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April 10 Reports: Focus on Corn, Soybean Carryout

April 9, 2012
By: Sara Schafer, Farm Journal Media Business and Crops Editor
USDA   pile of corn
  

Market experts weigh in on what big news could come out of tomorrow’s reports.

 

Tomorrow at 7:30 CDT, USDA will release its April Crop Production and World Supply and Demand Estimates (WASDE).
 
Following the market-moving March 30 reports, many are asking: Will this round of reports contain any new information?
 
Joe Vaclavik, Senior VP at Straits Financial, says many producers are brushing off tomorrow’s USDA report as being just a footnote to the March 30th report. "Tomorrow’s report has just as much potential as any to have an adverse impact on the market."
 
He says farmers should consider hedging both old and new crop soybean production at current levels, and option strategies are more than viable given the recent rally. 
 
Paul Georgy, president/CEO of Allendale, Inc., says traders are looking for sizeable reduction in old crop corn and bean ending stocks in tomorrow’s reports. "This should keep the markets firm into that report."
 
He says old-crop corn ending stocks is a huge guess right now and many believe USDA will drop soybean ending stocks due to increased exports to China and a short South American bean crop. For wheat, he says, there will be plenty ending stocks in wheat.
 
Greg Wagner, of GWX – Ag Advisors, says tomorrow’s reports should broadly reinforce the price supportive aspects of the March 30 reports. "Just as markets trend, building on new information, so do major USDA reports."
 
Wagner outlines several key points in tomorrow’s reports:
 
  • It is THE first platform for USDA to reconcile 2011/12 end stock levels for corn, soybeans, and wheat with across-the-board greater than expected 2nd Quarter use.   
  • Old crop corn and soybean end stocks will contract further, while any positive impact of a downward revision in wheat stocks will be muted near-term by both domestic and global supply considerations. Again, this is based on physical supply as of March 1st, as reflected in the March 30 Grain Stocks report.
  • In addition, given the ongoing pace of corn and soy exports, both these line items on the demand side of the 2011/12 balance sheet are already positioned as prime candidates for upward revisions. It is when, (not if) that occurs end stock levels will decline further.
 
"Tuesday’s April WASDE is more likely than not to serve to positively reinforce recent price gains in old crop corn and old/new crop soybeans," he says. "Producers need to be aware that demand rationing rallies can also be regarded as demand destruction. The process takes time with neither end-user nor producer having the luxury of becoming complacent in the current market."
 
For More Information
Following the report releases at 7:30 a.m. (CDT), find full report data, news and analysis at AgWeb.com
 
Read more of these market experts’ insights with their blogs:
 
 
Straits Grains by Joe Vaclavik
 

 


 

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RELATED TOPICS: Corn, Soybeans, Marketing, USDA, Analysis, Exports

 
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