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Clearer corn, soy numbers ahead?

John Walter 10/10/2012 @ 3:41pm

An unusually clear picture of U.S. corn and soybean production should emerge in Thursday’s USDA Crop Production and World Agricultural Supply and Demand Estimate Reports, commodity analysts said on Wednesday afternoon.

That’s because the early maturity of the crops has offered USDA a way to better gauge harvested acres, ear weights of corn, and other factors, they said.

The harvested acres category for corn will be a major focus in the production report. Analysts believe USDA will have more latitude in adjusting that number, as they have in previous drought years.

Given the early planting this year, USDA was able to get a better grasp of the crop size in its September report than they have in the past, said Greg Wagner, GWX Ag Advisors. He pointed to the wide range of pre-report corn yield estimates, from 119 bu/ac on the downside to 127 bu/ac on upside.  “That swing represents a 1.24 billion bushel difference," he said.

Ear weight estimates of the corn crop are a significant factor, Wagner says, adding that because USDA was able to get a good handle on ear weights in September, the agency likely won’t change things much tomorrow.

On the demand side, the drama continues to be the idea that ending stocks are historically tight, “virtually a pipeline,” says Wagner. 

DRAMA IN SOYBEANS

In soybeans, the general expectation is that production will be raised, said Jerrod Kitt, director of research at the Linn Group. Linn is pegging soybeans at 38.0 bu/ac.

Kitt predicts that carryout will stay “pretty consistent."  Demand is so tight that even extra with an extra 200 million ton of beans, they will get exported or crushed, he said.

“We’re going to get rid of these beans no matter how many farmers throw at us,” Kitt said.

Wheat likely will play a supportive role to corn and soybeans in tomorrow's report, according to Jerry Gidel, chief feed grain analyst, Rice Dairy.  World numbers will be worth watching, such as a likely reduction in the production estimate for Australia, he said. The global wheat outlook should be bullish for U.S producers, according to Gidel.

The world will have to come to the U.S. for wheat,” he said.

Farmers themselves may be experiencing a kind of “bird-in-hand” feeling with respect to USDA estimates.

“If the report is going to affect your marketing situation then you're more or less using a short-range view and have pending sales targets,” one farmer told the Agriculture.com Marketing Talk forum. “If your strategy is based on longer term trends then the report is probably inconsequential at best.  Activity around reports is more entertainment at this point in the marketing year.”

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