First reports down three more to go

Published on: 13:21PM Mar 11, 2015

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It is nice to have another report out of the way and as expected, this one did not hold any major changes but the ones that were made were interesting.  Domestic corn ending stocks were lowered 50 million bushels to 1.777 billion due to a boost in the export projection.  Seeing that the weekly pace of sales have been picking up over the past several weeks, it is difficult to argue with that assessment but considering the shipping pace has been less than stellar as they say, the proof will be in the pudding.  I do find it a bit curious that they elected to tweak the domestic usage numbers.  Granted it was a wash as feed/residual was boosted 50 million and ethanol lowered 50 million but the question would be, why make any changes prior to the quarterly grain stock estimate, particularly in the feed category.  I struggle with the number they were using anyway and with the increase we are now projected to use 5.3 billion bushels which will be the highest usage since 2007/2008.  The average usage for the past five years has been 4.805 billion and even if we toss out the lowest number from the 2012/13-crop year the average only moves up to 4.923.  I continue to believe that this number could be as much as 200 million too high but we shall see if the March 1st grain stocks sheds any light on that opinion.  World corn stocks were lowered 4.36 MMT to 185.28 due to adjustments for the past two years.  To keep all this in perspective this is still the largest domestic corn carryout in the past nine years and as a raw number still in a record world ending stocks estimate. Overall though, the corn estimates were understandably taken as positive for the market as with uncertainly of a new growing season just ahead and the potential for fewer acres, we risk the possibility of the seeing numbers shrink again for the 15/16 season. 

The bean market was not provided with any kind of information that would reinvigorate the bull as domestically, the USDA made no changes at all.  Granted, the trade was only looking for a small serving of positive nutrition but they did not even get crumbs from the table.  This could be moving us one step closer to bring this market in the reality of the world supply situation and on that portion of the report, ending stocks were bumped up just slightly to 89.53 MMT.  That number is still a bit lower than the estimates two months back but regardless is still record in any way you wish to measure.  Add to this no major setbacks with the talks between the Brazilian government and truckers and a rapidly expanding harvest down there and bulls were left with little to cling to. 

Finally, wheat was rewarded with a little positive news as the USDA trimmed domestic ending stocks 1 million bushels to 691 million and world ending stocks by .14 MMT to 197.71.  Granted, the shifts were insignificant but it caught the trade leaning the other way and helped to stimulate short-covering. As with corn it would seem that we have little risk premium in the price at this time in front of the uncertainly of a growing season. 

There was a less publicized report issued yesterday as well and that was another baseline projection from the Congressional Budget Office.  While not really a departure from their previous estimates they have the 2015 corn acreage projected at 89.4 million, which would be down 1.2 million from last year and beans at 86 million, which is up 2.3 million over a year ago.  Had there been nothing else in the news yesterday distracting traders attention this may has been more of a story but I believe it should at least bring a little more balance back to the estimates after the Ag Forum data released last month.

Markets have responded positively across the floor now overnight and in the case of corn, we have pressed back into the upper end of trading ranges once again.  If we can really carry much beyond here in corn and wheat at least for the time being is questionable but that said at least in these two markets there would appear to be little to trigger much selling at least until we reach the reports at the end of the month.  For beans though, it would seem that if on March 31stwe do not find something positive, it could be that final straw.