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USDA data seen very bullish for CBOT markets

Agriculture.com Staff 02/07/2016 @ 9:05am

USDA released a bullish supply/demand report Tuesday, seeing a tightening wheat and soybean carryouts, one analyst said.

Don Roose U.S. Commodities, says Tuesday's CBOT trading should open with soybeans 15-20 cents higher, wheat 15-20 higher, and corn 3-5 cents higher.

"There's nothing bearish about this report," Roose says. "Now, it's all about the March 31 acreage numbers."

USDA, in its monthly report, estimated 2007-08 soybean ending stocks at 140 million bushels, 4 million below the bottom of the trade range. The 2006-2007 soybean ending stocks were pegged at 574 million bushels.

"I think the USDA did the right thing by lowering the soybean carryout. We are seeing a lot of exports. This is a clear indication the U.S. will have to import soymeal and soybeans down the road," Roose said.

For wheat, USDA lowered the U.S. 2007-2008 ending stocks to 242 million bushels, 30 million bushels lower than its previous estimate. The average trade estimate was for only a 10 million bushel cut in ending stocks. The 2006-07 ending stocks were estimated at 456 million.

"The wheat stock reduction is dramatic," Roose says.

For corn, the 2007-08 ending stocks were pegged at 1.438 billion bushels, a bullish number for the market. The USDA's estimate is 125 million bushels below the bottom of the trade range.

For Brazil 2007-2008 soybean production, USDA increased production slightly to 61.0 million tons.

Matt Pierce, Futures International LLC, says the report doesn't include any big surprises for the market other than a 600 million pound reduction in methyl usage for soybean oil.

"That's going to be the big USDA number talked about on the floor," Pierce says. "The usage number goes from 3.4 billion pounds to 2.8 billion. This shows the lack of demand for biofuel right now. This increases soybean oil ending stocks. This will correlate into a weaker bean oil market."

The bearish USDA soybean oil usage number is expected to be trumped by the news from Argentina that it is thinking about eliminating all soybean registrations for exports.

"The Argentina threat on exports will be a bigger issue today. If Argentina pulls out of the export market right when they are finishing up harvest, that would be very bullish for the U.S. soybean market," Pierce says.

USDA raising Brazil's soybean production to 61.0 million metric tons from 60.5 is a slight surprise, Pierce says. "We have Brazil's production at 61.0 million, some believe we could see another 1.0 million metric tons added to this number before we're all said and done."

Meanwhile, analysts agree that macro-economics and the world inflationary boom is underpinning the CBOT market.

USDA released a bullish supply/demand report Tuesday, seeing a tightening wheat and soybean carryouts, one analyst said.

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