Previewing the USDA Report
Sep 29, 2011
I hate to break out my "crystal ball," as I have found it often has a mind of its own. So I say with all sincerity, proceed with caution when reading my commentary below. I will give you my best attempt at what I think could come from the USDA numbers. I have found trying to predict or play these games throughout the years to be been an extremely disheartening and painful experience at times. I personally think this report tomorrow could be extremely dangerous, just from the fact that it somewhat flies under the radar screen and is not highly publicized. It also provides many "wild card" opportunities. Most give center stage to the wheat market, but be careful buying into this, as there are some critical corn and soybean numbers being released as well. I include insight into each of these numbers, along with the reasons they are important, in my daily report. If you are not getting the report each day, make sure you get signed up by following the link below. There is no cost or obligation.
As far as the numbers are concerned, below are what I believe to be the most important points.
Corn Ending Stocks: USDA is currently at 920 million. The average trade guess is around 960 million. Bottom line, most in the trade are thinking we will end up with more corn, because of more "feed wheat" substitutions and generalized rationing across the board. I know some in the industry think we may end up over 1 billion, while on the flip side there are a few who believe the lack of harvest and available bushels in the South may lead to a slight decrease in ending stocks. I personally think we will be a little higher, maybe not all the way to 960, but around 940. To move drastically higher, you are going to need to see a number below 900, in my opinion.
Soybean Ending Stocks: USDA currently is estimating 225 million. The average guesses are ranging from 200 to 240 million. To trade limit-up, you will need to see a number in the low 200s or high 190s. At 240 million or higher, and you have potential to trade limit-down. Don't forget, USDA can readjust the 2010 numbers on this report as well.
Spring Wheat Production: USDA is currently at 475 million. Many in the trade are expecting a lower number, most are looking for a number around 440-450, but I have heard numbers flying around all the way down around 400 million. The thoughts are that higher protein levels have weighed on production totals.
Don't forget there will also be many other critical numbers being released, such as corn feed usage, wheat feed usage, total wheat production, total ending stocks and much more. Make sure you get tomorrow's report to see all of the insight and how the "big boys" are playing the data.
I hope everyone has banked big profits with my "bear spreads" the past few weeks; they have worked like a champ! Our hedges have also paid big dividends on the break. Good luck tomorrow and have a good weekend. Don't forget, tomorrow is the end of the quarter and end of the month for traders and "window dressing" may be in play! The Chinese holiday starts on Monday.