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It is hard to write a meaningful comment with two important USDA reports coming shortly. Friday’s stocks report will begin to answer questions regarding supply and the crop report on October 11th should provide the market a more accurate supply picture.
The fear tomorrow is the corn stocks number will not provide any clarity to the market--rather it will muddy the waters even more. With as much as 1.2 billion bushels of corn harvested before September 1st, will the USDA be able to accurately separate old crop bushels from new crop bushels? Or, more importantly, will the USDA be able to persuade the market that they have done an accurate job?
Solving the puzzle is key. The market is looking for clues regarding what price was/is necessary to reduce corn demand. Was the brief rally above $8.00 enough? If the USDA throws a curve ball, then the December 1st stocks number (not released until January of 2013) will be crucial. Remember, the USDA has a history of issuing numbers that are vastly different than the pre-report estimate. Stocks reports generate very volatile price reactions.
The issue is corn feed demand. Other categories of use, like exports and ethanol, have weekly/monthly reports to provide continual data to the market. Feed/residual demand is calculated off the stocks reports.
To help estimate feed demand in the future, the quarterly Hogs and Pigs report will be released at 2 p.m. Friday afternoon. Estimates include an all hogs and pigs number of 100.7 percent. The Cattle on Feed report from last Friday showed steady on feed numbers. The numbers of chickens being fed is fairly steady when compared with year-ago numbers. While eventually animal units should decline, it looks like the crop marketing year starts with steady demand.
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