn Import - Reported at 3 vs 2 million metric tons last month. The trade was looking for the number to increase, but no one really knew by how much 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 - Reported at 121.6 vs 123.2 million metric tons. The average trade guess was thinking this number would be down around 122.4 million. The range of guesses were from 120 to 125 million. Bigger South American crops were thought to have offset some of the gains in demand.
Chinese Corn Production - Reported at 184.5 vs 182 million metric tons last month. Some recent private surveys estimated the crop closer to 189 million metric tons, so there were some thoughts the USDA could have bumped this number up.
Brazilian Corn Production - Reported at 61 vs 61 million metric tons last month. The US Ag attaché recently raised its estimate of the country's 2011-12 corn crop to 64 million metric tons, so there was a strong chance the USDA would follow suit.
Argentine Corn Production - Reported at 29 vs 27.5 million metric tons. Last year Argentina corn production came in around 22 million metric tons, some are estimating the crop could be as large as 29.5 million metric tons this year, but with the USDA already at 27.5 million metric tons they will want to see more confirmation before bumping even higher.
Soybean Yield Estimate - Reported at 41.3 vs 41.5 bushels per acre last month. Most in the trade seemed to be thinking this number would remain "unchanged" or slightly lower to 41.4 bushels per acre. Personally, I thought we might actually see this number increase, eventually to 42 bushels per acre by year-end.
Total Soybean Crop - Reported at 3.046 vs 3.060 billion bushel estimated last month. This number was not really expected to change much with the range of estimates from 2.950 on the low side to 3.110 billion on the high side.
US Soybean Ending Stocks - Reported at 195 vs 160 bushels per acre estimated last month. Many in the trade are looking for this number to jump to 180 million bushels. The range of guesses I have heard are from a low of 150 million to a high of 225 million. I personally thought we would be close to 200 million bushels for this report, and maybe even closer to 3000 million by year-end.
US Soybean Exports - Reported at 1.325 vs 1.375 billion bushels reported last month. Most in the trade were looking for that number to fall between 1.300 to 1.350 billion. Most were expecting the report to cut 11/12 US soybean exports by 25-75 million bushels.
Brazilian Soybean Production - Reported at 75 vs 73.5 million metric tons being estimated last month. Some in the trade talking about a crop that could end up north of 78 million metric tons. As I indicated yesterday most in the trade doubted they would adjust this number or the Argentine soybean number in this report.
Argentina Soybean Production - Reported at 52 vs 53 million metric tons estimated last month. Argentina produced just under 50 million metric tons last year, some were estimating a jump to 55 million metric tons coming down the pipe eventually, so this cut to 52 was a surprise.
World Soybean Ending Stocks - Reported at 63.56 vs 63 million last month. Most were looking for this number to jump up to 63.5 million this month. 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 - Reported at 828 vs 837 million estimated last month. Most in the trade were looking for the number to fall to 817 million. The range of estimates was from 653 to 891 million.
Global Wheat Ending Stocks - Reported at 202.6 vs 202.4 million estimated last month. Most were looking for the number to fall to around 201.5 million. 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. For my thoughts on how the USDA numbers are impacting prices moving forward, go ahead and sign-up for the 30-Day trial of my daily report, no obligation. Simply sign-up Here Van Trump Report