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USDA data seen hard-pressed to hold down prices

Agriculture.com Staff 09/11/2007 @ 9:38am

Most traders are speculating that the USDA Wednesday will release a bigger soybean crop size number in its September report compared to its August estimate.

However, that estimate may not be large enough to turn the market bearish. Plus, world ending stocks are expected to tighten, creating even more support for the soybean market.

The USDA is scheduled to release the September survey of the U.S. corn crop and give new supply-and-demand data at 7:30 a.m. CST Wednesday.

The average trade guess for soybeans is 41.9 bushels per acre vs. the USDA August estimate of 41.5. For corn, the average estimate is 153.7 bushels per acre vs. the USDA August estimate of 152.8.

For corn, a big U.S. yield estimate is expected, making the sentiment bearish for the corn market, market watchers said.

Noel Blue, Chicago Board of Trade broker and floor trader, says that with a relentless wheat market, even if the USDA releases bearish corn figures, the downside for corn is limited.

"$3.00 is probably the floor right now for corn," Blue said. "There's a good deal of deferred-month buying by commercials. They (commercials) are looking forward instead of the nearby because record-high wheat prices could cause a shift in acres."

Blue says, "There are starting to be price incentives for producers to grow wheat with the world shortage."

Plus, with the wheat market taking on a life of its own, it would be very difficult for the USDA data to turn the wheat market negative, Blue said.

John Roach, Roach Ag Marketing Ltd., said in a daily newsletter that all eyes are on Wednesday's report.

"There were no overnight fireworks in wheat for a change. Traders seem to be waiting to see how tight wheat fundamentals really are on tomorrow's USDA wheat forecasts," Roach stated.

WATCH THE WORLD NUMBERS

Because of its impact on the wheat market, the world crop estimates will have a large impact on market direction, not just U.S. estimates, Blue says.

"I'm more concerned about the world figures for soybeans, not just the U.S. yields. We will see the 2007-2008 ending stocks in this report."

WHO'S BUYING IN

For corn, the USDA figures on Wednesday may appear bearish, but commercial interests buying into the market could trump the data.

"Even if we see a 20¢ or 30¢ drop in corn prices, the more important thing to be paying attention to is whether Bunge, ADM, Louis-Dreyfus, and Cargill are buying into the market, and for how much," Blue says.

Blue adds, "I want to know what the people with the grain are doing. The reports of people selling off this market are not as important."

Most traders are speculating that the USDA Wednesday will release a bigger soybean crop size number in its September report compared to its August estimate.

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