What Market Shocks Could Come from Today’s Reports?

May 10, 2013 02:25 AM
What Market Shocks Could Come from Today’s Reports?

Today’s USDA reports will likely show revisions for yield and acreage expectations. Experts share their thoughts.

At 11 a.m. CDT, USDA will release its monthly World Agricultural Supply and Demand Estimates and Crop Production reports.

This will be one of the first opportunities for USDA to scratch out and revise its estimates for this year’s crops.

Paul Georgy, president of Allendale, says all traders will be making last-minute adjustments this morning, ahead of the reports, which will likely hold a few surprises.

"We expect there will be something for everyone," he says. "Of course, everyone is waiting for the USDA’s first balance sheet of the year for 2013/14 corn and soybeans. This number could impact the world ending stock for corn and soybeans as well."

Georgy also expects old-crop usage to be closely watched. "Will they increase corn for ethanol or lower export shipments?"

Bill Tierney, AgResource Company chief economist, is predicting USDA’s biggest revision will come in its national corn yield estimate. "USDA frequently makes changes in their corn yield projection based on planting progress," he says.

Only 12% of the 2013 corn crop in the ground, which compares to a five-year average of 47% planted by this time. The odds are likely, Tierney says, that this year’s extremely slow planting progress will make USDA start shaving down corn yield expectations.

Currently, the national corn yield estimate stands at 163.6 bu. per acre. Tierney believes USDA will lower that projection by around 3 bushels.

As for acreage numbers, Ken Smithmier, a grain analyst for The Hightower Report, doesn’t believe USDA will start rewriting those numbers today. But, his overall belief is those numbers will need to be adjusted.

Currently, USDA expects U.S. farmers to plant 97.3 million acres of corn and 77.1 million acres of soybeans. If realized, this will represent the highest planted acreage for corn since 1936 and the fourth highest on record for soybeans.

"We believe there could be a significant shift from corn to soybeans, depending on how the weather turns out, perhaps up to 78 million acres," Smithmier says. "With late planting and delayed growth on the Eastern wheat crop, you may not see as much double-crop."

Tierney agrees that the corn acreage number will go down, perhaps a decrease of 1.5 million acres. "We think most of that will be from preventive planting, not as much from switching to soybeans," he says.

For More Information
Pre-Report Analysis of May 10 Reports
Find out what the big news could be with today's USDA World Agricultural Supply and Demand Estimates and Crop Production reports.

See current market quotes in AgWeb's Market Center.


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