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Traders, Farmers Place Bets Ahead of USDA

03/28/2014 @ 10:50am

U.S. corn and soybean futures prices moved up and down in a narrow range Friday, as traders placed bets ahead of a highly anticipated government report on planting and crops due Monday.

Farmers, grain companies and financial speculators were seen taking positions that would pay off if grain prices shoot higher on Monday's report from the U.S. Department of Agriculture, while others bought contracts providing a financial shield if prices drop, analysts said.

The USDA at noon ET on Monday will release its planting outlook, providing the market its first detailed glimpse into the 2014 growing season. The agency also will report quarterly grain stockpile figures at the same time, offering detail on the remaining supply of major crops.

"What is going on here today is a lot of positioning" in anticipation of the data, said Tim Emslie, research manager with CHS Hedging, a brokerage based in suburban St. Paul, Minn.

May-dated corn futures on the Chicago Board of Trade recently were up 1/2 cent, or 0.1%, at $4.92 1/2 a bushel in midmorning trading Friday, after trading lower earlier in the session.

Soybean contracts expiring in May were down 3 1/2 cents, or 0.2%, at $14.33 a bushel. May wheat futures were down 15 cents, or 2.1%, at $6.95 1/2 a bushel.

The USDA report on planting intentions, released once per year, regularly moves markets. Corn futures prices shifted by the maximum amount allowed at the CBOT on four of the last seven trading sessions during which the report was released, according to a research note Friday from Standard Grain Inc., a Chicago-based brokerage.

The CBOE/CBOT Corn Volatility Index, a corn-focused version of the stock market "fear gauge," on Friday climbed above 34, its highest level since late November.

The move indicated that traders anticipate major price shifts in the CBOT corn futures market, with farmers purchasing contracts that will pay off in the event grain prices drop and fund managers taking positions that will become profitable if prices surge, according to Joseph Vaclavik, president of Standard Grain.

"The risk of a real big move is a lot bigger on Monday than any other day of the year," he said.

Analysts surveyed by Dow Jones expect the USDA to forecast that farmers will plant 92.902 million acres of corn, down from 95.365 million last year. Soybean acreage is expected to rise to 81.369 million versus 76.533 million in 2013, the analysts said.

Last year's record corn harvest has left farmers and grain companies to manage a vast supply of the grain, and helped send its price sharply lower. As a result, farmers are seen favoring soybeans as a more-profitable crop.

Analysts expect corn stockpiles as of March 1 to have risen 32% compared to the same time last year, and anticipate less soybeans and wheat in storage, according to the survey.


-Write to Jacob Bunge at jacob.bunge@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
March 28, 2014 10:57 ET (14:57 GMT)
DJ Farmers, Traders Place Grain-Market Bets Ahead of USDA Report->copyright

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