Traders watch for USDA ending stock estimates
CHICAGO, Illinois (Agriculture Online)--Because of continued China soybean purchases, conventional trade wisdom is the U.S. has a lot less soybeans on-hand than corn compared to the USDA's estimates in December.
On Monday, CBOT traders and market analysts will be eyeing the USDA's January Quarterly Stocks and Production Reports, released at 7:30 am CST, for any major ending stock changes.
For corn, the average trade estimate for Monday's USDA 2008-09 carryout estimate is 1.489 billion bushels, vs. the government's 1.474 billion bushel estimate in December.
Jim Bower, Bower Trading Inc., says the corn market needs and wants to know more precisely what the 2008-2009 supply/demand table in corn looks like now.
"There is still a great deal of uncertainty surrounding 2008 corn production, first quarter U.S. corn feed use, the magnitude of cuts in U.S. corn ethanol production, and just where the USDA is going to calculate exports," Bower says.
Because of a slowdown in demand, the average trade estimate for quarterly corn stocks, as of Dec. 1, is 9.845 billion bushels.
The average trade estimate for 2008 corn production is 11.98 billion bushels, below USDA's last estimate in November of 12.02 billion bushels. Plus, the average trade is estimating a final 2008 corn yield at 153.3, within the USDA's November estimate of 153.8.
Bower adds, "I truly feel it will be beneficial for the corn market to get this report out of the way, as we can then proceed from an analytical base which will then be influenced by a pending acreage battle and weather-up and through the pollination period."
Matt Pierce, Futures International LLC is looking for higher corn stocks and lower ethanol usage.
"This (ethanol) is a variable number with the Obama Administration sure to change things in the coming months," Pierce says.
Pierce, and many other marketwatchers, expect the USDA to lower soybean ending stocks.
The average trade estimate for 2008-09 soybean ending stocks is 186 million bushels, vs. 205 million in December.
For soybean quarterly stocks, as of Dec. 1, the average trade estimate is 2.181 billion bushels.
"I'll be watching carefully what the USDA says about old crop soybean ending stocks and export numbers. Plus, the market will be eyeing any changes in Brazilian production and Argentine production," Pierce says.
On Monday, USDA will revise its world production estimates.
"Concerning South America, I'm looking for reductions in Argentina wheat, corn, and soybeans, and Brazilian soybeans and corn. World ending stocks should be lower across the board in soybeans, higher in corn and mixed to higher in wheat," Pierce says.
For wheat, there is an overwhelming tendency for the trade to overestimate U.S. Winter Wheat acreage on the January intentions (19 of the last 20 years), Bower says.
"The "trade" is looking Monday for a decline of only 2.1 million acres of Winter Wheat in 2009, versus widespread "commercial" chatter of about a 3 to 4 million acre drop," Bower says.