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USDA data seen as corn friendly

Agriculture.com Staff 05/12/2009 @ 6:16am

CHICAGO, Illinois (Agriculture Online)--The USDA's May Supply/Demand Report is seen as friendly for the corn and wheat markets. The USDA released it's latest estimates Tuesday.

The report is seen as friendly for corn and wheat, neutral to bearish for soybeans, CBOT floor traders. "The market might eventually see this report as a yawner, before the day is over," one floor trader says.

Early calls for the commodities, based on the report, are corn up 4-6 cents, wheat up 5-7 cents, and soybeans down 10-14 cents.

Matt Pierce, a CBOT floor trader with Futures International LLC, says the market will see the report as friendly. "Slightly bullish across the board. This only adds to the upside momentum brought on by crude and a weak US dollar. The new crop yields (155 bu./acre for corn) are way too high for me to feel comfortable," Pierce says.

For 2009-10 U.S. All wheat production, the USDA pegged the crop at 2.026 billion bushels, slightly lower than the average analyst estimate of 2.091 billion. All winter wheat production was estimated at 1.502 billion bushels, compares to last year's production of 1.868 billion bushels, and the average analysts estimate of 1.526.

Meanwhile, the USDA estimated the U.S. 2009-10 soybean carryout at 230 million vs. the analysts estimate of 239 million bushels. Plus, the USDA estimated 2008-09 U.S. soybean carryout at 130 million bushels compared to the analysts estimate at 130 million bushels and its April estimate of 165 million.

For corn, the USDA pegged the 2009-10 U.S. carryout at 1.145 billion bushels, vs. the analysts average estimate of 1.383 billion bushels. That number is considered the most bullish in the report, one floor trader says. Also, the USDA estimated 2008-09 U.S. corn carryout at 1.600 billion bushels compared to the average analysts estimate of 1.711 billion and its April estimate of 1.700.

Jason Ward, Northstar Commodity Investment Co., says this report is more friendly to corn than it was beans.

"Trade was right on with the soybean numbers, probably the biggest surprise to the corn was the ethanol usage increase. It was widely expected that exports would rise, and if it wasn't people simply weren't paying attention to how much corn we have been selling. At 1.75 billion bushels for exports we need to sell 14 million bushels of corn/week which is still a very manageable number. Especially with the currency dropping like it has been," Ward says.

Ward adds, "I like USDA's start on the yield for corn at 155.4. That is still an attainable number, but we need drier weather obviously and for our customers in the west it is becoming a concern about heat, so we need to see this cool/wet weather pattern shift to reach 155.4. It is a good starting spot, but things need to improve to reach it. It's too early to tell on bean yields yet, but if we see a significant shift of corn acres to beans it should lower the yield estimate somewhat, especially if 500,000 acres come out of the Dakotas (lower yielding potential)."

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