USDA Reports Today, Gov't Shutdown Looming

September 30, 2013 01:04 AM

What Traders are Talking About:

Overnight highlights: As of 6:00 a.m. CT, corn futures are around a 1 cent higher, soybeans are 3 to 7 cents lower and wheat futures are mixed. Pre-report positioning will limit trade this morning as traders won't likely add new positions ahead of USDA's reports. Cattle futures are expected to open steady to firmer, while hogs are seen opening under heavy pressure.


* Key USDA report data out today. USDA's Quarterly Grain Stocks Report is the headliner. That's the report that has historically "found" more bushels of corn and soybeans than the World Agricultural Outlook Board has indicated in its September Supply & Demand Report, with the real shockers being greater-than-expected Sept. 1 corn stocks. Therefore, I wouldn't be shocked if USDA's Sept. 1 corn and soybean stocks come in higher than the average trade guesses of 688 million bu. and 126 million bu., respectively. Those Sept. 1 stocks set final 2012-13 carryover for corn and soybeans. USDA will also release its Annual Small Grains Summary, which will be the final estimate of the 2013 wheat crop. Based on the average pre-report guess, traders are expecting the wheat crop estimate to rise slightly to 2.121 billion bushels.

The long and short of it: Sept. 1 stocks, specifically corn stocks, will provide the "read" on this morning's report data.

* Gov't shutdown looms. Lawmakers have taken it down to the wire in getting a deal to keep the government funded as Fiscal Year 2014 starts tomorrow. Without a deal, the government would shut down until some kind of resolution is reached. While an 11th-hour agreement is still possible, plans are in place for what would and wouldn't happen if there is a temporary shutdown. Whether a government shutdown would affect the release of
USDA reports depends on how long the shutdown would last. USDA’s Crop Production and Supply & Demand Reports that are due to be released Oct. 11 would still likely come out on schedule if a shutdown would last only one or two days. Food and meat inspectors are expected to be classified as essential personnel, meaning they would continue to work through a government shutdown.

The long and short of it: It appears a temporary shutdown is coming, though any impact on ag markets should be limited. The greater impact is likely to be felt on financial markets.

* There's your top in the hog market. USDA's Quarterly Hogs & Pigs Report showed nearly all categories higher than expected. The U.S. hog inventory as of Sept. 1, which USDA put at 68.360 million head, came in 188,000 head higher than year-ago and 1.142 million head more than the average pre-report trade guess suggested. That's a huge miss. The bigger hog inventory was largely driven by a bigger-than-expected summer pig crop and a continued rise in the number of pigs per litter despite the spread of porcine epidemic diarrhea virus (PEDV). The bigger-than-expected market hog inventory suggests slaughter will run roughly 1% above year-ago through the first quarter of next year.

The long and short of it: This report data should put a top in the hog market unless traders fade the data.


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