USDA S&D
Posted By: Roger Wright <Send E-Mail>
Date: Wednesday, February 9, 2005 at 9:45 a.m.
The USDA released its monthly S&D this morning. The market expected an increase in the US corn and soybean carryout, and a decrease in the wheat carryout. World corn and bean carryout was expected to increase with a decrease in the world wheat carryout.
The biggest surprise to the market was a one and half million mt decrease in the Brazilian bean crop. The USDA lowered bean production for Brazil, Uruguay, and India. Brazil's crop is projected at 63 million tons, down 1.5 million tons because of “dry weather through January in the southern state of Rio Grande do Sul which extended into Uruguay”. Uruguay borders southern Rio Gran do Sul. Argentina’s bean crop was left unchanged. Last year, in February, the market was highly critical of the USDA with its huge prediction of the Brazilian crop while “everyone” agreed the Brazilian crop would be much smaller than the USDA’s 66 million mt estimate. None-the-less, the USDA did not change their estimate until March. The USDA responded to that criticism by saying it was too early in the growing season to cut bean production in February. Did they change their policy on what was “too early in the growing season” or do they see something much worse this year than they saw last year?
The US bean carryover was increased about as expected with a 5 million bushel increase as the US crush was reduced 5 million bushels.
The US wheat carryover was reduced perhaps a bit stronger than expected at 25 million bushels, but the world carryout was not reduced as expected; it was increased a minor 4 million bushels, but being up a slightly when lower was expected is a definite negative.
The US corn exports were decreased 50 million bushels as expected and the carryout was increased accordingly to slightly over 2 billion bushels. It is interesting to note the USDA increased the expected price paid to farmers by five cents… World corn carryout was increased about as expected also, 91 million bushels.
I would say these numbers were friendly for wheat and beans, neutral for corn. Certainly, the USDA’s lower Brazilian number will catch the eye of the market today, but there is still a lot of beans in North & South America.
CBOT Mkt Info: Positive news for change
Posted By: Roger Wright <Send E-Mail>
Date: Thursday, February 10, 2005 at 10:35 p.m.
Corn, wheat and bean weekly export sales were above expectations Thursday morning.
The daily news was especially strong for wheat. Cuba bought 125,000 tons of US wheat. US wheat export sales or on pace to surpass Wednesday's S&D increased sales projects. Further, Japan bought 45,000 of US wheat. A rumor that a US exporter sold 50,000 tons of wheat to Iraq was also noted. The EU announced that it had granted export licenses for 185,000 tons of wheat at their weekly tender with a maximum export subsidy of 4 euros per ton. The French believe that the subsidy needs to 10 to 11 Euros per ton to reach the 300,000 tons per week needed to make the necessary sales quantity. F.C. Stone reported 17 million bushels of vomitoxin laden wheat are in Toledo... can't deliver that against CBOT futures... if true, Toledo will be bidding up wheat this year to get enough "clean" wheat to blend the contaminated wheat to get the vomitoxin down to 20 parts per billion. I mentioned a couple weeks ago the new crop wheat basis in Ohio was surprisingly strong. Now we know why...
Along that same note, remember the bearish ideas that corn piled outside would be a drag on the corn market this winter? I have heard of three elevators this week (warmer weather last week!)bidding up the corn basis to attract good corn to blend with corn stored outside that is going bad...
Brazil's soybean export registrations are about an eighth of what they were a year ago and was supportive for the bean complex. Brazil's farmers are in sync with US farmers; they are both holding onto soybeans. Illinois River bean basis is 22 over the March for February compared to just 12 over the March for March delivery.
Funds are short over 300 million bushels of March beans with only 185,000 bushels of beans currently in CBOT approved for delivery warehouses. If I was short March beans, I be scurrying to either liquidate the short march position or get title to beans in a CBOT approved warehouse. It looks like some the fund managers are beginning to think the same way...
The Gulf export bean basis was up another cent to go on top of the futures gain Thursday. Corn basis was steady better and soft wheat basis was unchanged.
Cash wheat was 2-6 cents higher. Cash corn was 2-3 cents higher. Sorghum was 2-6 cents higher. Cash soybeans were 3-12 cents higher.
Do not get carried away with the idea that the winter lows are in for sure, but it IS beginning to "smell" that way. February is more than third over... Friday will probably be a down day on modest profit taking and some farmer selling.
... che bello che bello ... se i fondi cominciano a ricoprisi sul marzo viene fuori una candelaccia verde meravigliosa !!! 
