Tuesday January 12th, 2010

If you are on the side of producing grain, it was a bad report card issued by the USDA today in it's supply & demand findings. The USDA increase corn yield from 162.9 in Dec to a whopping 165.2 bu/ac. Harvested acres were also somehow increased from 79.3 to 79.6 million acres which increased production a total of 230 mbu. Traders were expecting a reduction of near 100 mbu leading into the report. Demand was also surprisingly increased 140 million bu with feed use up 150 mbu from Dec. In the end, carryout was increased 89 mbu to 1.764 billion. Corn closed down the limit of 30 cents with an outrageous number (over 100,000) of contracts offered to sell limit down in the March futures month. Bids tonight have 15 cents of corn protection to reflect the offers to sell when the market closed.

The USDA soybean report showed production up .7 bu/ac to 44.0 with acres slightly down from 76.6 to 76.4 with an end result of 42 mbu more of production. Demand was increased as expected 52 mbu with exports up 35 mbu for a net rusult to carryout of 10 mbu less. The SA crop estimate was increased for Brazil from 63.0 million metric ton to 65.0 and Argentina was left unchanged at 53.0. Last year Argentina had 32.0 mmt and Brazil had 57.0 mmt.

Time will tell if any of these numbers are accurate, but the USDA did leave the door open to a lot of revisions as they already announced they would be resurveying farmers in many key states and would revise production numbers in their Mar report.

Scott Meyer