USDA reports seen trumped by 'other' markets
CHICAGO, Illinois--Many analysts believe this Friday's USDA Crop Production and Supply/Demand Reports will be overshadowed by what's going on with the markets outside of agriculture. Producers are still urged to take notice of ending stocks figures.
On Friday, USDA is scheduled to release its final crop production report of the year based on conditions as of Nov. 1.
OUTSIDE MARKETS TO TRUMP USDA
With many estimating little change in the numbers, the grains and oilseeds markets are expected to look for direction elsewhere.
Alan Kluis, Kluis Commodities, says this Friday's report will be trumped by other news.
"What's happening with crude oil, the dollar, precious metals, and the equity markets is more important to price discovery than the USDA tweaking their numbers," Kluis says.
PRODUCERS URGED TO WATCH ENDING STOCKS
Despite the down-playing of the reports' impact on the market, producers looking to make a decision on buying or selling should take note of the ending stocks figures, analysts say.
Jay Calhoun, Walsh Trading Inc., says the one single line-item on the supply/demand report that can help the producer is ending stocks.
"If ending stocks are going down markets can be perceived as being supported. If the trend over a number of reports is increasing ending stocks it's not a bad idea to sell some crop," Walsh says.
WHEAT STOCKS SEEN TIGHTENED
Sid Love, Kropf & Love Consulting Services LLC, agrees there isn't much to talk about with this week's report.
"There isn't a lot of news expected to be in this month's report," Love says. "There is not much to say about it."
Love plans to keep an eye on the USDA's estimate of the 2007/08 U.S. wheat ending stocks.
"Because of additional exports, the 'crowd' of analysts thinks the ending stocks will be lowered between 13-17.0 million bushels," Love says.
In October, USDA estimated U.S. 2007/08 wheat ending stocks at 307 million bushels.
Also, Love will be anxious to see what the USDA does with the world wheat crop.
"The last time the USDA estimated world wheat, they pegged it at 600 million tons. Since then the International Grains Council released a estimate of 602 million tons," Love says.
Love adds, "Plus, Australia's crop may be lowered, but with late rains that crop could come back."
Looking at the supply/demand tables, Love says wheat feed usage should be limited.
"The ratio between wheat and corn prices is so high that wheat shouldn't even be fed by livestock producers," Love says.
INCONSISTENT CORN USAGE
Meanwhile, Kluis says the USDA production numbers will be key. It appears the late planted, late harvested corn and soybeans yields have been disappointing, Kluis says.
"I would expect the harvested acreage number for soybeans to be lower than USDA's last estimate, mainly due to the abandonment of double-crop soybeans," Kluis says.