USDA's June S&D, Crop Production Reports On Tap

June 12, 2013 12:53 AM

What Traders are Talking About:

Overnight highlights: As of 6:00 a.m. CT, corn futures are fractionally to 2 cents lower, soybeans are 6 to 11 cents higher in old-crop contracts and mixed in new-crop contracts, while wheat futures are 1 to 7 cents lower with Chicago contracts leading declines. Light trade is expected ahead of USDA's reports later this morning. Cattle and hog futures are expected to open steady to firmer this morning.


* USDA reports out later this morning. USDA will update its old- and new-crop balance sheets and issue its second winter wheat production estimate at 11 a.m. CT. Only minor changes are expected to old-crop carryover estimates for corn, soybeans and wheat. For the 2013-14 marketing year, focus will be on what USDA does with its corn production projection and how that impacts carryover. Due to severe planting delays, some are anticipating a lower planted acreage projection, but I believe the World Board will wait until after it has planted acreage data from NASS at the end of the month before making an adjustment on that front. More likely, USDA will trim its yield forecast even further below trendline (was already around 5 bu. per acre below trend in May). A downward yield adjustment should also be seen on soybeans given planting delays, especially since USDA had a record yield plugged in last month. For 2013-14, corn carryover is guessed at 1.758 billion bu. (2.004 billion bu. in May), soybean ending stocks are guessed at 273 million bu. (265 million bu. last month) and wheat carryover is guessed at 634 million bushels (670 million bu. in May). In the Crop Production Report, traders are expecting the winter wheat crop to be 1.457 billion bu., with HRW at 743 million bu., SRW at 506 million bu. and white winter wheat at 208 million bushels.

The long and short of it: USDA's report data will set the price tone the final two-plus hours today. But barring any major surprises, traders are more interested in what USDA has to say on planted acreage at the end of the month and on weather as they realize USDA's new-crop projections are just guesses at this stage.

* ABARES raises Aussie wheat crop forecast. The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) raised its 2013-14 Australian wheat crop estimate to 25.399 MMT from 24.9 MMT in March. Australian producers are expected to plant more acreage to wheat than previously expected and extended weather forecasts call for above-normal precip across Western Australia and much of the key production areas in eastern Australia. The Aussie wheat crop is now forecast to be the fourth biggest on record and up 15% from last year's production of 22.077 MMT.

The long and short of it: Australia will be a major contributor to what is expected to be record world wheat production in 2013-14, which will keep wheat futures on the defensive.

* Argy farmers to strike starting Saturday. Argentine farmers will halt grain sales from Saturday through next Wednesday in protest of government ag policies, according to the heads of the four major farmer groups in the country. Next Thursday and Friday are public holidays in Argentina, so grain sales will be halted for a week.

The long and short of it: While some congestion of cargo ships is expected at Argentine ports, no major export disruptions are anticipated. Therefore, this should have minimal market impact.


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