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John Roach's DAILY GRAIN MARKETING PLAN

USDA Reports

This morning the USDA gave us their final U.S. 2007 Production Estimates, Stocks in All Positions Report, and Winter Wheat Seedings Report. The reports are viewed as bullish by most traders. Traders on the CBOT floor expect corn and wheat to be limit higher with beans 30 higher on the opening.

Corn traders are excited because the U.S. corn ending stocks were cut by 359 million bushels on increased corn feeding and a bit smaller 2007 corn crop.. Wheat traders are bullish because the 2008 winter wheat acreage was only up 1.623 million acres with most expecting a 3.3 million increase. Bean traders saw the Brazilian crop reduced 2 million tons by the USDA but and are bullish because of positive corn and wheat numbers in today’s report.

Here is what the USDA said,

Markets

The market received positive news in the form of smaller U.S. corn and bean crops, bigger feed demand, and fewer acres of winter wheat than expected. My guess is that everything you read will be bullish today. You might actually read the most bullish analysts’ reports for the entire year today because higher prices will surely slow usage.

The bullish feed demand forecasts are a moving target. Last year the January report projected 2006-07 corn feed demand at 5.975 billion bushels and on today’s report the 2006-07 corn feed usage was reported at 5.598 billion bushels.

This year livestock producers not only have to deal with increasing feed costs but an economy that keeps getting disappointing news. In this morning’s New York Times, Christmas sales were reported as being “the weakest holiday shopping season in five years.” If you haven’t noticed recent employment reports, they are also disappointing. Our consumer driven economy is struggling which is not good news for meat or energy demand.

Make sure you get sales made and puts bought before the bullish bubble bursts.

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