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The market has new crop focus

Agriculture.com Staff 02/22/2008 @ 6:16am

The USDA's annual Outlook Forum is being held this week. This puts the focus this week squarely on new crop possibilities-acreage, demand, etc. This get-together has been attracting more and more attention in the commodity markets the past few years, perhaps as supply/demand tables tighten.

On Thursday morning, there was some basic data released as part of the morning presentations. The USDA is now using these planted acreage figures in its planning-90 million acres of corn, 64 million acres of all wheat and 71 million acres of soybeans. The corn acreage figure is 2 million acres higher than the USDA had previously, but definitely in the range of what the market is anticipating. This larger number rattled corn futures traders, but by the end of the day, prices were slightly higher.

The USDA uses trendline yields in this initial look at the 2008 crop. Therefore, the crop sizes are 2.3 billion bushels of wheat, 12.8 billion bushels of corn and 2.95 billion bushels of soybeans.

Today, as a part of the Forum, the USDA will release supply/demand tables for the 2008-09 crop year. This will be their first up-to-date try at these tables. (The Baseline Projections, released a few weeks ago, were compiled last fall and are pretty stale.) The demand numbers released tomorrow will be more interesting, as the market must contemplate how little carryout is adequate carryout.

Actually, the wheat supply/demand situation will be looser than it is currently. A potentially larger wheat crop both in the US and the world should allow stock rebuilding.

It is the soybean situation that is potentially the most interesting. Acres and crop sizes are both projected to increase, but demand should be far stronger, leading to a decline in ending stocks.

Corn is also likely to be in a similar situation, although a smaller potential crop size and an increase in demand will likely both lead to a slightly reduced carryout from what the market is dealing with during this year.

The risk of loss in trading commodities can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial situation.

The USDA's annual Outlook Forum is being held this week. This puts the focus this week squarely on new crop possibilities-acreage, demand, etc. This get-together has been attracting more and more attention in the commodity markets the past few years, perhaps as supply/demand tables tighten.

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