USDA To Release Preliminary Outlook For 2013-14

February 20, 2013 11:56 PM

What Traders are Talking About:

* Focus on USDA. USDA's Annual Outlook Forum kicks off today outside of Washington DC. Over the next two days, USDA will lay out its outlook and preliminary Supply & Demand projections for 2013-14. Of note today, USDA Chief Economist Joe Glauber will give his outlook for the upcoming marketing year. Glauber may go into detail in his presentation, but in recent years has painted a broader picture for the year ahead, leaving the details of the balance sheets until Friday morning. Markets will pay close attention to USDA's projections as traders try to get a gauge of the preliminary fundamental outlook for 2013-14.

The long and short of it: Corn acreage and yield will be the market's primary focal point. USDA is likely to project corn plantings higher than the 96 million acres from its long-term projections (budgetary numbers) released last week, although the yield may be trimmed from the 163.5-bu.-per-acre figure last week.

* Brazilian pork worker protests planned. Brazilian stevedores (port workers) are planning to strike Friday morning and next Tuesday afternoon in protest to the government's plan to privatize ports, which they feel will eliminate some jobs. These are just token protests, but as I mentioned yesterday, labor unrest could become an important issue if there are prolonged strikes as Brazil's soybean shipping season is about to get underway. If China (and others) sense any major shipping delays out of Brazil (or Argentina), they will have to turn to the U.S. for supplies.

The long and short of it: Temporary work stoppages are common this time of year in Brazil (and Argentina). This will become a market factor if there are prolonged strikes by port workers.

* Risk-on movement slowed. Minutes from the Fed's Jan. 29-30 Federal Open Market Committee (FOMC) meeting that were released Wednesday, showed a number of board members favor ending the Fed's aggressive bond-buying program as the economy improves. A waning commitment to the quantitative easing program could limit investors’ willingness to aggressively add risk. And then overnight, some disappointing economic data came out of the euro-zone, further lessening the recent risk-on movement.

The long and short of it: While there has been a recent improvement in investor risk appetite, the FOMC meeting minutes and disappointing euro-zone data are renewing concerns about aggressively adding risk.


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