Analysts Brace for Bearish News in Grain Stocks

March 31, 2016 05:00 AM
Analysts Brace for Bearish News in Grain Stocks

Will USDA’s quarterly Grain Stocks report bring bearish market when it comes out on Thursday?

Some traders think so, even though a separate report—Prospective Plantings--often gets more attention.

“Generally, the trade is looking for a bearish report, with quarterly stocks up year-over-year for all three major grain markets,” said DuWayne Bosse, of Bolt Marketing in Britton, S.D.

The grain stocks report, which tracks the last three months of corn, feed and residuals, will be released Thursday along with farmers’ planting intentions for 2016.

Analysts expect to see the highest U.S. soybean stocks figure for March since 2007 and the highest March 1 corn stocks since 1987. The trade’s average estimates for various grain stocks are:

  • Corn: 7.798 billion bushels.
  • Soybeans: 1.557 billion bushels.
  • Wheat: 1.354 billion bushels.

“The acreage report gets the headlines, but the quarterly stocks report will have a quicker and more dramatic effect on prices,” said Bosse.

“The acreage report is only planting intentions.  Intentions can still be changed,” he cautioned. “For example, I intended to get up early and work out this morning, but it just didn’t happen.”

Rich Nelson, chief strategist at Allendale in McHenry, Ill., suspects that neither of the reports will produce any significant moves in the market, given what is known already.

Of course, reports can always have some unexpected information. “The big surprise for corn certainly could come from the (grain stocks) numbers,” said Nelson. “On corn, you have demand from feed residuals, ethanol and exports.”

He offered additional information on an Allendale webinar previewing the report. “The main message in this quarter is that you have a pretty steep change in usage,” Nelson said.

The grain stocks data is not expected to boost soybeans, which already have already seen a good rally driven by falling palm oil production,  according to Nelson.



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Spell Check

Chappell, NE
3/31/2016 10:53 AM

  Those poor, poor analysts! Let's all shed big tears for them if they bother to come back after lunch break.


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