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USDA grain stocks bearish

CHICAGO, Illinois ( USDA released mostly bearish grain stocks data Thursday. As a result, the corn market could take the biggest hit.

For corn, the USDA estimates stocks at 1.708 billion bushels vs. the trade expectation of 1.407 billion bushels.

For soybeans, the USDA placed stocks at 151 million bushels equal to the average trade estimate of 151 million bushels.

For wheat, USDA pegged the stocks at 2.224 billion bushels vs. the average trade estimate of 2.44 billion bushels.

"The USDA found back the 300 million bushels of corn stocks lost on the June report, when the lows were posted," one CME Group floor trader says. "So, look for a bearish response today. However, a weak dollar and higher energy prices are supportive."

The floor trader adds, "While we were expecting a higher stocks number than the average guess, the 300 million increase is rather large. We will now have to wait for more yield data on production report, a week from Friday. But, this number will cool our jets."

Jack Scoville, PRICE Futures Group vice-president, says the report is very negative corn, but kind of neutral to beans and wheat.  

“Wheat stocks a little higher than expected, but production a little lower so a wash, and beans dead on,” Scoville says. But corn is the big number and a big number.  We will talk about it all day.  I personally think it is harvest related, but who knows.  

Scoville adds, “Calls should be steady to higher beans, steady wheat, and sharply lower corn, hearing up to 20 lower although I think more like 10. This morning’s weekly export sales were solid to great. So, not a lot of bad news, away from the corn stocks.  I can se corn opening sharply lower and then rebounding kind of strong due to the short crop ideas.”  

Jason Ward, Northstar Commodity Investment Company, says he’s shocked at the USDA’s corn stock estimate.

“The real question we are asking around the office is how much of this, if any, is new crop corn. Those bushels are not supposed to be reported in this report, but with early harvest it may be tough to distinguish.”

Ward adds, “If it is not new crop then it is bearish. We are expecting the market to be 30 lower on corn, because we were all expecting 1.400-1.45 billion bushels. I can’t explain the corn number. I’m completely dumbfounded. How can it be report after report that USDA changes the entire scope of the marketplace?”

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