USDA’s December round of Crop Production and World Agricultural Supply and Demand Estimates reports is typically a non-event. But, USDA has been known to provide the market with a few surprises every now and then.
At 11 a.m. CDT on Tuesday, Dec. 10, USDA will release this month’s reports. What information or revisions could move the markets? Four grain market experts share their thoughts on what farmers should watch for in the reports.
Kevin Van Trump, president of Farm Direction
These reports might have a little bullish feel, assuming USDA makes a few higher demand adjustments. I suspect soy exports are moving higher, and wouldn't be surprised to see the same for corn exports and possibly even a hair higher for ethanol usage.
A potential surprise would be USDA making bullish adjustments to demand but choosing to leave the supply side of equation "unchanged" until the January end-of-year report. If this plays out this way, the bulls could get a false sense of security only to see the rug pulled out from under them in January. Don't fall into this trap! Use the rallies to reduce more risk.
Read Van Trump's blog.
Tim Hannagan, grain analyst at Walsh Trading
The reports will be neutral to bullish for corn as export completion looks smaller out of Brazil and Argentina lending to a lower carry over number. Also higher feed usage and good corn-to-ethanol use all cuts carryover.
The trade is expecting lower carryover for beans as present demand is at a record pace. I see it friendly at best and a carryover number unchanged to only fractionally lower as USDA sees a seasonal period in January and February, where U.S. demand falls sharply and South American ports take future deliveries.
The biggest surprise would be a large cut in bean carry of 25 to 60 million bushels.
Read Hannagan's blog.
Rich Nelson, Chief Strategist at Allendale
This week’s reports will only have a minimal impact on prices. USDA will only make marginal changes to demand and no changes to production on this report. January is THE report here. December is typically a yawner.
The only real question here is exports. Both corn and soybean YTD exports are far ahead of their previous expectations. How they handle the cancellations in corn and rumored cancellations for soybeans is the issue. Keep in mind USDA typically makes changes here due to facts and not potential cancellations in the future.
We feel USDA will leave soybean crush alone. We only have data for two months of the marketing year (September + October). It is too early to start moving those numbers much.
For corn feed use there are still many in the industry suggesting USDA will be lowering it in the future (and raising production). We do not look for any change until next month. The January report will use the results from the Grain Stocks report that is also issued in January. That report will tell them how much grain is left after one quarter of usage (which they break out to find feed use).
For ethanol the trade, and Allendale, is leaning for a decline. USDA will make no change on this report though. The EPA is still in the comment period for their lower numbers.
Read Allendale's blog.
Ted Seifried, vice president of Zaner Ag Hedge
The biggest question on this December USDA WASDE report is how USDA is going to handle soybean exports. On one hand, export sales are only 18.7 million bushels away from reaching the current export estimate of 1.4 billion bushels. At the rate of sales we have seen thus far this year we should hit that number next week, and could chew through the current USDA projected ending stocks of 170 million bushels in 4-5 weeks. This suggests a need to price ration export demand.
On the other hand, the shipments pace is only 33 million bushels over this time last year. USDA is currently projecting a 130 million bushel increase in exports this year and the shipments number would suggest that they are right on target. So, USDA could use the export sales numbers to justify a higher export number and therefore a tighter carry over, or they could use the shipments number to hold tight to their current estimate. Our thought is that they will fall somewhere in the middle and increase exports only slightly at this time.
Corn numbers should stay relatively the same.
The biggest surprise on this report would be if USDA would take a more aggressive stance on increasing soybean exports and lowering carry over estimates. If they were to do this soybean prices would need to rally to try to price ration demand of all kinds.
All four market experts agree the Jan. 10 reports will be the blockbuster ones.
Read Seifried's blog.
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Visit AgWeb.com on Dec. 10 full coverage and analysis of the USDA reports following their 11 a.m. release. Read AgWeb's pre-report coverage.