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USDA report seen neutral to bearish

Agriculture.com Staff 02/09/2016 @ 9:52am

Friday's USDA report will offer the first look at the World supply/demand picture for 2006-2007. A neutral to bearish report is expected.

For instance, the market will be watching to see if USDA lowers Brazil's soybean production, analysts told Agriculture Online on Wednesday.

USDA, in its May supply/demand report, estimated Brazil's 2005-2006 soybean crop at 56.5 million metric tons.

"The trade will watch this number closely. We expect USDA to lower it to 55.0 million metric tons," Don Roose, U.S. Commodities, said.

On Friday, USDA will be estimating Brazil's 2006-2007 crops for the first time. Roose sees the USDA coming out with an estimate of 56.0 million metric tons.

Otherwise, because the report estimates will be based on old acreage numbers, this week's report will get little attention from the trade, according to Roose.

"U.S. crop ratings have been so good, the USDA could raise its yield estimates up for both corn and soybeans. But, with a lot of growing season left, the estimates shouldn't change much."

For corn, USDA is expected to raise its corn trendline yield estimate from 149 bushels per acre to 150. For soybeans, USDA's May estimate of 40.7 bushels per acre could be pushed to 41.5, Roose said.

For soybeans, the U.S. crush pace and exports have been running slow, therefore, Friday's report could reflect these changes.

"We could see the crush numbers drop 5.0 million bushels for old-crop and exports lowered 5.0 million bushels," Roose said.

If lower crush and export estimates are realized, USDA could increase its 2005-2006 soybean ending stocks by 10.0 million bushels.

Combining the 10.0 million bushel estimate with an expected strong new crop, Roose sees the USDA estimating 2006-2007 soybean ending stocks at 700 million bushels, up from 650 million.

For corn, Roose sees USDA leaving old-crop ending stocks of 2.26 billion bushels alone.

"If the USDA changes this year's yield estimate, the 2006-2007 ending stocks number of 1.141 billion bushels would go up," Roose said.

Sid Love, Love & Kropf Consulting Services LLC., agreed that if Friday's report offers anything it would be neutral to bearish news for the markets.

"For corn, supply numbers will be tightened up a bit with stronger exports lately," Love said.

USDA will adjust harvested acres for hard red winter wheat, Love said.

"Because of the poor growing season, it's always a probability we will lose acres there," Love said.

Friday's USDA report will offer the first look at the World supply/demand picture for 2006-2007. A neutral to bearish report is expected.

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