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Jan 11, 2021

Trade Expectations for USDA’s Tuesday Reports

Markets firm with South American forecast dry after this week

Trade Expectations for USDA’s Tuesday Reports

  • The trade on average is looking for supportive reports.
  • US corn and soybean stocks are expected to be lower versus December.
  • Global stocks for corn, soybeans, and wheat are forecast to be cut.
  • The combined corn and soybean crops in Argentina and Brazil both are forecast to be trimmed from December’s outlook.
  • USDA also will provide revised estimates for US corn and soybean production with the market leaning towards slightly lower crops.
  • US winter wheat area is expected to be up versus a year ago (see Chart below).

FBN’s Take On What It Means: While the market is looking for supportive numbers in Tuesday’s reports, a lot of the risk to lower supplies is built into the market. It likely would take a sharp reduction in supplies to push the market a lot higher. Plus, with the market bulled up, we could be more sensitive to downside risks if perhaps changes are minor or no large cuts are made to supplies. However, we lean towards no big losses in prices for now.

FBN

Argentina Crop Conditions Lower

  • Buenos Aires Grain Exchange reported corn planting progress advanced from 75% to 85% complete, slightly behind 88% last year.
  • Corn crop conditions declined to 15% good to excellent versus 17% last week
  • The exchange left its corn production forecast at 47 million tonnes, noting downside risk in future reports.
  • BAGE reported Argentina’s bean planting was 93.5% complete, compared 87.5% last week and 93.2% last year.
  • Soy crop condition ratings dropped to 27% good to excellent versus 42% last week, and 52% last year.
  • The soybean crop production forecast remains at 46.5 million tonnes.
  • Wheat harvest was 98% complete and the crop production forecast was raised slightly to 17 million tonnes from 16.8 million previously.
  • Soil moisture conditions declined sharply as the weather remained dry until this week.

FBN’s Take On What It Means: Conditions may stabilize depending on how forecast rains verify over the next week. Rain over the weekend was beneficial for central and northern growing areas, but left areas in the south and east dry. USDA will update its crop forecast in tomorrow's report, but could leave the figure relatively unchanged as the upcoming month is key for yield potentials.

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Kevin McNew

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Magazine

Marketwatch: Jan, 18

US Corn Price Idx: ZCPAUS.CM

open: 5.7667
high: 5.8486
low: 5.7266
close: 5.8288

US Soybean Price Idx: ZSPAUS.CM

open: 13.366
high: 13.376
low: 13.2328
close: 13.2696

US Hard Red Winter Wheat Price Idx: KEPAUS.CM

open: 7.3061
high: 7.3384
low: 7.2334
close: 7.2454

US Soft Red Winter Wheat Price Idx: ZWPAUS.CM

open: 7.0114
high: 7.0566
low: 6.9566
close: 7.0014