The USDA released neutral-to-bearish grain reserve numbers Friday.
In its December Supply/Demand Report, the government agency lowered the amount of U.S. corn and soybeans expected to be left over at the start of the new marketing year of September 1, 2011 for corn and beans and June 1, 2011 for wheat.
Tim Hannagan, PFGBest.com senior grain analyst, says the numbers were not dropped enough. "I see the report neutral to bearish, as corn and wheat came in over pre-report trade guesses on ending stocks. World wheat and corn stocks are higher. The numbers were not too far off guesses. So, it was a little bit conservative of a report. No big surprises."
For corn, USDA estimated the 2010-11 U.S. carryout at 832 million bushels, vs. the average trade estimate of 803 million bushels and the government's November estimate of 827 million.
For soybeans, the USDA 2010-11 U.S. carryout is pegged at 165 million bushels, compared to the average trade estimate of 167 million bushels and the USDA's previous estimate of 185 million.
The U.S. 2010-11 wheat carryout estimate is 858 million bushels, vs. the average trade estimate of 849 million bushels and the November estimate of 848 million.
WORLD CARRYOVER
On Friday, the USDA estimated the 2010-11 world wheat carryover at 176 million metric tons compared to its November estimate of 172.5 million metric tons.
For corn, the 2010-11 world carryover is estimated at 130 million metric tons vs. a November estimate of 129.2 million metric tons.
USDA estimated the 2010-11 world soybean carryover at 60.1 million metric tons vs. its November estimate of 61.41 million metric tons.
REACTION
Jack Scoville, PRICE Futures Group vice-president, says the report is interestingly negative. "Early Calls will be a little lower in corn and wheat, maybe 3 to 5 lower for both and steady/mixed in the beans. "A corn price uptick based on imports is very possible, I hear of a lot of Canadian corn moving into New York for the dairy and other uses there. The USDA's wheat cut in food demand I don't understand real well. The report indicates an increase in soybean export demand and a cut in ending stocks. Both are dead-on, regarding expectations. World ending stocks appear, at first blush, to be a little negative as well. So we could see a little pressure here early in the day anyway," Scoville says.
Yet a CME Group grain floor trader says the report is considered small and a non-factor. "USDA never updates production in Dec. Remember, final yields are still expected lower and they will come in January. Also, a Jan stocks report that will be important, with many thinking there will be more disappearance there. Notice the July Dec corn spread continues to rally."
Matt Pierce, a floor trader and analyst with GrainAnalyst.com, says the USDA report is a snoozer. "The most boring report in ages. The increase in world wheat may be looked at as bearish, but we are dealing with quality issues, not quantity.
Beans are doing nothing, based on this report, with all eyes on Chinese trying to raise interest rate levels," Pierce says. Corn is expected to do nothing, off this report, with the front end of volatility expected to get killed."
