Blogging by the Bushel
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This is a million dollar question that many are wondering. The big thing to note is that no yield or production numbers will be released until the January report. However, this could still be a big report though, so don’t discount it as meaningless. I have tried to list what most will be looking for…hope it helps. Let’s first look at ethanol. In Friday’s report the USDA may adjust the amount of corn used for ethanol up anywhere from 50-100 mmt. Do not get too excited though because if we go back to last week, the lack of talk on the extension of the ethanol blender’s credit in congress turned the market bearish early in the week. So if they do not extend tax credits the USDA is liable to reduced it. Export demand is the tricky piece of puzzle. Exports could be increased if they decide to drop Argentina’s crop size from 25 mmt to closer to 22-23 mmt. This comes after a private estimate last week had Argentina corn production at 22.5 mmt and Brazilian production at 50 mmt compared to previous USDA numbers of 51 mmt. Exports could also increase if Russian import numbers are increased. Right now, the USDA has Russia importing just 1.9 mmt. Some believe they made need double that.
As for soybeans, it shouldn’t come as a surprise to anyone that the USDA more than likely once again raise exports by at least 50 mmt and crush by 25 mmt. U.S. soybeans are in high demand. There are rumors circulating though that the numbers could be much higher which means very bullish for beans. I believe that some of this premium has already been built in, but am uncertain as how much. If the market does make huge leaps I wouldn’t be afraid to make some more sales. Longer term the market will most likely continue higher but the moves will be fast and furious. So if you are not ready to sell, place open orders above the current market.
Wheat is the hardest off all three complexes to gauge because there is a lot that could change with the global numbers. With the recent wet weather in eastern Australia delaying harvest a lot traders are saying they wouldn’t be surprised to see the hard red winter wheat exports increased. Early estimates indicate that as much as 30% of Australia’s wheat crop this year will be feed grade quality due to the excessive rains. Due to this fact some traders are saying the export increase could be as much as 50 million metric tons.
Everyone looks straight ahead and sees all these supply/demand facts on the balance sheet, but we cannot ignore other key domestic issues as well. Keep in check the high unemployment figure, unresolved economic situation and the fact that banks are still easily not lending money. Most importantly a lot depends on what happens with the dollar. Right now I am an extremely cautious bull with optimistic bearish tendencies. That is a least until we see the December USDA numbers and then the January crop report.

Anna Kaverman

Mercer Landmark

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