Analysts to Watch for Ending Stocks in USDA January Reports

January 9, 2017 03:24 PM
 
USDA Grain Unloader

Analysts don’t expect major adjustments by USDA in the January crop production report, but they will be paying very close attention to its estimates on Thursday.

USDA will release four reports: Crop Production Annual Summary, World Agricultural Supply and Demand Estimates, Quarterly Grain Stocks and Winter Wheat Seedings.

Forecasts leaning bearish

“Ultimately we expect growing balance sheets for corn and soybeans as a combination of reduced feed, lower corn exports, and rising soybean yields contribute to expanded ending stocks,” says Mike North, president of Commodity Risk Management Group in Platteville, Wis. “We expect little changes to wheat.”

DuWayne Bosse, of Bolt Marketing in Britton, S.D., holds a similar view.

“Generally, I’m looking for a bearish report for all grains, but I don’t think the market will be shocked … It is widely known that we have large supplies of corn, soybeans, and wheat,” notes Bosse. 


Here are analysts’ estimates for the WASDE report, according to a Reuters’ survey:

Corn

Production: 15.196 billion bushels

Yield: 175.1 bu. per acre

Ending stocks: 2.385 billion bushels

Soybeans 

Production: 4.374 billion bushels

Yield: 52.7 bu. per acre

Ending stocks: 468 million bushels

Wheat

Ending stocks:  1.148 billion bushels


For its part, INTL FCStone, of Kansas City, Mo., puts corn ending estimates at 2.494 billion bushels, "due to some demand concerns if South America benefits from favorable weather," says Arlan Suderman, the firm's chief commodities economist.

The trade will also be closely watching  numbers in the USDA's Quarterly Grains report.

“Feed usage will be the watch point in corn,” says North. “A mild first quarter will likely lead to reduced usage as strong pasture conditions allowed for the ongoing trend of longer backgrounding periods to continue.”

Analysts are also gauging how the market could react to Thursday’s reports.

“I expect corn and wheat to hold up much better than beans potentially. If bean yields or carryout increases and weather forecast for South America is non-threatening, beans could get hit hard,” points out analyst Chip Nellinger, of Blue Reef Agri-Marketing, in Morton, Ill.

So what should farmers do?

“Farmers need to manage risk before this report,” advises Bosse.  “Soybean prices are profitable and about $1.00 higher than they were at this time last year.  That profit should be protected even if they 'think' markets are going higher.”

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