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Little attention to be given to USDA's first look at 2007/08 crop size

Agriculture.com Staff 02/27/2007 @ 12:25pm

As USDA prepares to release its annual Agriculture Outlook data on Friday, the report is not expected to be market moving, market watchers said.

During its annual forum in Washington, D.C., the USDA will present its first look at the U.S. 2007/2008 crop year. Plus, USDA will announce projections on livestock and poultry prices and its supply/demand picture.

In a nutshell, the report will contain crop size estimates, and everything on balance sheets ranging from imports/exports, to stocks, and projected average prices.

For the corn and soybean markets, everything has a bullish slant to it right now, Matt Maloney, vice president of RJ O'Brien and Associates, and a CBOT corn broker and trader, told Agriculture Online.

"Whatever the numbers are on Friday, we're going to shrug it off within ten minutes and trade too much rain in the eastern Corn Belt, La Nina predictions giving us a hot/dry summer. Weather is already the focus," Maloney said.

Mark Schultz, North Star Commodity Investment Co., agreed the trade would look briefly at USDA's crop size estimate on Friday.

"Overall, it's no different than me sitting down and guessing the crop size," Schultz said.

Most trade estimates for the U.S. 2007 corn crop is between 86-88 million acres, Schultz said.

"My guess is the USDA will come in between those estimates," Schultz said.

Roy Huckabay, Linn Group executive vice president, said it's inevitable the USDA will tighten grains and oilseeds stocks.

"If you take USDA's world ending stocks in feedgrains versus usage which is at 45 days of usage. That's record tight," Huckabay said. "Blame it on ethanol, but that's not all."

Because the world economies don't finance big inventories anymore, they are letting the market determine inventories, Huckabay said.

"Throw in a bad crop year, like wheat had worldwide last year, you get tight stocks and volatile prices. We'll see if the government's don't start financing larger inventories."

Going forward, Huckabay sees increased acres of barley, rye, oats, sorghum, and corn around the world.

As USDA prepares to release its annual Agriculture Outlook data on Friday, the report is not expected to be market moving, market watchers said.

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Weather Trumps Demand