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USDA's stocks data could surprise

06/28/2012 @ 6:18pm

With the grain stocks and acreage reports tomorrow, it seems any comment today could be worthless by 7:30 a.m.  So what are traders expecting?  A small increase in corn acres and a larger increase in soybean acres.  The average guess is 96.0 million acres of corn and 75.5 million acres of soybeans.  In March, it seemed the USDA did not have enough total acres (for all the principal crops), so analysts are looking for the total “acreage pie” to increase. 

The stocks numbers will be the true wild card, as the USDA has shown in the past an ability to release numbers that are significantly different from the average guess.  This is especially true in the corn market, where feed/residual use is such a large part of total use.  The market has been caught with the wrong opinion for about the last year and a half. 

Trading Hours

Over the past few weeks, several changes have been made in trading hours.  There is now basically a 21 hour trading day.  The electronic market begins at 5 p.m. and goes until 2 p.m. 

On normal business days, the pit is trading between 9:30 a.m. and 2 p.m.  These extended hours for pit trading have eliminated the confusion for grain merchants and farmers regarding closing prices.  Now the settlement price is based on both the closing ranges for pit and electronic trading and bid sheets should all reflect the same closing price. 

The CME has made an adjustment to trading hours for days with USDA reports, like tomorrow.  On report days, pit trading will start at 7:20 a.m.  This is an effort to increase liquidity and give everyone a chance to trade the numbers.  It is probably very important to options traders and brokers, where substantial volume still occurs in the pits. 

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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. 


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