Big Crop Estimates Expected In August Crop Production Report

August 12, 2013 01:08 AM

What Traders are Talking About:

Overnight highlights: As of 6:00 a.m. CT, corn futures are steady to 3 cents lower, soybeans are 8 to 10 cents higher and wheat futures are mixed. Trade is expected to be light ahead of USDA's August crop reports at 11:00 a.m. CT. Cattle and hog futures are expected to open mixed this morning.


* August crop reports on tap this morning. Traders are anticipating USDA's first survey-based corn and soybean crop estimates to come in at 14.005 billion bu. and 3.336 billion bu., respectively. If realized, that would be a record corn crop and just shy of a record soybean crop. In the Supply & Demand Report, traders expect very modest downward revisions to the old-crop corn and soybean carryover estimates. For 2013-14, traders expect corn carryover to rise to 1.970 billion bu., soybean ending stocks to decline to 263 million bu. and wheat carryover to decline very modestly to 572 million bushels.

The long and short of it: Given bearish attitudes, it would likely take crop estimates under the bottom end of the guess range -- 13.485 billion bu. for corn and 3.226 billion bu. for soybeans -- to get a strong bullish reaction.

* Funds build short position in corn, continue to trim length in soybeans. Managed money (funds) continued to build a record short position in the corn market, moving to net short 113,072 contracts of futures and options as of the week ended Aug. 6. For soybeans, funds trimmed their long position to 43,580 contracts of futures and options. Funds are heavily short SRW (Chicago) wheat futures -- 47,335 contracts of futures and options.

The long and short of it: Fund positioning signals attitudes are very bearish in corn and wheat, and tilting toward a clear bearish stance in soybeans. A bullish catalyst is needed to fuel a shift in attitude.

* Hit-and-miss rains. Scattered rains were seen across areas of the western Corn Belt overnight. Those rains are dissipating as they slide east. Forecasts call for more scattered rainfall chances today, but the remainder of the week is expected to be dry. Traders aren't likely to get concerned, however, as forecasts continue to call for below-normal temps this week. The computer-generated National Weather Service (NWS) forecast for Aug. 17-21 calls for above-normal temps over the northern half of the Corn Belt, while precip is expected to be below normal generally Belt-wide. That's the first NWS forecast calling for hot and dry conditions in quite some time. It will be interesting to see if that remains the case as there's human interpretation of the computer models.

The long and short of it: Many areas that couldn't get rains to stop this spring now can't seem to buy a rain. Unless forecasts show an extended period of hot temps, however, traders won't likely show much concern.


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