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Friday's USDA data seen as neutral to the market

Agriculture.com Staff 03/08/2006 @ 2:31pm

With all eyes looking ahead to the March Planting Intentions report, Friday's USDA monthly Crop Production Report is expected to be neutral for the markets, one analyst said on Wednesday.

The USDA report is expected to be 'trumped' by other market fundamentals such as wheat weather and fund investments.

Shawn McCambridge, Prudential Securities, grains analyst, sees modest changes in the world balance sheet, and fewer changes in U.S. crop figures from February's data.

"The March Supply and Demand report is usually uneventful and that is what people are expecting for this one," McCambridge said.

The average analysts estimate for corn ending stocks is between 2.25-2.40 billion bushels, in line with USDA's February estimate of 2.401 billion bushels, according to the Dow Jones newswire.

On the corn balance sheet, on the usage side, there is a possibility of a 25-50 million bushel increase in exports, McCambridge said.

"Buyers waited until after the first of the year to put more corn on the books," McCambridge said. This helps, but still keeps U.S. 2006 corn ending stocks at a burdensome level of 2.35-2.7 billion bushels."

For soybeans, a steady balance sheet is expected in Friday's report. Analysts surveyed by the Dow Jones newswire estimated soybean ending stocks at 562 million bushels, slightly above the USDA's February estimate of 555 million bushels.

Because of periods of dry weather, a modest decrease in the Brazilian soybean crop is estimated.

Within the U.S. soybean data, a small increase in soyoil usage reflecting optimism in the biodiesel issue.

As the world tries to figure out the extent of the bird flu outbreak, little change in soy meal data is expected, McCambridge said. "There are new cases of bird flu being discovered, but they are very localized. So, the potential for it (bird flu) to be very significant in the market is there. But, to date, the market is taking a wait and see attitude to see how this whole issue progresses," McCambridge said.

Because wheat is in its final month of the crop year, USDA is expected to simply fine-tune its current figures from February. "The focus for the wheat market has turned to 2006-2007 marketing prospects, especially considering the growing problems in the U.S. and overseas," he said.

U.S. wheat ending stocks are estimated between 538-550 million bushels, within the range of USDA's February estimate of 542 million bushels.

With all eyes looking ahead to the March Planting Intentions report, Friday's USDA monthly Crop Production Report is expected to be neutral for the markets, one analyst said on Wednesday.

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