Markets Await USDA's First 2012-13 Projections

February 23, 2012 12:38 AM

What Traders are Talking About:

* USDA Outlook Forum starts today. USDA kicks off its annual Outlook Forum this morning with a keynote address from Sec. Tom Vilsack. But the real attention will be on Chief Economist Joe Glauber as he presents the ag outlook, starting at 7:40 a.m. CT. Glauber is expected to highlight acreage, production and ending stocks projections for the 2012-13 marketing year. On Friday morning, USDA analysts will release the first full balance sheets for 2012-13.

The long and short of it: Most of traders' attention is on corn. It's expected corn acres will be around 94 million, with USDA likely to use a trendline yield and project record production. In theory, that would "solve" the corn supply situation. But weather will have a major impact on whether these initial projections come to fruition.

* Rains fall on southern Brazil. Rains of 0.5 to 1 inch fell across areas of Parana and Rio Grande do Sul (RGDS) in southern Brazil Wednesday. More precip is forecast for Parana today, with weekend rains likely across areas of RGDS. The rains will generally help the filling soybean crop, but may be just enough to stabilize conditions in areas hit hardest by drought after extended heat and dryness.

The long and short of it: With rains falling in southern Brazil, even if they are too late for some of the crop, it will be harder to generate sustained buying interest in soybean futures.

* Euro-zone seen falling into recession. The European Commission today said the 17-member euro-zone is now expected to fall into recession this year, with contraction forecast at 0.3%. The overall European Union is seen unchanged in terms of economic growth in 2012 compared to 2011. In November, the commission forecast 0.5% expansion in the euro-zone and 0.6% growth in the EU economy. Meanwhile, German business sentiment rose for a fourth consecutive month in February, according to a survey of businesses conducted by Munich-based Ifo. The think-tank's index rose to 109.6 in February from 108.3 in January, giving some hope the euro-zone's largest economy will be able to avoid recession despite economic struggles throughout the region.

The long and short of it: While German business sentiment continues to inch higher, there are concerns throughout Europe. Greece's new austerity measures and bailout package isn't likely to solve the country's problems. Plus, there are serious concerns in Italy, Spain, Portugal and Ireland.


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