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Focus turns to Thursday USDA reports

Jeff Caldwell 01/09/2012 @ 3:23pm Multimedia Editor for Agriculture.com and Successful Farming magazine.

Thursday morning, we'll get what's thought of as the final, most accurate picture of the previous year's corn and soybean crop output and domestic grain stocks on hand. And, farmers and traders say those numbers for the 2011 crop year could cause the earth to shake under the corn and soybean markets.

"The estimate of corn stocks will be especially important as it will reflect any changes in the production estimate and the rate of feed and residual use during the first quarter of the marketing year," says University of Illinois ag economist Darrel Good. "The trade is expecting a smaller production estimate and a relatively small inventory number."

Now, some are eying $8 as a reasonable target for nearby corn futures in the wake of Thursday's USDA reports, both on account of projected lower corn crop output and continued strong demand in the face of dwindling U.S. stocks that some analysts say will be tipping around zero soon.

"Anything is in the cards," says Agriculture.com Marketing Talk senior contributor Mizzou_Tiger. "We had cash corn over $8 last year. Supply is tighter this year. As mentioned for months, demand fluffing has been floating this balance sheet."

The grains traded sharply higher across the board Monday, with some traders saying attention's already starting to focus in on Thursday's reports. And, the way things are shaping up, the numbers could have a pretty major influence.

"History tells us that this will be a rough one. Markets higher on weather down south and we continue to rehash the rebalancing story. My feeling is that those that want to express an opinion going into this number will have already done so and those that don't will stay on the sidelines," says ICAP Energy LLC Derivatives Manager Scott Shellady. "What this means to us all is that this rebalancing will be taking place in a thinner market and will have a bigger effect."


Editor's note: Agriculture.com will be streaming live video of a CME Group post-USDA report press conference, at which traders and analysts will break down the USDA numbers and look ahead to how they'll affect the trade. The conference will take place at 8:15 CST and live video of the event will be streamed in Marketing Talk.

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Scott Shellady: Options 101