Weekly grain report

Byron Behne watches the grain markets for the Odessa Union Warehouse.

1/10/13: Tomorrow the USDA bombards us with their latest round of reports including monthly supply and demand, quarterly stocks and final corn and soybean production. The reports will be released at 9:00 a.m. local time instead of 5:30 a.m. as they have been previously. That will leave the market a short three hours to digest the news before trade closes for the week. Six out of the last six January reports have produced a limit move in corn futures, three up and three down conveniently. One of the most scrutinized numbers will be the final corn production and what the USDA does with harvested acres. They’ve been using the same estimated number since early fall with most people thinking that it is far too high for a drought year like they had. The average expectation is that they will cut about 750k acres which would drop total production by about 90 million bushels versus their prior estimates. Part of that reduction will likely be offset by a cut to export demand as corn sales have been pathetic ever since harvest. So the net effect of all of that should be a cut to projected ending stocks which would be bullish if it’s large enough. Soybeans are likely to get an ending stocks increase on larger production via a higher yield estimate. Wheat figures to tag along with corn whichever way it goes as ending stocks are much looser than either corn or beans. So cross your fingers for a bullish corn number but we’ll have to deal with whatever the USDA sticks us with once it’s done.

1/11/13: USDA report day was a wild one for the markets, however by the time the market closed there wasn’t much to show for it. Chicago wheat futures finished the day up a dime, as did corn, while soybeans lost six. The reports were bullish for corn and wheat and neutral for soybeans. Winter wheat planted acreage came in 800k smaller than anticipated. Corn ending stocks were cut but it wasn’t due to a production decrease, in fact corn production was boosted through increases to yield and minimized the cut to harvested acreage by increasing planted acres. The most surprising number was again the quarterly stocks number for corn which came in 180 million bushels under the average guess, indicating far higher first quarter usage than was anticipated. U.S. wheat ending stocks were cut by about 40 million bushels, and white wheat ending stocks were increased by one million. White wheat prices did not follow futures higher as Portland exporters backed off their basis over Chicago from $1.00 to $0.90, negating the day’s gain. Overall it would seem that the report sets up a potential change of the recent downtrend at the least, and could finally spark an upward one.