The January crop reports have the ability to affect trading for many months to come.  Today’s reports are no exception.  Each data point on its own was bearish, so the sum total of all the data was simply overwhelmingly bearish.  

The corn stocks number did probably stick out as the most bearish number.  At 9.642 billion bushels, the stocks were definitely at the high end of the pre-report range of estimates.  

First quarter feed use, therefore, was very small at around 1.850 billion bushels.  However, on a percentage basis, it was much more in line with historical averages.  Considering some wheat has been fed and there are more DDG’s available, the number does not seem so unlikely.  In future quarters, feed use could very reasonably end up meeting the 4.600 billion bushel figure the USDA has in the supply/demand report.  

Actually, the number most likely to change in future reports is the ethanol number.  Ethanol production has been very strong in the first four months of the marketing year.  Of course, the uncertainty of how production will be affected by the lack of the 45 cent tax credit still exists.  But to meet the USDA’s 5 billion bushel figure, production must be reduced 10 percent and soon.  If production doesn’t drop, then the USDA’s corn grind needs to be increased.  

Bean and wheat numbers were also bearish.  Crop size and stocks numbers for beans, for example, were both a little bit large.  Winter wheat seedings were also one million acres larger than the pre-report estimate.  

The weather in South America will continue to be a focus.  Any further weather reactions in the market may just not be as positive as before the reports.

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The risk of loss in trading commodities can be substantial.  You should therefore carefully consider whether such trading is suitable for you in light of your financial situation.