Nice thing about starting this blog only 3 days ago is that you can’t read what I have been telling customers about my guesses on the USDA report out this morning or the resulting affect on the market. I can say I was right and most readers will not be able to prove otherwise.
The most interesting item in this mornings report to me was corn stocks: corn and soybean stocks were lower than expectations and wheat stocks were slightly above. March 1 Quarterly Corn stocks are down considerable from last year but most of that decline is “on farm”.
Commercial houses are nearly as full of corn as they were this time last year. I am really torn as to what impact that fact will have on the market. Grain elevators are lugging inventories so carries should be there, there are few replacement bushels available so we should trade an inverse and basis levels should better themselves right? Guess the market has been explaining to us with volatile spreads that it doesn’t know either.
Most commercials have been concerned about the inverse in the market July vs Dec for some time now. Considering the amount of stocks they have I am sure most have attempted and made cash sales out through July to protect themselves.. As long as we are looking at an inverse it is not hard to find willing commercial sellers. That fact has removed much of the reason to ratchet up basis levels dramatically.
The USDA crop acre projections did hold a couple of surprises. Cotton acres were not up as much and soybean acres were actually down from last year. That leaves room for corn to lose a few. We could still see some shift so I would expect corn prices to be sensitive bean and cotton prices.
Corn was limit up this morning… guess I was right. : )
