Elections and USDA Reports Highlight This Week

November 5, 2012 12:01 AM

What Traders are Talking About:

* Key week ahead. On Tuesday, Americans will determine the leadership of our country for the next four years. Polls are still too close to call, but most give President Obama a slight advantage to win reelection. Obama and GOP challenger Mitt Romney will make one final push with campaign stops in multiple states today. Meanwhile, USDA will update its crop estimates and supply/demand balance sheets Friday morning, which will help shape the course of price action in the weeks/months to come.

The long and short of it: Tuesday's elections have a broader and longer-term impact on our country. But from the grain markets' perspective, USDA's reports are the key event this week.

* Bigger crop estimates expected. History strongly suggests USDA's corn crop estimate will be smaller than month-ago, while the soybean crop is likely to increase. But most pre-report estimates signal traders are looking for both the corn and soybean crop estimates to increase from last month. Two of the most highly visible pre-report estimates are from FC Stone and Informa Economics. FC Stone sees the corn crop at 10.881 billion bu. (124 bu. per acre yield) and the soybean crop at 2.959 billion bu. (39.1 bu. yield). Informa Economics forecasts the corn crop at 10.738 billion bu. (122.4 bu. yield) and the soybean crop at 2.925 billion bu. (38.6 bu. yield). In October, USDA pegged the corn crop at 10.706 billion bu. (122 bu. yield) and the soybean crop at 2.860 billion bu. (37.8 bu. yield).

The long and short of it: Expectations for bigger crop estimates are limiting buying interest, especially in the soybean market, ahead of Friday's reports.

* Improved South American weather outlook. Dry areas in central and eastern production regions in Brazil got some rains over the weekend and more are forecast throughout this week. Meanwhile, wet areas in southern Brazil and central Argentina were generally dry over the weekend. Forecasts remain dry for southern Brazil through the week, but rains are expected to return to central Argentina late this week.

The long and short of it: The improved weather should allow for an increase in planting pace in both Argentina and Brazil. While planting delays for soybeans got attention early last week, delays at this time of year typically suggest soybeans could pick up some intended corn acres.



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