Big USDA Report Day

March 28, 2013 12:38 AM
 

What Traders are Talking About:


* Big USDA report day. The much-anticipated Prospective Plantings Report is finally here, meaning we'll know later this morning how much of each crop producers intend to plant. Keep in mind, these are intentions, which will change when the final crop mix is determined, but they will give traders a good starting point from which to add or subtract acres. Recently, corn acreage expectations have been slipping, while soybean acreage expectations have been on the rise. Whether that's reflected in this morning's survey-based data from USDA will be the key. While planting intentions have gotten most of the pre-report hype, don't forget about quarterly grain stocks. That data has provided plenty of fireworks, especially for the corn market since June 2010. The avearge pre-report expectations put corn acreage at 97.3 million, soybean acreage at 78.5 million, all wheat acreage at 56.4 million (spring wheat at 12.5 million) and cotton acreage at 10.08 million. March 1 grain stocks are guessed at 5.03 billion bu. for corn, 947 million for soybeans and 1.167 billion bu. for wheat.

The long and short of it: There will be some surprises in USDA's data, there always are. This data should set the price tone for at least the first half of spring.

* China continuing to buy U.S. new-crop corn. Chinese importers have purchased in excess of 2 MMT of new-crop U.S. corn, according to China National Grain and Oils Information Center (CNGOIC). That total includes deals signed or intended to be signed. CNGOIC did not give a breakdown of purchases by private firms and state-owned firms, but it's likely most of the purchases have been by private firms. For 2013, China has allocated 7.2 MMT of corn import quotas, with 40% (2.88 MMT) allocated to private firms and the rest being for state-owned firms.

The long and short of it: As long as U.S. new-crop prices are below domestic prices, Chinese importers have incentive to buy U.S. corn.

* U.S. hog herd seen expanding. USDA's Quarterly Hogs & Pigs Report this afternoon is expected to show the U.S. hog herd is expanding, with most categories guessed just above year-ago levels. The average pre-report guesses put All Hogs and Pigs at 100.7%, Kept for Breeding at 100.3%, Kept for Marketing at 100.8% and the Dec.-Feb. pig crop at 101.2% of year-ago levels.

The long and short of it: Given modestly lower feed costs that seen last summer and fall, it shouldn't be surprising to see expansion of the U.S. hog herd. After all, there wasn't active contraction when feed prices were record-high. Still, the hog industry doesn't need to expand.

 

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