4 Market Experts Share Insight Ahead of Reports

July 10, 2014 07:06 AM
4 Market Experts Share Insight Ahead of Reports

USDA's will release its monthly Crop Production and World Agricultural Supply and Demand Estimates reports Friday, July 11, at 11 a.m. CDT.

What should farmers know going into these reports? Four market experts provide a rundown.

Bob UtterbackBob Utterback, Farm Journal Economist and president of Utterback Marketing

What is the old adage "rain makes grain"? Looking out the back door with today’s rain, the crop looks good. Corn in many fields is beginning to tassel, above shoulder high and looking to be a great crop. Many in the trade are guessing yields this fall could come in above 162 to 167 bushels per acre giving the United States a carryover above 2 billion. Demand is already becoming weak and the potential for a good global corn crop implies the corn prices have no reason to bounce.

Many producers are already facing a good crop and the new crop cash price below the $4 level hoping for a bounce into harvest or after the bins doors shut. The only problem I have with that scenario is what if everyone has a decent crop and demand continues to stay weak through the end of the year and throughout 2015.

Now is a time to reflect and decide where your bottom line is as to what price is break even for corn and how to enhance revenue if the cash price does not cover the input costs. The next few years without an event to spark the prices higher, is going to be difficult at best when it comes to pricing your crop.

Read Utterback's blog, "Outlook Today."

ted seifriedTed Seifried, vice president of the Zaner Ag Hedge Group

We think the July WASDE report could be quite bearish for corn and soybeans and neutral to bearish for wheat. When we plug in the new USDA planted acreage numbers we get a big production number for soybeans. Also, with Quarterly Grain Stocks numbers coming in higher than expected for corn and soybeans this could suggest demand is a little softer then expected and beginning stocks could be higher especially for corn.

The biggest surprise on this report could be the new crop soybean carry over number. With the sharp increase in soybeans acres it will be interesting to see how the USDA handles the increase in production. Will the USDA dramatically increase demand to offset the increase in production or will the USDA leave the demand side of the balance sheet unchanged and show us a huge increase in ending stocks? If USDA leaves the demand side of the equation mostly unchanged we could get a larger then expected carryover number, but if they feel demand could increase then it they could offset a good amount of the increase in production and ending stocks could come in below expectations.

Unless there is a major change in the weather pattern we think corn and soybeans prices could continue to decline while wheat prices may start to stabilize not far from current levels. We are currently projecting corn prices near $3.50, soybean prices near $9.75-$9.25 and Chicago wheat near $5.50.

Read Seifried's blog, "The Ted Spread."



dan hueberDaniel Hueber, general manager of The Hueber Report

While all the figures on Friday should be larger, with the already negative psychology of the market it may not be any worse than expectations. The trade is expecting a slight increase in the corn yield and little change in bean yields but with the boost in acreage, the bean production number will be huge nevertheless. I suspect the biggest challenge will be that whatever the report says, the trade will anticipate that the numbers are understated with the continuing good weather. Wheat should be a non-event but of course if that is the expectation there is always room for a surprise.

While unusual to see changes in the corn yield on the July report it is not unprecedented. The average trade estimate calls for not even a 1 bushels boost and I would not be surprised to see a 2 to 3 bushel increase. That is still within the range of estimates but would have to be considered negative. With beans on the other hand, any change or at least increase would be highly unlikely so a change would come as a surprise. The enormity of the size of the bean crop and the world ending stock numbers should be the albatross that continues to drag on this market.

Right now it is difficult to be anything but bearish and I am looking for December corn to head down to at least 3.75 and potentially the 3.50/3.30 zone. The gap left this week in November beans gives me a target of 10.19 and a dip below 10 would seem feasible if there are no weather issues in August.

Read Hueber's blog, "The Hueber Report."


Paul GeorgyPaul Georgy, president of Allendale, Inc.

Allendale thinks the standout adjustments on Friday’s Supply and Demand report for old corn could come in feed use, ethanol use and exports with a net increase in ending stocks. New crop corn will likely see adjustments in planted acres, harvested acres and possibly yield.

USDA is less likely to change soybean yields on the July report as they have made adjustments only one time out of the last 28 years. Ending stocks for new crop soybeans could reach 400 million bushels, more than 3 time current year ending stocks.

Old-crop soybeans are being watched closely on how USDA will handle the stocks situation due to actual export sales and domestic crush usage already above previous targets.

Read Georgy's blog, "The Allendale Wake-Up Call."

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