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John Roach's DAILY GRAIN MARKETING PLAN

April 10th, 2012 USDA Supply & Demand

Today the USDA released its monthly WASDE supply demand estimates. The Brazilian bean crop was estimated at 66.0 million tons which was at the low end of trade expectations but 1.0 million tons less than the average guess.

The beans may get a shot in the arm from this report, but there was little new for corn or wheat traders to get excited about. Bullish corn traders may be disappointed in the carryover number but usage will have to slow for 801 million bushels to be left in the bin on August 31st.

Bullish traders didn’t get the smaller U.S. corn carryover estimate they expected, but beans and wheat carryover numbers were right at expectations. Click on this link to see the complete list of pre-report trade guesses and most recent USDA prior estimates.

March 30th, 2012 USDA Planting Intentions & Grain Stocks

The U.S. corn acreage was bigger than expected at 95.9 million acres and soybean acres were less than expected at 73.9 million acres. If realized it would be the largest acreage since 1937. Spring wheat was also less than expected at 12.0 million acres which made all wheat acres less than expected. Total crop acres were up a whopping 7.5 million from last year but were still 2.5 million less than 2008.

The USDA said, “Corn growers intend to plant 95.9 million acres of corn for all purposes in 2012, up 4 percent from last year and 9 percent higher than in 2010. If realized, this will represent the highest planted acreage in the United States since 1937 when an estimated 97.2 million acres were planted.

Soybean planted area for 2012 is estimated at 73.9 million acres, down 1 percent from last year and down 5 percent from 2010. Compared with 2011, planted area is down or unchanged across the Corn Belt and Great Plains with the exceptions of Illinois, North Dakota, South Dakota, and Wisconsin.

All wheat planted area is estimated at 55.9 million acres, up 3 percent from 2011. The 2012 winter wheat planted area, at 41.7 million acres, is up 3 percent from last year but down 1 percent from the previous estimate. Of this total, about 29.9 million acres are Hard Red Winter, 8.4 million acres are Soft Red Winter, and 3.5 million acres are White Winter. Area planted to other spring wheat for 2012 is estimated at 12.0 million acres, down 3 percent from 2011. Of this total, about 11.3 million acres are Hard Red Spring wheat. Durum planted area for 2012 is estimated at 2.22 million acres, up 62 percent from the previous year.

All cotton planted area for 2012 is expected to total 13.2 million acres, 11 percent below last year. Upland acreage is expected to total 12.9 million acres, down 11 percent from 2011. American Pima acreage is expected to total 270,000 acres, down 12 percent from 2011.”

Meanwhile, there is less corn and more soybeans in storage this year compared to last. The stocks of corn were smaller than traders expected with soybean and wheat stocks right at pre-report estimates.

The USDA said, “Corn stocks, stored either on- or off-farm, total 6.01 billion bushels, an 8% decrease from about this time a year ago. And there are 1.37 billion bushels of soybeans in storage around the country now, a 10% increase from last year. And there are 1.2 billion bushels of wheat stocks in storage now, 16% less than a year ago.”

March 9th, 2012 USDA Supply & Demand

Traders were anxiously awaiting today’s USDA updated estimates but received little surprise in the change in U.S. supply demand balance tables.

U.S. wheat ending stocks were reduced by 20 million bushels due to large early season exports and a better than expected pace since. U.S. corn and soybean usage and ending stocks estimates were unchanged from last month which left stocks bigger than pre-report trade estimates.

As you can see from the table above, world corn, soybean and wheat stocks were all reduced from last month’s estimate. Although world wheat stocks were cut the most, wheat supplies are still plentiful. Corn traders are more focused on the increased Brazilian corn crop than world stocks. The reduced bean stocks are important but traders have pushed the May bean price up $1.11 since February 9th.

Has the size of the rally been enough to compensate for the smaller South American production? The market will tell us what it thinks today. My way of thinking is that the bean market is fully priced.

Our bean Sell Signal, at 23 days is very long in the tooth. U.S. soybean exports have not kept pace with the USDA estimate and South American export competition is about to begin in earnest. South America will have plenty of beans to supply world demand until the U.S. crop is harvested. Then the U.S. will supply world users until Brazil’s 2013 crop is harvested.

We need to also remember that all of today’s estimates are actually old news. The most important news will come at the end of this month when we get the Stocks in All Positions and planting intentions. And all the USDA reports will be trumped by field conditions in early April.

We see no reason in today’s reports to change our marketing plan. We want to sell an increment of grain and oilseeds on each Sell Signal between now and mid-July. During that period of time the market should print its peak for the calendar year 2012. We want to make sure we get a percentage of our bushels sold on that peak and each additional peak between now and then.

February 9th, 2012 USDA Supply & Demand

The USDA’s WASDE (World Ag Supply Demand Report) report out this morning was about what traders had expected for U.S. corn, a little better for U.S. soybeans and wheat while world numbers fell in line for corn and soybeans. World wheat numbers were outside of pre-report estimates to the high side.

Here is what the USDA had to say:

U.S. wheat ending stocks for 2011/12 were projected 25 million bushels lower this month on the account of better exports supported by the stronger than expected pace of sales and shipments, particularly for competitively priced feed quality wheat. Projected exports of Soft Red Winter and White wheat were each raised 15 million bushels on strong demand from Mexico and South Korea.

Wheat exports were also projected higher for Hard Red Winter wheat, up 5 million bushels, based on sales and shipments to date. Projected Hard Red Spring wheat exports were lowered 10 million bushels as strong domestic premiums for spring wheat continue to limit demand. Ending stocks for all wheat are now projected 25 million bushels lower at 845 million. Based on prices reported to date and the lower expected carryout, the 2011/12 projected season average farm price is raised 20 cents on the bottom end of the range to $7.15 to $7.45 per bushel.

Global wheat supplies for 2011/12 were projected 2.1 million tons higher with larger beginning stocks in Kazakhstan and increased production for India, Kazakhstan, and Morocco.

U.S. feed grain ending stocks for 2011/12 is now projected 45 million bushels lower this month as primarily due to increases in corn exports. Exports were adjusted up 50 million bushels as reduced supplies from Argentina are expected to boost U.S. export business. Corn ending stocks are projected 45 million bushels lower at 801 million bushels. The projected range for the season average farm corn price was narrowed 10 cents on both ends of the range to $5.80 to $6.60 per bushel.

Global coarse grain supplies for 2011/12 were projected 3.1 million tons lower mostly reflecting reduced corn production from Argentina, down 4 million tons (157 million bushels), about what the trade expected. Brazil corn was unchanged at 61 million tons and China’s record crop adjusted up slightly to 191.8 million tons. The USDA did leave the door open for further cuts, stating later rains were not enough to reverse damages.

Global coarse grain trade for 2011/12 is raised with higher corn imports for EU-27 and higher barley imports for Saudi Arabia, EU-27, and Jordan. Partly offsetting is a reduction in corn imports for Canada. Higher corn exports for a number of countries offset a 4.5 million ton reduction for Argentina. On top of the U.S. export increase, world corn exports are raised 2.0 million tons for Ukraine, 0.5 million tons each for Brazil and EU-27, and 0.2 million tons for Russia.

U.S. soybean supply and demand projections for 2011/12 were unchanged, leaving ending stocks at 275 million bushels. Soybean exports are projected at 1.275 billion bushels, down 226 million from last year. Although soybean export commitments through January trail last year’s pace by more than 226 million bushels, lower soybean crop forecasts and reduced export projections for Brazil, Argentina, and Paraguay are expected to be offset by additional U.S. sales and exports during the second half of the marketing year. The U.S. season-average soybean price range for 2011/12 is narrowed to $11.10 to $12.30 per bushel compared with $10.95 to $12.45 last month.

Global soybean production for 2011/12 is now projected at 452.5 million tons, down 4.9 million tons from last month. Brazil soybean production is forecast at 72 million tons, down 2 million tons while Argentina was also projected 2.5 million tons lower, their number now at 48 million tons.

Global soybean exports were estimated to be 110.5 million tons, down 2.6 million mainly reflecting reduced soybean export projections for Brazil, Argentina, and Paraguay. Soybean imports were reduced for China, EU-27, South Korea, Russia, and several Middle East countries. China soybean imports are reduced 1 million tons to 55.5 million reflecting lower than expected October-December imports.

Global oilseed ending stocks are projected at 71.2 million tons, down 3.6 million from last month. Reduced soybean stocks in Brazil and Argentina account for most of the change.

I don’t see much in today’s report that will alter trader ideas. South American crops were adjusted and will likely be cut again for Argentina corn. Brazil plants almost half of their corn as a 2nd crop but the weather in Brazil is not as concerning.

January 12th, 2012 USDA Supply & Demand Quarterly Grain Stocks

Today’s USDA Stocks and production report will likely miss what the bull’s needed. The expectation for smaller U.S. corn crops and no gain in stocks was not delivered in this morning’s report. It is safe to say an increase in both corn and soybean yields (Eastern Corn Belt did better than thought in later harvests) was not what most analysts had expected. Click here to view a summary of the numbers.

Adding bearish sentiment to the corn outlook, corn stocks as of December 1st, missed the trade guess by 241 million bushels to the negative. Although corn numbers from Argentina and Brazil were both lowered (3 & 1 million tons respectively), the FSU increase was enough to offset almost half of those reductions. The trade will likely expect more corn cuts from S. America, not as much reduction for soybeans.

Corn ending stocks remained almost flat, estimated at 846 million bushels, from 848 million bushels. Production was increased 48 million bushels on both a bump in yield (146.7 bu/acre to 147.2 bu/acre) plus a small increase in harvested acres (100,000 acres). Demand for ethanol was unchanged, feed unchanged, while exports increased 50 million bushels on the account of Argentina’s smaller corn production expectations.

Soybean ending stocks increased by 45 million bushels, from 230 million bushels to 275 million bushels. A slightly higher yield added 10 million bushels, while slow demand numbers for crush and exports made up the rest of the 35 million bushel gain. The outlook for soybeans looks negative as rains have helped dry S. American crops early enough to prevent major yield losses.

Wheat ending stocks were adjusted 8 million bushels lower, to 870 million bushels. Most of the reduction comes from a 25 million bushel increase in exports offset by 15 million bushel reduction in feed.

Bottom line in today’s report is the bulls did not get what they wanted. The corn crop increased in size and stocks as of December 1 were much higher than expected. Similar to last year, something in the order of a 200 million bushel gain in stocks will lead the market to price in a larger forecasted ending stocks position in later reports.

Soybeans reflect slower and slower demand as crush numbers continue to fall while exports lose to the larger crops from S. American. As the same time, world wheat ending stocks crept higher again (+1.5 million tons), surely limiting the upside in corn prices no matter what happens during the remaining growing season in S. America and then, the U.S.

We should expect corn supplies from Argentina to remain questionable so long as the weather pattern remains hot and dry. Along with a very dry pattern remaining in the U.S. western Corn Belt, prices will surely find a bottom and then trade weather risk back higher.

December 9th, 2011 USDA Supply and Demand

No surprises in today’s numbers.

U.S. production estimates were unchanged from last month.

Global wheat supplies for 2011-12 are projected 9.3 million tons higher with larger beginning stocks in Australia and Argentina and a 5.7-million-ton increase in foreign production. World wheat production posted a new record at 689.0 million tons, up 37.4 million from 2010-11 and 3.5 million higher than the previous record in 2009-10.

U.S. wheat exports were cut by 50 million bushels due to the increased foreign competition. U.S. wheat ending stocks for 2011-12 were raised by the same amount to 878 million bushels, up 16 million from last year.

Global corn production for 2011-12 is projected at a new record high of 867.5 million tons, despite a 3.5-million-ton decline year-to-year in the United States. Foreign corn production is expected to be up 43.4 million tons from 2010-11. China 2011-12 production is raised 7.3 million tons this month based on the recently released estimate from the National Bureau of Statistics. Slightly higher area and a 3 percent increase in yields from the previous forecast boost this year’s crop to a record 191.8 million tons.

U.S. corn industrial consumption was cut by 5 million bushels and ending stocks were increased by the same amount. U.S. corn ending stocks, at 848 million bushels, are the smallest since 1996.

Global oilseed production for 2011-12 is projected at 457.6 million tons, up 2.8 million tons from last month. Foreign oilseed production accounts for most of the change. Global soybean production is projected at 259.2 million tons, up 0.3 million tons.

Global oilseed ending stocks are projected at 75.5 million tons, up 1.6 million from last month mainly reflecting increased soybean stocks in the United States and increased rapeseed stocks in Canada.

U.S. soybean exports are reduced 25 million bushels to 1.3 billion reflecting the slow pace of shipments and outstanding sales through November, and strong export competition from South America. Projected soybean crush is reduced 10 million bushels to 1.625 billion due to reduced domestic soybean meal consumption and a higher meal extraction rate. Soybean ending stocks for 2011-12 are projected at 230 million bushels, up 35 million from last month.

November 9th, 2011 USDA Supply and Demand

This morning’s U.S. corn production estimate was the biggest surprise in the USDA estimates. The U.S. corn yield was cut by 1.4 bushels per acre from last month bringing down the production estimate by 127 million bushels. That was a bigger cut than was expected.

World coarse grains will be in very tight supply next fall prior to harvest in the Northern Hemisphere. If you click on the graph, you can see that demand has been growing even at relatively high prices. Production was up to a new record because of South American increased corn planting but the world is not producing enough. We need big corn crops in 2012 to supply growing demand and there is little room for crop problems in any major world growing region.

U.S. corn stocks are also projected to be very tight and we will be worried about raising the big crop that is necessary. Corn will open higher this morning.

World soybean stocks (in days of supply) have less history for you to see. The August 31st stocks have many of the South American beans still left in the bin. With South American production really growing we shorten the years displayed so the picture is more accurate. Bean stocks are not as tight as corn, but still tight.

U.S. bean stocks are tight and we will be worried about raising a big crop.

World wheat stocks are not very tight. If you click on the chart, you will see that demand is increasing sharply as animal producers shift to wheat to offset the tight supplies of corn.

U.S. wheat stocks didn’t change this month and are plenty adequate. With improved weather in the hard red winter belt and wheat crop ratings will likely improve next week.

The report reinforced our idea that grain prices will have seasonal price improvement into spring. There still is that one but…….Europe….and nothing looks any better there. MF Global problems continue to keep some of the biggest traders in the world away from markets.

October 12th, 2011 USDA Supply and Demand

This morning’s USDA supply/demand report had a few surprises but nothing far from what traders anticipated. Given recent news about a smaller Chinese corn crop, potentially smaller Russian exports and the need for China to rebuild stocks, today’s report seems outdated before the ink even dried.

Corn yields were left unchanged at 148.1 bu/acre while acreage was reduced as expected. Yield was overall expected to increase to 148.8 bu/acre suggesting the optimism on better yields was based off very pessimistic early expectations. Total planted and harvested acres were adjusted lower by 385,000 and 452,000 acres, respectively.

Corn demand was unchanged with exception of exports, lowered by 50 million bushels, from 1,750 billion bushels to 1,700 billion bushels. Beginning stocks were adjusted upward by 208 million bushels from the September 30th stocks report (this would be the single largest bearish factor).

All in, ending stocks for new crop corn were adjusted higher to 866 million bushels versus a pre-report estimate of 806 million bushels (+60 million vs. trade guess).

Soybean yields were reduced by ½ bushel to 41.3 bu/acre vs. a trade guess of 42 bu/acre. Harvested acres were also reduced 147,000 acres for a total reduction in production of 25 million bushels.

Soybean demand was reduced 31 million bushels, mostly on a large cut to exports (40 million bushels) offset by 10 million bushel higher feed and 9 million bushels higher residual. Ending stocks were smaller than the trade guess by 20 million bushels at 160 million bushels. Not sure I agree with a cut like this to exports, in light of what we know about the activity of the Chinese soybean buyers.

World stocks for corn increased substantially on larger China, Brazil, Argentina and FSU production numbers. Whether China’s numbers are accurate is debatable given their buying presence in U.S. and Argentina export markets recently.

World wheat carryout also increased from 194.59 million tons to 202.37 million tons. Wheat growers need much larger demand numbers to expect much higher prices.

World soybean carryout increased slightly from 65.55 million tons to 63.01 million tons. Higher priced corn has slowly pushed new crop production numbers away from soybeans, primarily in S. America.

U.S. wheat stocks were increased 76 million bushels, from 761 million bushels to 837 million bushels. The pre-report number was 733 million bushels.

September 30th, 2011 Quarterly Grain Stocks Report

Today’s USDA Quarterly Stocks in All Positions Report came as a bearish surprise to corn and wheat traders. Look for corn and wheat prices to be sharply lower on the opening.

The USDA pegged U.S. stocks of corn September 1st at 1.128 billion bushels which compares to the average trade guess of 0.956 billion bushels and the September USDA estimates of 0.920 billion bushels. The corn stocks were larger than the largest guess ahead of the report which was 1.050 billion bushels. Although the stocks are larger than traders expected they are still the smallest since 2003. Corn prices will open sharply lower today.

Although the corn number was bigger than traders expected, prices have been under pressure partially because everybody knew the stocks were bigger and the crop in the field better. Grain buyers have been telling us for weeks that buying old crop corn was easier than it should’ve been.

Although I’m sure many farmers will be mad at the USDA after seeing this report, the likelihood is producers had more corn stored in their bins at home than what they had been reporting. The only time you really know the exact number bushels you have stored on the farm is when that number is zero. Every farmer I know is conservative on the estimates of the corn in farm bins. With this year’s record high corn prices, more of the farmer held corn went to town where it was measured across the scale. Today’s report indicated the percentage of corn held on the farm was the smalled since the 1960’s.

Wheat stocks were also larger than the trade anticipated coming in at 2.150 billion bushels nearly 100 million larger than expected.

The soybean stocks were estimated at 214.7 million bushels slightly below the average guess of 235 million bushels and the USDA’s ending stocks forecasts last month of 225 million bushels.

September 12th USDA Report

The bulls did not get fed by today’s USDA Reports. U.S. corn production was down as expected but no surprise. Bean production was actually bigger than expected. The USDA believes usage rates have slowed which is especially noticeable in the world numbers. World stocks of coarse grains, soybeans and wheat are all expected to grow over the next 12 months. High prices are stimulating production as well.

Opening calls are lower across the board. Traders expect U.S. harvested acres to be lowered next month which may keep some selling from the market.

This morning the USDA estimated the 2011 U.S. corn crop will have an average yield of 148.1 bushels per acre and total production of 12.497 billion bushels. The production estimate was exactly what the trade expected but the yield was 0.8 bushels less. Although this production estimate is down 444 million bushels from the last USDA estimate, it is still 50 million larger than last year’s crop and the 3rd largest U.S. corn crop on record.

World coarse grain production was actually increased (even after the U.S. losses) from 160.92 million tons last month to 162.90 million tons today. 2012 ending stocks were increased to 149.96 compared to 147.21 last month.

The USDA soybean estimate was bigger than expected with the national yield at 41.8 bushels per acres and production of 3.085 billion bushels compared to 3.056 last month. The trade expected 41.2 bpa so the increase of 0.4 bushels per acre from the August estimate was a surprise to most traders. U.S. soybean ending stocks were raised 10 million from last month to 165 million bushels.

World soybean production was up by 0.4 million tons and 2012 ending stocks increased to 62.6 million tons today from 61.0 last month.

There were no changes in the U.S. wheat production or U.S. ending stocks estimates.

World wheat production was increased from 672.1 million tons last month to 678.1 million tons this month. Carryover was increased from 188.87 to 194.59 million tons.

August 11th USDA Report

Today’s USDA report gave the corn bulls what they needed in this morning’s report.

On the supply side, U.S. new crop corn production was reduced by 556 million bushels, to 12.914 billion bushels (just on the low side of the trade range). Corn harvested acres were reduced by 500 million acres while yield was slashed by 5.7 bu/acres. Old crop supplies were increased by 70 million bushels as demand numbers for exports were adjusted lower.

U.S. corn demand numbers were all reduced, all in by 340 million bushels. Feed numbers showed the largest decline, – 150 million bushels, followed by exports also lowered – 150 million bushels. Ethanol was adjusted lower by 50 million bushels. As we have been saying, just how bullish on corn demand can you be when buyers are paying $6.50-$7.50 for your product? All in, U.S. ending stocks have been reduced 156 million bushels, down to 714 million corn bushels.

World corn ending stocks decreased by 1.13 million tons, from 115.66 to 114.53 million tons. No changes from China at 178 million tons while Argentina and Brazil were unchanged.

U.S. soybean supplies were reduced on both fewer harvested acres, down -500 million acres and by a lower expected yield, reduced 2 bu/acre, down to 41.4 bu/acre. Total soybean production was reduced by 139 million bushels to 3.301 billion bushels (Average trade guess 3.174 billion bushels). U.S. new crop soybean demand was reduced as expected by 118 million bushels, exports making up 95 million and crushing another 20 million bushel reduction. Old crop soybean demand was reduced by 30 million bushels on slower export pace, according to the USDA. Ending stocks were reduced from 175 million bushels to 155 million bushels vs. the average trade guess of 172 million bushels.

World soybean ending stocks decreased 1.02 million tons, primarily on a lower U.S. production number.

U.S. wheat supplies remain mostly unchanged, as production was lowered 29 million bushels and demand also lowered 30 million bushels. Ending stocks remained nearly unchanged at 671 million bushels.

World wheat ending stocks climbed 6.68 million tons, no small amount. Stronger FSU and Russian supplies have continued to grow while our U.S. portion of exports shrinks. U.S. wheat exports were adjusted lower by 50 million bushels.

To sum it up, in a year where we needed a huge corn crop, we are staring at a crop that could indeed get smaller by January. Corn prices will escalate again to the top of whatever target the specs put on paper corn, as we already know buyers and end users are likely to not pile on more physical corn at the next price levels. Corn will dominate price levels for the near term with critical August weather directly ahead for a late maturing soybean crop. You can be bullish corn and somewhat bullish soybeans only as long as demand numbers will allow. This report reflects a weakening demand picture for corn as the old saying goes, the cure for high prices is high prices.

July 12th USDA Report

Traders viewed the reports as generally positive although there were not really any surprises. The old crop corn carryover was a bit smaller than expected and the corn carryover for the 2011-12 crop came in well below trade guesses. The bean carryover was right at pre-report estimates for both crop years.

New crop production utilized the June 30th Acreage Report numbers with corn and bean yields left unchanged from their June estimates. The U.S. corn production was pegged at 13.470 billion bushels up from last year’s 12.447 billion bushel crop. The U.S. soybean crop was pegged at 3.225 billion bushels compared to 3.329 billion last year.

Traders will compare Informa’s initial Row Crop Outlook with a U.S. corn yield at 162.5 bpa, to the USDA’s 158.7 bpa estimate.

U.S. wheat yields were increased from 43.1 bpa last month to 44.6 this month. The U.S. wheat crop is expected to total 2.106 billion bushels compared to 2.208 last year.

World wheat production was down about 2 million tons from last month and ending stocks lost about the same 2 million tons.

World coarse grain production was up about 4 million tons and ending stocks for the new crop year were also about 4 million tons bigger than last month.

World soybean production was down 1.3 million tons but that loss was made up by larger ending stocks for the old crop year. New crop ending stocks were up 0.4 million tons.

June 30th Acreage & Stocks Report

Today’s USDA reports were negative especially for corn.

The biggest shocker came in U.S. corn planted acreage which the USDA said totaled 92.3 million acres. That was well above the trade range of estimates which ranged from 89.5 to 91.5 million acres and the June 9th USDA estimate of 90.70. Corn stocks were also bigger than expected at 3.670 billion bushels when the trade average estimate was for 3.290 billion bushels. Corn bulls got shot between the eyes with today’s report. Corn is called limit down on the opening.

U.S. Soybean planted acreage was reported at 75.2 million acres down from the average trade guess of 76.487 million acres and the June 9th USDA estimate of 76.6. The soybean stocks totaled 619 million bushels, a bit larger than the average trade guess of 592 million acres. But beans will follow corn lower in early trade.

U.S. total wheat acreage was estimated at 56.4 million acres compared to the average trade estimate of 56.725 million acres and the June 9th USDA estimate of 57.7 million. Wheat stocks came in at 861 million bushels above the average trade estimate of 823 million.

U.S. spring wheat planted acreage was reported at 13.6 million acres compared to the average trade estimate of 13.279 million.

June 9, 2011

Today’s USDA Reports were bullish on corn and mostly neutral for beans and wheat. Corn traders will likely stay on their buying spree and bring buyers to the other grains as well. Look for sharply higher openings.

Most traders expected the USDA to eventually reduce corn planted acreage due to the weather problems and flooding. The USDA began that process today by cutting 2011 corn planted acreage from 92.2 to 90.7 million acres. Harvested acres were cut from 85.1 to 83.2 million acres. The USDA left their average yield estimate unchanged at 158.7 bushels per acre. The smaller acres cut the USDA U.S. corn production estimate by 305 million bushels to 13.2 billion bushels, well below trade estimates.

Old crop corn carryover was increased by 15 million bushels but new crop 2011-12 ending stocks estimate fell from 900 million bushels last month to 695 million bushels today after plugging in the smaller crop and 100 million less feed usage. Traders had expected a drop to 817 million bushels so today’s numbers should stimulate buyers of the distant months.

World corn ending stocks for the 2010-11 crop year were cut nearly 5 million tons to 117.4 million tons. The surprise came in the 2011-12 crop year where world corn stocks were estimated at 111.9 million tons down a whopping 17.24 million tons from last month. That is a really big cut and traders will crank up their bullishness on corn!

U.S. old crop wheat stocks were lowered 30 million bushels with a 10 million-bushel reduction in imports and a 20 million bushel increase in exports for 2010-11, both based on the pace of shipments to date. All wheat production for 2011-12 was forecast at 2,058 million bushels, 15 million higher than last month. The winter wheat production forecast was raised 26 million bushels with higher forecast yields for Hard Red Winter, Soft Red Winter, and Soft White Winter wheat.

Partly offsetting the bigger winter wheat estimate was a projected 11-million-bushel reduction for durum and other spring wheat production as seedings are projected 290,000 acres lower. Flooding and persistent wet soils have delayed planting in North Dakota and Montana well beyond the normal planting window. The USDA cautioned, “Because spring planting is still underway in the Northern Hemisphere and remains several months away in the Southern Hemisphere, these projections are highly tentative.”

Although the USDA forecast world wheat production down about 5 million tons, bigger ending stocks from the old crop year and smaller usage next year allowed them to increase world wheat stocks for 2011-12 by 3 million tons. The net of their analysis is that prices have been high enough to slow world wheat usage in the old crop year and their expected demand for the new crop as well.

U.S. soybean production and usage numbers were little changed from last month. Exports for the 2011-12 crop year were cut by 20 million bushels and the endings stocks increased to 190 million bushels. These were small changes with little market impact. World soybean numbers were not changed enough to talk about.

May 11, 2011

The USDA weighed this morning with their May production and supply demand numbers. There were no big surprises in their estimates but in initial swaps trade after the report was released, the corn market was down 20 cents.

Neither the bull nor bear in the grain markets scored a knockout, but, supplies are inching a bit bigger than was forecast during the February USDA Outlook Forum. That being said, the prospects for production and price depends (more than it normally does on this date) on weather in several important growing regions of the world.

Their first of the season 2011-12 crop estimates called for a U.S. corn crop of 13.5 billion bushels using an average yield of 158.7 bushels per acre.

Their 2011-12 U.S. soybean crop was projected at 3.285 billion bushels using an average yield of 43.4 bushels per acre.

Their 2011-12 U.S. wheat crop was projected at 2.043 billion bushels using an average yield of 42.5 bushels per acre.

The USDA pegged old crop 2010-11 corn stocks a little bigger than expected at 730 million bushels, some 30 million over the largest trade estimate which ranged from 565 million to 700 million bushels. They found the extra bushels by increasing corn imports 5 million bushels and cutting exports 50 million bushels. Their estimate for the 2011-12 corn ending stocks was 900 million bushels compared to the average trade guess of 811 million bushels.

Soybean carryout at 170 million bushels was slightly over the average estimate of 153 million bushels, but that is no big deal. Carryout for next year was 160 million bushels, slightly below the average trade guess of 176 million.

U.S. wheat carryout at 839 million bushels was slightly below the average estimate of 844 million bushels, but again that is no big deal. Carryout for next year was 702 million bushels, slightly above the average trade guess of 674 million.

April 08, 2011

This morning’s USDA Supply Demand report did not give the trade those smaller corn and soybean stocks as everyone had expected. Particularly after the reduction in stocks from last week, weighing heavy on trader and analyst projections. It wouldn’t surprise us much to see us trading lower across the board.

U.S. corn ending stocks were kept unchanged at 675 million bushels. A 50 million bushels reduction in feed was offset by a 50 million bushel increase in ethanol. The average cash price range was lowered by 5 cents, to $5.20 – 5.60.

U.S. soybean ending stocks were also left unchanged at 140 million bushels. Crush demand was reduced by 5 million bushels and exports adjusted up by 10 million bushels. Residual was increased by 17 million bushels.

Wheat ending stocks were adjusted lower from 843 million bushels to 839, slightly below the average trade guess of 861 million bushels. Wheat stocks are still not tight but it is spring time and in many years, this is when to pay attention to rallies.

March 31, 2011

Markets will be sharply higher this morning as traders adjust their positions for the USDA Reports. The numbers are bullish and can be seen compared to estimates if you click here.

Listen to our webinar to get a complete rundown of the report.

Part 1 | Part 2 | Part 3

March 10, 2011

This morning’s USDA Reports did not give us much new news. The only real change came in wheat where U.S. ending stocks were raised 25 million bushels and world stocks by 4.1 million tons. Click here to see the snapshot version of today’s USDA Reports.

U.S. wheat exports were lowered 25 million bushels due to increased world supplies of high quality wheat (particularly in Australia) and a slower-than-expected pace of U.S. shipments heading into the final quarter of the wheat marketing year. The U.S. wheat ending stocks were increased by the same 25 million bushels.

Global 2010-11 wheat supplies were projected 1.9 million tons higher with Argentina and Australia production each raised 1.0 million tons. Higher yields were noted in Western Australia where wheat quality was not hurt by harvest rains as in the east.

Global wheat trade was projected lower partly reflecting reduced import prospects for a number of smaller markets as high prices trim demand. The largest import reduction, however, was for Russia where imports were lowered 1.5 million tons. Despite last year’s drought, Russia appears to be meeting its wheat needs as the government’s export ban helps maintain supplies for domestic users. With lower imports by Russia, Ukraine exports are lowered 1.5 million tons.

World wheat ending stocks for 2010-11 were projected 4.1 million tons larger than the last USDA report.

U.S. and world corn numbers were virtually unchanged. The same was true with soybeans. Brazil soybean production was forecast at a record 70.0 million tons, up 1.5 million tons from last month due to higher projected yields.

Although the USDA did not change its corn used for ethanol production estimate, traders are concerned about a slower than needed ethanol grind, and growing concerns about next year’s (likely to be less subsidized) ethanol grind.

February 9, 2011

The USDA released its monthly WASDE Report this morning which contained only one surprise that we can see at first glance. The U.S. corn carryover was reduced from 745 million bushels last month to 675 million this month with 70 million bushels increased industrial consumption. Traders were looking for 736 million bushels and will view this as bullish.

U.S. soybean and wheat carryout estimates were left unchanged.

The USDA reduced their estimate of the Argentine corn crop 1.5 million tons to 22.0 million tons and their beans to by 1 million ton to 49.5 million tons. The Argentine cuts were widely expected by the trade.

Brazil’s soybean crop was raised by 1 million tons to 68.5 million tons and their corn crop was left unchanged at 51.0 million tons.

The 2010-11 Chinese corn and soybean crops were left unchanged.

January 12, 2011

The much awaited USDA reports came out this morning with bullish traders getting positive news in corn and beans with more of a neutral report on wheat.

U.S. corn stocks came in at 10.040 billion bushels compared to trade guesses of 10.97. Beans stocks were 2.277 billion bushels compared to 2.333 expected. U.S. wheat stocks were reported at 818 million bushels compared to 842 expected. World corn and soybean ending stocks were reduced 3 million tons and 1.9 million tons respectively.

U.S. corn production last year was pegged at 12.447 billion bushels (152.8 bu per acre) compared to the last estimate of 12.540 (154.3 bu per acre). U.S. soybean production fell to 3.329 billion bushels (43.5 bu per acre) from last month’s 3.359 billion (43.9 bu per acre) estimate.

U.S. ending stocks were also reduced for corn and beans due to the smaller crop size. Corn usage was cut 100 million for feed and increased the same amount for ethanol. Soybean usage was reduced a total of 16 million bushels.

U.S. wheat used for feed was reduced by 10 million bushels and exports were increased by 50 million bushels, reducing the ending stocks by 40 million bushels. World wheat ending stocks were increased by 1.2 million tons.

U.S. winter wheat seedings at 40.990 million acres were up 10% from last year’s 37.335 million acres. For the bulls, the USDA was helpful this morning, but the weatherman was not. Weather in Argentina is looking much wetter this morning.

December 10, 2010

Corn: Neutral to bullish- Opening calls higher 5-10 cents.

Corn bulls did not get much fundamental news to run with this morning as actual numbers are well within pre-report estimates. The USDA estimated the U.S. corn ending stocks at 832 million bushels, up just 5 million from November’s report and in line with an 827 million bushel average trade guess. The USDA does not report on crop supply on the December report.

One take away here is demand numbers were NOT softened up. Ethanol, feed and exports were all left alone and that is friendly to bullish given the tightness of today’s corn crop stocks.

World corn ending stocks came in at 130 million tons, up from 129.18 million tons.

Markets will look to major growing regions in the world, scrutinizing weather patterns and yield potential in South America primarily. Australian weather has been traded for quite some time and in this morning’s report, actually saw an increase in wheat supplies vs. the last report by 1.5 million tons, from 24 million tons to 25.5 million tons.

Soybeans: Neutral to bullish- Opening calls 10 higher

Traders assumed U.S. soybean exports would increase and they were right but they were only raised 20 million bushels, from 1.570 billion bushels to 1.590 billion bushels. Ending stocks came in at 165 million bushels down from 185 million bushels last month. Stocks to use ratios are tightened down to 5.5% as the smaller crop and a pattern of higher export numbers has shrunk ending stocks considerably.

World soybean stocks were unchanged coming in at 60.12 million tons, down slightly from November at 61.41 million tons.

Outside news this morning will likely be a greater driver of futures as China announced a 50 basis points hike in interest rates. This is not a surprise by any means as we read about this over a week ago.

Wheat: Neutral – Opening calls mixed.

No surprises in wheat as U.S. ending stocks were raised a slight 10 million bushels, from 848 million bushels to 858 million bushels, right at the trade guess average of 849 million bushels.

World wheat ending stocks increased from 172.51 million tons to 176.72 million tons. This was largely on reduced feed demand on the account of higher prices and small increases in production in Canada and Australia.

November 09, 2010

Corn: Bullish-opening calls higher

Corn bulls got another positive report, albeit only a bit below estimates. The USDA estimated the U.S. corn yield at 154.3 bushels per acre compared to a pre-report average estimate of 154.4. This gave us a total crop estimate of 12.54 billion bushels very near estimates. U.S. corn ending stocks came in at 827 million with 100 million increased food and 100 million reduced livestock fee. Exports were cut 50 million and the rest of the decline from October’s carryout estimate of 902 million coming from the reduced yields.

Soybeans: Bullish – opening calls sharply higher

Traders thought the soybean yield would be increased but it was actually cut by another ½ bushel per acre down to 43.9 bushels per acre. That brought the U.S. crop down to 3.375 billion bushels, some 50 million below expectations. Ending stocks came in at 185 million bushels down from 265 last month as the smaller crop and 50 million in increased exports brought down the total.

Wheat: Bullish – opening calls higher

The wheat yield was reduced by .3 bushels per acre down to 46.4 bushels per acre. A slight increase in imports was also forecast bringing carryover down to 448 million bushels some 20 million smaller than expected.

October 08, 2010

Corn: Bullish – opening calls : Limit up

Corn bulls got everything they wanted and more. Reductions in yield to 155.8 bu/acre, more than offset a slight increase in harvested acres of 300,000 to 81.3 million.

Illinois showed the largest decline, down 14 bushels per acre. Indiana and Iowa are both down 10 bushels from the previous month, while Missouri and Nebraska declined 9 bushels per acre.

Soybeans: Bullish – opening calls up 7-10

A reduction in yield by .3 bu/acre plus a reduction in harvested acres from 78 million to 76.8 million pushes ending stocks down from 350 million bushels to 265 million bushels. With strong demand forecasts and dry weather in South America still a concern, traders should find this bullish.

Wheat: Bullish – opening calls up 2-15

Smaller acres forecasted by 700,000 acres and a slight reduction in yield, 46.9 down to 46.7 bu/acre skims another 49 million bushels from U.S. ending stocks.

Outside markets:

Dollar Index is higher this morning, 19 cents, after a major slide lower in the past two weeks. Gold also reversed from a high of 1365 yesterday, closing lower than the prior session low.

Stock futures lower ahead of key unemployment report.

Septmeber 10, 2010

On this morning’s USDA crop production estimate, total U.S. corn production was cut by 2% from their August estimate to 13.2 billion bushels. The corn crop was still a record size, however, slightly larger than the 2009 prior record of 13.1 billion bushels.

The U.S. corn average yield was reduced by 2.5 bushels per acre to 162.5 bushels per acre, right in line with analyst’s pre-report guesses. Harvested acreage was left unchanged with acreage to be update next month as final sign up is added to the calculations.

On the supply demand side, beginning stocks of corn for the 2010-11 crop year were cut by 40 million bushels due to bigger export and ethanol usage last year. Exports for 2010-11 were increased by 50 million bushels while feed usage was cut by 100 million and ethanol usage unchanged. The resulting ending stocks for corn were 196 million bushels smaller than last month at 1.116 billion bushels.

The FSU-12 countries did not lose much production on this report with their coarse grain production down only 1.8 million tons from last month. The world coarse grain ending stocks were cut by 5.8 million tons with most of that coming in the U.S

August 12, 2010

The U.S. Dollar index continues to strengthen after recent Federal Reserve comments pointed toward maintaining current levels of stimulus, not adding more. Bullish grain traders will be disappointed in this morning’s USDA World Ag Supply and Demand report (WASDE). Better than average crop conditions, whether you believe it or not, have guided the USDA to raise expectations for soybean and corn yields.

In the corn market, even though we will be faced with bigger yields, corn is at 35 days of supply, back to levels experienced in 2003/2004. This will be a long term supportive tone in corn following a wheat market that remains in a very volatile situation. Remember we remain in a huge weather driven market in the former Soviet Union while U.S. weather remains wet and hot.

Weekly exports out this morning remain very robust, particularly in soybeans and wheat. .

July 9th, 2010

The USDA Reports out this morning were neutral to negative. Look for lower openings across the board. Click here to see the entire report: http://usda.mannlib.cornell.edu/usda/current/wasde/wasde-07-09-2010.pdf

USDA basically gave us a repeat of the positive numbers from their Stocks and Acreage reports June 30th. Since the market has been trading the smaller numbers the USDA gave us last week, there is nothing new for the bulls to grab onto from today’s reports. Weather looks mostly beneficial in North America and China leaving only Europe and Russia as areas of a little concern.

We recommend selling the last increment of corn in the bin and the balance of new crop corn you want to have priced before harvest. Be sure to sell enough new crop corn to cover cash flow needs until March. You don’t want to be forced to sell at a cheap price to pay a bill you know will be due on January 1.

Use this rally to buy put options on all 2010 corn you are leaving unsold. Call your Roach Ag consultant to get put options purchased.

Don’t let anybody (most likely yourself but possibly some broker who thinks he or she knows what prices will be) talk you out of making some small sales on December 2011 and 2012 corn. Sell futures with each year currently at $4.17 yourself if your cash buyer won’t offer a decent contract.

Soybeans are still one day away from a Sell Signal. We base our Sell Signals off the month with the greatest volume and that is currently November. July beans which have considerably smaller volume are solidly in a Sell Signal. Nothing wrong with selling some old beans you have kept for gambling and getting a start on next week’s Sell Signal on new crop.

June 30th, 2010

Today’s much awaited USDA Acreage and Stocks Reports were bullish for corn, positive for beans, and negative for wheat.

The USDA reported that U.S. farmers planted 87.9 million acres of corn, up 2% from last year but well below the average trade estimate of 89.229 million acres. Using 170 bushels per acre average yield gives us a crop 226 million bushels smaller than traders figured. The Stocks were also smaller than expected, coming in at 4.31 billion bushels, 288 million smaller than the average trade guess.

When you add the smaller stocks to the smaller acreage total, corn supplies are down over 500 million bushels. That is a very big difference from what traders had in their minds when corn closed yesterday. Corn is worth more and will be sharply higher today. We also have a bigger demand base (smaller stocks means bigger usage) or the USDA will eventually be forced to reduce last year’s production number. These numbers increase the need to grow a big crop this year.