Sep 30, 2014
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Cash Grain Insights

RSS By: Kevin McNew, AgWeb.com

Kevin McNew is President of Grain Hedge and Geograin. McNew was raised on a farm in central Oklahoma and received his bachelor’s degree from Oklahoma State University, and master’s and Ph.D. degrees in Economics from North Carolina State University. For over a decade, he was a Professor of Economics at the University of Maryland and Montana State University, focusing on commodity markets. He has received numerous academic awards for his research and outreach work, and was (and still is) widely regarded for boiling down complex economic issues into easy-to-understand concepts for applied life.

 

WASDE Report Reaction

Jun 11, 2014

USDA REPORT REACTION

 

Grains are trading lower in Chicago following this morning’s USDA report. Ending stocks came out larger than expected for new crop corn, soybeans and wheat. Old crop ending stocks came in below expectations for corn and soybeans while wheat was reported larger than trade expectations.

2014/15 U.S. Ending Stocks (Million Bushels)

 

May
Reported

June
Expected

June

Reported

Corn

1,726

1,716

1,726

Soybeans

330

319

325

Wheat

540

552

574

 

New crop corn ending stocks were left unchanged from the May report. Not surprisingly given crop conditions, yield was left unchanged at 165.3 bushels per acre for corn. This report will do little to support sagging corn futures, with key technical support being tested at $4.40. This market has traded steadily lower since the May 9th WASDE report so be cautious around these support levels. Despite the fact that we missed the average analyst expectation for this June report, the market has already been baking ideal growing conditions into price over the last month. As we get closer to major support at $4.34, be cautious of a sharp bounce or short covering rally. If however, we do close below $4.34 chances are good this corn market is ready to move another leg lower.

New crop soybean ending stocks were lowered by 5 million bushels to a projected carryout of 325 million bushels for the new crop. Yield and planted acreage were left unchanged, and the lower carryout number was a result of 5 million bushels being taken from old crop carryout. This morning’s report provided little direction for soybean traders and the next major report will be the June 30th acreage numbers.

2013/14 U.S. Ending Stocks (Million Bushels)

 

May Reported

June Expected

June Difference

Corn

1,146

1,170

1,146

Soybeans

130

127

125

Wheat

583

590

593

 

For the old crop balance sheet, crushings were raised 5 million bushels for old crop soybeans, the only balance sheet item changed from the May report. This lowered projected ending stocks by 5 million bushels to 125 million for the 2013/14 marketing year. This was slightly below trade expectations and is working to strengthen the July contract compared to November. At the moment we see the July/November soybean spread widening by 6 cents to $2.37 per bushel.

Corn ending stocks were left unchanged from the May report, coming in below trade expectations for ending stocks to be raised by 30 million bushels. Similarly to soybeans, today’s numbers are supporting the July corn contract with respect to the new crop, December, contract.

Wheat ending were raised 10 million bushels on net, 3 million bushels ahead of trade expectations. Imports were down 5 million bushels, food usage down 10 million bushels, and exports lowered 5 million bushels in this morning report. Wheat futures are trading lower in Chicago, Kansas City, and Minneapolis following the report.

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