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How long will USDA data be traded?

CHICAGO, Illinois ( any given month, the big question for market participants is how long will the fresh USDA data be traded once it's released.

On Thursday, the USDA will release the most critical data of the summer. At exactly 7:30am CDT, the June Acreage and Quarterly Stocks Reports will be unveiled. From that point forward, the market's job is to digest the numbers and react accordingly. Most people go back-and-forth as to whether the numbers are higher, lower or equal to the trade's expectations.

If the government report numbers are higher than what was expected, that day's market 'opening' (9:30am) is seen to start lower. If the government undershoots the trade's guesses, the opening bell can bring higher prices.

Interestingly enough, traders' opinions on how the market will open, based on the USDA data, changes numerously in the two hours prior to the trading session.

Regardless the bullishness or bearishness of Thursday's USDA data, it's once the market starts that traders try to figure out just how long these fresh acreage and stocks estimates will stay as major market factors.

With all of the recent flooding, the delayed Midwest planting, and world unrest, there is a chance the most important USDA data of the summer could be trumped quickly, analysts say.​

Tim Hannagan, senior grain analyst, is in the camp that believes the government data will be short-lived. "Lets see the numbers first. But, they will always be there along with talk of an adjustment on acres in July, since some farmers are still planting."

By Monday, weather and its impact on yields takes over the market's focus, Hannagan says. "It's not what you plant but what you grow. Weather becomes the major factor for the markets starting next week."

Not so fast, says other market analysts. As states like North Dakota continue to fight flooding, Jack Scoville, PRICE Futures Group vice-president, sees the market trading this Thursday's report all summer. "There's no possible way the USDA has a handle on 'harvested' acres, due to the ever-changing flooding situation. In the past, I've seen the June Report traded all the way to January."

Rich Feltes, RJ O’Brien Inc. research specialist, will not be surprised if the report gets trumped with other factors next week. “Uncertainty and hence risk premium (and volatility) will rachet lower after release of numbers tomorrow.  Weather and outside markets will assume center stage as dominant price drivers next week,” Feltes wrote to customers Wednesday.

Ron and Sue Mortensen, Advantage Agricultural Strategies LTD, see these numbers traded for awhile.  "They (USDA data) will tell us how much anxiety we should have regarding summer weather, how much cushion we have in terms of old crop supply, how likely it is that the corn crop is large enough to meet demand without severe rationing. Soybeans and wheat are important, but corn is the most important," the Mortensen's say.

Stocks Data Considered

In addition, to the USDA's June Acreage estimates, Thursday's report will include U.S. Quarterly Stocks, as of June 1.

Though most attention is being put on how many corn and soybean acres the U.S. farmers planted this year, the stocks shouldn't b e forgotten, Susan Mortensen says. "I think you should concentrate more on acres.  That could have a more long lasting impact on prices.  However, corn stocks will be important as the market seeks to figure out feed use, rationing, wheat substitution, etc."


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