Bearish Stocks Report

Published on: 16:16PM Mar 28, 2013

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The stocks report was very bearish.  Grains and oilseeds closed sharply lower with May corn closing lock-limit down.

The short story is that the USDA released their March 1st stocks report and there were 400 million more corn bushels in the count than what the market had been expecting.  To make matters worse for the bulls, there were an extra 41 million bushels of soybeans and an extra 60 million bushels of wheat from the market expectations as well.  These are substantial increases from expected levels which have created a lot of controversy over the count.  The fact is whatever people may say about the numbers, they are still what the market has to trade off of.  May corn was synthetically trading 60 cents lower at the close which means Sunday night we may see corn open 20 cents lower near $6.75.  Don’t forget, trading limits increase to 60 cents a bushel.

May Corn SyntheticsMay Corn Synthetics

Acres were in line with expectations for corn at 97.28 million.  Soybean acres were less than expected at 77.12 million and wheat acres were slightly higher than expected at 56.44 million.  These numbers were a little bit lower than we would have guessed and think there is room for an increase before the July report.  Take Illinois for example, their total corn and soybean acreage was down 250,000 acres from 2012, a little low by our estimates.

The next obstacle to overcome is the low volume Easter Sunday night session.  Markets will be closed for Good Friday and reopen Sunday night with expanded corn limits.  That type of a low liquidity environment may be a recipe for extra large price swings.  We will have more to report on Monday morning I am sure.  For now we still like our current levels for hedge recommendations, please feel free to sign up to receive our letter full time using the signup link below, including hedge recommendations. Have a great Easter holiday!


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