USDA reports seen crucial to markets
All eyes are on this Friday's USDA Crop Production and Grain Stocks report. USDA's estimate of the 2006-2007 corn and soybean crops, corn ending stocks, and the 2007 wheat planted acres will be the main categories watched by commodities traders.
By all accounts, this Friday's report is the most important USDA report all year. Furthermore, with the explosion of corn usage for feed, food, and fuel, the report is extremely telling this year, analysts said.
At first glance, the report is expected to have bullish potential for the corn market, but a bearish tone for soybeans.
Also, this Friday's report will offer the USDA's first estimate of the already planted winter wheat acres.
The main focus of traders will be the USDA's corn crop estimate and corn usage figure, analysts said.
Last week, Informa, a commodities research, information, analysis and consulting company, pegged the 2006-2007 corn crop at 150.7 bushels per acre, down 0.5 bushels per acre from the December USDA estimate.
Jason Ward, North Star Commodity Investment Co., said a lower-than-expected corn crop size would move the market.
With a current national corn yield average of 151.2 bushels per acre, anything below 150 bushels would be shocking, Ward said.
"If we stay above 150 bushels per acre, the market will not be extremely bullish. Any number that comes down a bushel per acre or more would be considered bullish," Ward said.
If the national corn yield is lowered below 150 bushels per acre that tightens corn stocks to a 21-day supply.
"In this report, I think the USDA is likely to tighten stocks up a bit, but keep the yield above 150. Then the market will have to run its course and figure itself out over the spring time."
Brian Basting, Advance Trading Co., said the uncertainty of the report is whether the 2006-2007 corn crop estimate gets larger or smaller.
"If we see a lower production figure but a higher stocks number, that would be an indication of a cutback in feeding. So, the crop size and how feed usage did in the fall quarter will be the two figures the market will watch," Basting said.
SOYBEAN DATA EXPECTED BEARISH
For soybeans, there is a strong feeling throughout the market that the U.S. soybean crop has gotten larger in the last few months, Basting said.
The U.S. bean yields were estimated by Informa at 43.8 bushels per acre, up 0.8 bushels per acre from the current USDA number with a production estimate of 3.263 billion bushels, up 59 million bushels.
"The market knows soybean exports and crush levels have been good," Basting said. "So, for this report, the tweaking of the U.S. crop size will be under the microscope, along with USDA's estimate of South America's crop size."
"I would also watch for USDA's estimate of China's soybean imports," Basting added.
2007-2008 WHEAT ACRES TO BE WATCHED
For wheat, traders' focus will be looking at how much was seeded last fall for hard red in the west and then how much went to soft red. "There's a general feeling that we didn't get as many soft red wheat acres planted in the Midwest than hoped because it was too wet in Michigan, Ohio and Indian. And we may have planted more in Kansas," Basting said.