Grain traders await USDA blockbuster on Monday

January 11, 2009

grainelevator Monday will present a raft of eagerly awaited statistics from the U.S. Agriculture Department, making the day one the biggest benchmarks of the winter for the markets.
    USDA’s blockbuster crop numbers to be released at 8:30 a.m. CST (1330 GMT) on Monday will set the stage for price direction in Chicago Board of Trade grain and soy markets this week.
    Traders will be eager to see the government’s final 2008 U.S. corn and soybean crop numbers; its updated 2008/09 corn, soy, and wheat ending stock estimates; its Dec. 1 U.S. grain stocks data; and its first U.S. winter wheat seedings report of the season.
    Winter wheat seedings will be the first number that will gain attention, with all analysts expecting a drop from last year’s 46.2 million planted acres.
    But it’s a roll of the dice on how big of a drop.
    Analysts polled by Reuters on average expect 4 percent fewer seedings, or a total 44.3 million acres.
    Final U.S. production numbers are typically pretty well known going into the January report. USDA as of November, the most recent report, had estimates for a 12.02 billion bushel corn crop, the second largest in history, with soybeans at 2.921 billion bushels. 
    In normal years, the U.S. harvest is mostly wrapped up by November. But this year was anything but normal.
    The heart of the U.S. crop belt saw its worst flooding in 15 years during June — stalling planting and forcing farmers to replant many fields washed out by the floods in key states like Iowa, Illinois and Indiana.
    Then a wet autumn stalled harvest. By December, farmers were still struggling to get the last of their corn out of snow covered fields. At the end of December there was still up to 7 percent of the corn crop yet to be harvested, analysts say.
    “That’s 500 to 700 million bushels of uncertainty — that’s huge,” said Randy Mittelstaedt, analyst with Chicago brokerage RJ O’Brien. “Drive around anywhere out in the country, you still see plenty of corn fields still standing.”
    But corn has seen disappointing demand this season. Exports are about half what they were a year ago and a struggling domestic ethanol market has meant less corn turned into the biofuel.
    Soybeans will likely offer the fewest surprises. But traders will be watching to see if the crop size was also hurt by a late harvest.
    After USDA’s numbers, the market will return to South American weather. Both central Argentina and southern Brazil are parched but were expected to receive rain this weekend and early in the coming week.
    However, the forecast took an about-face on Friday, with central Argentina expected to stay dry through Thursday — news that sent CBOT soybeans to a three-month peak.
    “It’s all Argentina, that’s the whole ballgame,” said analyst Vic Lespinasse for GrainAnalyst.com on Friday.
    While the dryness would be more detrimental to Argentine corn which is now pollinating, traders are most worried about the country’s soybean output. 
    The world grain trade is counting on Argentina, the world’s third largest soy exporter, to pick up the slack from a smaller supply of U.S. soybeans. U.S. soy stocks are projected to reach a five-year low of 205 million bushels by the end of this marketing season in August. 
     
PHOTO: Grain elevator in Ridgefield, Illinois. U.S. grain stocks are tucked away for the winter. USDA to report on Monday the amount of grain held by commercial firms and farmers on Dec. 1, 2008.

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