January 12, 2012
By: Craig Haugaard, Grain Origination Manager

CORN:  Out of the market until the open

I will start by saying that SDWG is out of the market this morning until the open.  That probably tells you all you need to know about this morning’s USDA report.  The trade was taken completely by surprise by this report and as a result we have a pretty solid chance at trading limit down today.  The average trade guess for the national average yield coming into this morning’s report was 146.4 so the USDA number of 147.2 bu/acre, while not higher than the highest guess was certainly much larger than the trade was looking for.  This in turn had an impact on the production number which swelled from up from 12.31 in the December 9 report to 12.358 billion bushels in this morning’s report.  The trade had been looking for a reduction in the production number to something around 12.265 so once again this is a bearish turn of events.  This then gets us to the ending stocks number.  The trade was looking for a number of 753 so this morning’s number of 846 means we have 93 million more bushels than what we expected to have.  The USDA started to acknowledge the drought conditions in South America by reducing their estimate of the corn crop in Argentina by 3 MMT while leaving the size of the crop in Brazil unchanged.  I wouldn’t be surprised to see the market trade limit down at some point today.
SOYBEANS: Out of the market until the open

The bean report defied expectations as well with the USDA raising the national average yield to 41.5 bu/acre.  This is an increase from the 41.3 that the USDA gave us last month.  The trade had been looking for the 41.3 number again in this report.  The increase in yield pushed production higher as well.  The average trade guess coming into this morning’s report was for a production number of 3.042 so today’s USDA number of 3.056 is being viewed as bearish.  In terms of the all important carry-out number the trade was looking for a number of 227 which would have been down slightly from the USDA number of 230 that we had in the December 9 report.  Instead we have now been given a carry-out 270 to play with.  On face value that size of carry-out could very well set the stage for a move sharp break in bean futures with some calling for a seventy cent lower move today.  In the all important South America we saw the USADA start to reflect a drought by dropping the projected production number in Brazil by 1 MMT and in Argentina by 1.5 MMT.  I suspect we will continue to see those number ratcheted lower in the next couple of months.

WHEAT: Out of the market until the open

Winter wheat seeding came in nearly a million acres more than expected and that should help weigh on prices this morning.  In terms of the carry-out we saw minimal change with the domestic carry-out pegged at 870 while the world carry-out swelled from 208.5 MMT in December to 210 MMT in this morning’s report.  I look for wheat to plummet along with the other grains this morning.

The information contained above was taken from sources which Wheat Growers believe to be reliable, but is not guaranteed by Wheat Growers as to accuracy or completeness and is made available for information purposes only.  There is a risk of loss when trading commodity futures and options.