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USDA Report May Produce Sharp Price Swings

USDA Report May Produce Sharp Price Swings

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Spencer, IA: (Jan. 09, 2014) – Fasten your seat belts. Friday’s release of the USDA’s Crop Production and Quarterly Stocks reports could create a rocky ride. March corn has made a limit move six out of the last seven years following the release of the January report, with 2013 being the outlyer.

Analysts say it’s possible such a volatile move could be seen again, with possible changes to ending stocks being the catalyst.

A survey of analysts expects the December 1st stocks number to be 10.77 billion bushels (bbu). If realized it would be the second-largest December 1st corn stocks figure on record, trailing only the 10.9 bbu from 2009-10. The average farm price that year was $3.55, well below USDA’s December projection of $4.40/bushel for the 2013 corn.

Soybeans a little different story. December 1st Quarterly stocks are expected to be 2.17 bbu, the second-smallest figure since the 2003-2004 marketing year.

Rich Nelson, director of research for Allendale, expects USDA to raise soybean exports by 25 million bushels, but cautions not to become too bullish on beans. He expects cancellations.
Nelson says there are 633 million bushels of beans sold that have not yet been shipped. And 80% of those sales are to China. Cancellations could become more frequent as the South American crop moves into the global market, according to Nelson.

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