Tag Archives: Ags

USDA October Supply Demand Preview

by on October 7, 2011

SOYBEANS

The soybean market has seen a collapse of more than $3.00 since late August and is extremely oversold going into the key October USDA Crop Production and Supply Demand reports on Wednesday, October 12th. On top of the bearish macroeconomic news of the past six weeks, the market is also absorbing better weather for September and a general expectation for higher yields in the report. There have been recent indications that yield in areas which were hit with dryness could be down due to low moisture content. However, we still expect to see a jump in yield to around 42.8 bushels/acre, up 1 bushel/acre from last month. While the late start to corn plantings might have pushed actual soybean planted area a bit higher, the FSA data has indicated the opposite. We lowered our estimate of harvested acreage by 100,000 acres. With a record South America supply on September 1st, we also lowered our export forecast by 10 million bushels. As a result, we see ending stocks increasing to 233 million bushels from 165 projected last month. This would push the stocks/usage ratio to 7.4%, a 5-year high.

PRICE OUTLOOK: We see a bounce in January soybeans to the 1211 3/4 to 1266 3/4 zone as a selling opportunity, with 1145 and 1139 as next downside objectives.

CORN

There is also plenty of talk from the early harvest of higher than expected yield. While the weather in July was some of the worst on record, subsoil moisture ahead of the heat was good. Producers used record high profitability on paper to justify spending more on inputs (such as fertilizer) in order to attain optimal yields. On top of that, the weather in September was nearly ideal. We are looking for a jump in yield in this report to the vicinity of 150 bushels/acre, up from 148.1 last month. This would more than offset a drop the harvested acreage of 500,000 acres that we think resulted from the poor weather earlier in the growing season. Based on these changes, we are looking for production to come in around 12.585 billion bushels, which is still below projected usage. We have lowered our estimate of ethanol usage by 25 million bushels and have raised our exports estimate by 50 million bushels due to expected increases in demand from China. As a result, we see ending stocks increasing to 943 million bushels from 672 projected last month. This would push the stocks/usage ratio to 7.4%.

PRICE OUTLOOK: The increase in ending stocks is expected, and even if yield is left unchanged, ending stocks will increase to 858 million bushels (784 million with the acreage adjustment), so it will be tough to see a bullish surprise for the report. Our concern is that the soybean numbers could be negative enough to carry the other grains lower after the report. The long liquidation trend by hedge funds and index funds is a concern. Look for December corn resistance at the 630 to 651 zone, with support at the 575 to 551 zone.

WHEAT

The Quarterly Grain Stocks and Small Grains numbers (which included wheat production were released last week, so a good deal of the uncertainty in the wheat outlook has already been absorbed by the market. As a result, the “by class” estimates will be the most important data for the wheat market in Wednesday’s Supply/Demand report. Hard spring wheat ending stocks could slip below 100 million bushels, which would be the second tightest on record. (In 2007, record low stocks contributed to the rally to $24.00 per bushel.) While this could be the bullish highlight of the report, US total ending stocks and especially world ending stocks data are not showing any abnormal tightness. US ending stocks could drop to 725 million bushels from 761 million last month and 861 million last year. Production was already revised down by 69 million bushels last week.

PRICE OUTLOOK: With the extremely oversold condition, it will not take much in the way of positive news or even some relief from global economic concerns to spark at least a short-covering bounce in wheat. Dryness in Ukraine is still an issue, and there could also be a return to dry weather in the US southern plains that could spark concerns for next year’s supply. Given the huge profitability for corn and soybean producers around the world, the wheat market might also be caught up in a battle for planted acreage. Close-in support for December wheat is 610, with 642 and 676 1/2 as stiff resistance. The double bottom might spark some short-covering ahead, with funds holding a record high net long position.

COTTON

Traders see yields coming down for this report, which could drag production down by 150,000-250,000 bales. Pakistan’s production may also be revised lower. However, there are still concerns that other key exporters like India will be more competitive than the US, which could raise questions on the ability of the US to export 12 million bales this season. It is too early in the marketing year and the current export pace is too strong for us to expect the USDA to revise is US export estimate lower. With that in mind, the US ending stocks might come in at 3.2 to 3.3 million bales versus 3.4 million last month and 2.6 million last year. World demand is still in question as well, so lower US and Pakistan production estimates may not necessarily lower world ending stocks.

PRICE OUTLOOK: Look for a range of 106.80 to 94.55 for December cotton over the near term.

Corn Market Commentary – 2009.12.15

by on December 15, 2009

Below is a sample of our Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!

NEAR-TERM MARKET FUNDAMENTALS: The corn market closed higher for the third day in a row yesterday in conjunction with moderate buying support from funds. Corn followed soybeans and meal higher tied to the higher than expected crush rate for November. This in turn was tied to improved feed demand in the US which may be following an improving economic outlook according to many traders. This has not had a dramatic impact on corn demand yet, and corn lagged on yesterday’s rally. But export sales have moved higher for corn in 2 of the past 3 weeks and the USDA announced a sale of 116,000 tonnes of corn to an unknown destination yesterday morning. In addition, South Korea’s biggest feed maker is looking to buy up to 165,000 tonnes of corn along with 55,000 tonnes of feed wheat and 4,500 tonnes of barley. South Korea may have some catching up to do in the feed department according to one analyst since they announced today that imports of corn are down 19% to 6.6 million tonnes for the first 11 months of this year. South Korea is normally a very consistent importer and is the world’s third largest buyer. The USDA weekly crop update yesterday afternoon showed overall harvest progress at about 4% for the week last week to 92% harvested. Illinois, Indiana and Iowa were at 90%, 96% and 96% respectively. Nebraska and Minnesota were each at 91% complete. However, the biggest laggard was North Dakota at just 60% harvested, followed by Wisconsin at 85% and South Dakota at 82%. Forecasts call for dry weather across major harvest areas of the US through later this week with the exception of some light and scattered rains moving into the west central Corn Belt by Friday. Weather in Brazil has been mostly dry in the corn-growing provinces of Parana and Rio Grande do Sul which is welcome. Conditions are expected to be mainly dry over the next 2-5 days with a few light showers and some localized thunderstorms. This week’s export inspections in corn were 28.1 million bushels, about in line with trade expectations. An EPA spokeswoman indicated yesterday that the agency will issue final rules on revisions to the renewable fuel standards in early January.

TODAY’S GUIDANCE: The 3-day surge higher is a positive technical development and corn seems to have the longer-term fundamentals to push higher. However, the surge higher in the dollar might encourage some fund selling today. First support is at 402 and 396 1/2 for March corn with resistance at 413 and 425.

USDA Export Sales Report – 2009.03.19

by on March 19, 2009

CORN:

Net weekly export sales for corn, came in at 440,600 metric tonnes for the current marketing year and none for the next marketing year for a total of 440,600.

As of March 12, cumulative corn sales stand at 70.7% of the USDA forecast for 2008/2009 (current) marketing year versus a 5 year average of 72.1%. Sales of 512,000 metric tonnes are needed each week to reach the USDA forecast.

Corn Export Sales - Percent vs Last Year

WHEAT:

Net weekly export sales for wheat, came in at 213,800 metric tonnes for the current marketing year and 22,000 for the next marketing year for a total of 235,800.

As of March 12, cumulative wheat sales stand at 93.2% of the USDA forecast for 2008/2009 (current) marketing year versus a 5 year average of 89.7%. Sales of 159,000 metric tonnes are needed each week to reach the USDA forecast.

Wheat Export Sales - Percent vs Last Year

SOY COMPLEX:

Net weekly export sales for soybeans came in at 143,300 metric tonnes for the current marketing year and 196,500 for the next marketing year for a total of 339,800.

As of March 12, cumulative soybean sales stand at 87.0% of the USDA forecast for 2008/2009 (current) marketing year versus a 5 year average of 87.6%. Sales of 169,000 metric tonnes are needed each week to reach the USDA forecast.

Soybeans Export Sales - Percent vs Last Year

Net meal sales came in at 33,400 metric tonnes for the current marketing year and 40,800 for the next marketing year for a total of 74,200.

As of March 12, cumulative soybean meal sales stand at 60.0% of the USDA forecast for 2008/2009 (current) marketing year versus a 5 year average of 61.3%. Sales of 106,000 metric tonnes are needed each week to reach the USDA forecast.

Soymeal Export Sales - Percent vs Last Year

Net oil sales came in at -8,000 metric tonnes for the current marketing year and none for the next marketing year for a total of -8,000.

As of March 12, cumulative soybean oil sales stand at 58.5% of the USDA forecast for 2008/2009 (current) marketing year versus a 5 year average of 77.9%. Sales of 10,000 metric tonnes are needed each week to reach the USDA forecast.

Soyoil Export Sales - Percent vs Last Year

COTTON:

Net weekly export sales for cotton, came in at 204,200 running bales for the current marketing year and 5,400 for the next marketing year for a total of 209,600.

As of March 12, cumulative cotton sales stand at 93.6% of the USDA forecast for 2008/2009 (current) marketing year versus a 5 year average of 80.5%. Sales of 36,000 running bales are needed each week to reach the USDA forecast.

Cotton Export Sales - Percent vs Last Year

BEEF:

Weekly US beef export sales for the week ending March 12 came in at 13,300 metric tonnes making it 147,300 metric tonnes for the year. This compares to year ago weekly sales of 12,300 metric tonnes and 162,700 for the year. Before Mad Cow (2003) cumulative sales as of this week were 251,800 metric tonnes.

Cotton Market Commentary – 2009.03.12

by on March 12, 2009

Below is a sample of our Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!

The market is probing for a near-term low and a potential tightening of supply for the 2009/2010 season appears to be the factor which has helped provide underlying support in a period of weak international demand. Until the world economy bottoms, the outlook for cotton demand remains weak. However, there is talk of another 10% drop in US planted area for the coming season which is down from a 25-year low in plantings last year. In addition, land will be lost in the higher-yielding delta region and drought conditions are developing in Texas and California. Some rains in Texas this week may have helped ease dryness concerns but it will take more than one or two storms to bust the drought. The market inched higher in very quiet trade yesterday as traders saw the USDA supply/demand news as somewhat important but the focus of attention is on the end of the month planted acreage report. The US supply/demand data was mostly supportive while weakness in world demand kept the world numbers negative. World cotton consumption is now pegged at 111.1 million bales from 112.6 million last month. The USDA lowered US domestic cotton demand by 150,000 bales but exports were revised higher by 500,000 bales to 12 million. As a result, ending stocks are now pegged at 7.3 million bales from 7.7 million projected last month and 10.04 million bales last year. The positive tilt to the US report was offset by news of declining demand from China and increasing world ending stocks which are now pegged at 62.55 million bales from 61.71 million last month. China production was revised down by 700,000 bales and China import demand was revised higher by 500,000 bales to 7 million. China total demand, however, is now pegged at 46.50 million bales from 47.00 last month and from 51.5 million bales last year. Export sales news for the weekly update may have some impact today. Focus is shifting to the shipment pace and traders hope for weekly shipments near last week’s 253,500 bales.

TODAY’S GUIDANCE: December cotton is challenging the November lows and we would have to believe the market should find some fundamental support near the 45.80-42.70 zone.

TODAY’S MARKET IDEAS: Wait for a technical sign of a low before considering buying December futures or bullish option plays. For now, macro economic news may keep the trend down.