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USDA data seen extremely bullish for corn

Agriculture.com Staff 01/12/2007 @ 6:45am

By lowering its estimate of the 2006-2007 U.S. corn crop, and the world corn ending stocks, USDA released a very bullish corn report Friday.

USDA dropped the U.S. corn crop from 10.745 billion bushels in November to 10.535 billion bushels. For the world ending stocks, USDA estimated a record 86.44 million bushels, compared to its November estimate of 92.74 million.

Don Roose, U.S. Commodities, said the corn market could open up 10-15 cents higher this morning. "This report shows our margin of error for this spring's corn crop has shrunk dramatically," Roose said.

The USDA January 1 corn carryout estimate for the 2006-07 crop is 752 billion bushels. The pre-report trade estimate was 905 billion bushels. The December estimate was 935 billion bushels.

Joe Victor, Allendale Inc., during a Chicago Board of Trade briefing, said the corn market is piling up supportive fundamentals. "This report shows the world demand for corn is not letting up, and the attempt to replace foreign oil with renewable fuels is increasing."

For soybeans, USDA estimated the 2006-2007 crop size at 3.18 billion bushels, lower than 3.204 billion in November. The range of trade estimates was from 3.166 billion to 3.310 billion. U.S. soybean yield average was dropped from 43.01 in November to 42.7 bushels per acre

"Typically big crops get bigger. But, in this report our yield went down. I think the USDA report is friendly toward the soybean market as well," Roose said.

The Januuary 1 U.S. soybean carryout estimate at 575 million bushels is seen as large. Plus, the USDA raised its world carryout estimate. However, Roose sees these figures dropping from this point. The average trade guess was 597 million bushels. In December the estimated carryout was 565 million bushels.

"These could be our peak numbers from a carryover standpoint," Roose said. "Keep in mind we are going to lose acres in the U.S. to the corn market."

USDA estimated U.S. winter wheat seedings at 44.089 million acres, seen neutral to negative to the wheat market.

"I think this shows that some of the acres that were expected to go into corn went to wheat," Roose said. "This adds fuel to the corn fire."

Roose added, "With more acres, better growing conditions, ending stocks on the rise, and world ending stocks increasing, the wheat numbers are negative for the market. Plus, the wheat market is really left as a food/feed market, it isn't involved in the biofuels industry," Roose said.

By lowering its estimate of the 2006-2007 U.S. corn crop, and the world corn ending stocks, USDA released a very bullish corn report Friday.

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