USDA Update: 07/09/10

The USDA report on corn this morning turned out to be relatively uneventful as the end effect was to reduce ending stocks for this year by 125 mbu with next year ending stocks down 200 mbu. These were despite a bullish June 30 Stocks and acreage report where acres were 1.4 million below trade estimates and June 1 grain stocks were 300 mbu below expectations. Corn production for this year is estimated at 13.245 billion bushels using a 163.5 bpa yield estimate. The only major change on demand for the 2010 crop year was a 50 mbu reduction in exports to 1.95 billion, equal to the current year. Feed usage for the 2009 crop year was increased 175 while use for ethanol saw a surprising reduction of 50 mbu. Early calls as of 8:00 seems to be 3 - 10 lower for the corn market.

The soybean report didn't really didn't do much as carryout levels were largely left unchanged with production up 35 mbu for 2010 to account for the increased acres reported June 30 with an increase in both crush and exports to leave expected Sept. 1 2011 carryout at 360 mbu. World soybean numbers don't seem to have a significant impact at this point. The soybean market is expected to be a follower today, early calls are 10 - 20 lower.

If we trade higher it’ll be because of weather concerns and outside markets, not today's report. Most commodities traded and closed already over 100 day moving averages and that could stimulate more short covering by trend following funds as they’re modestly short corn and beans. If they want to push a long we’ll end up higher today.

Phil

Wednesday July 7th, 2010

Corn closed higher on Wednesday on fresh fund buying, and a decline in U.S. condition ratings boosted corn as did lingering support from last week's bullish USDA acreage and stocks reports. September corn closed up 10-1/4 cents at $3.78-1/4 per bushel. Funds bought an estimated 12,000 contracts. Talk China bought a cargo each of old and new-crop U.S. corn supportive. Higher crude oil also lent support.

Analyst are also expecting that the USDA is not likely to change its U.S. corn yield estimate in Friday's crop report despite a strong start to the 2010 growing season, grain analysts said on Wednesday. USDA is already forecasting the national average corn yield for this year to come in at 163.5 bushels per acre, just below the record 164.7 bpa achieved in 2009.

Chris Spurlock

Tuesday July 6th, 2010

Crop conditions out today with expected declines in both Corn and Soybeans. The national corn crop rating was down 2% from 73 to 71 good/excellent while soybeans lost 1% from 67-66. Interestingly both crops are rated exactly the same as last year at this time. It looks like those of us in Northern Illinois have been dealt a better hand this year. Wheat harvest has gradually made it's way up to our area but with SRW planting acres down 60% from last year and arguably down much more than that in our area it is hard to get a handle on how fast or slow acres are coming out.

Corn started the day up 6-7 cents on bullish outside markets, a new crop bean sale to China and concerns over European wheat in France and Russia but slowly traded lower throughout the day and finished down 4-5 cents. Corn weather seems to be all over the board with western corn belt generally too wet (Des Moines IA having 200% of avg precip from May 1 - July 4), Delta way too dry (Pine Bluff AR having 52% of avg precip from May -July), and Eastern Corn belt just about right (Champaign IL having 125% of avg from May-July). The absence of extreme heat in any of the long term forecasts should provide a long window for most corn acres to pollinate regardless of their moisture situation.

Soybeans were identical to corn today in that they started 10 cents higher and slowly eroded down to close down 6 cents. Soybean ratings at 66% G/E should provide support to prices as many western belt areas have had a horrible time getting beans planted and southern Delta regions are hanging on by a thread waiting for moisture.

Please continue to monitor any old crop corn in the bin as quality issues can pop up at any time.

Scott Meyer