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What Surprise will the February USDA Report Hold?

Here are the analyst expectations for the February WASDE report and what traders will be paying close attention to.

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In the overnight session the grains turned negative with corn down 1 ½ cents, soybeans down 2 ¼ cents and wheat down 3 ½ cents on the week. The dollar index is trading higher this morning and crude oil is trading slightly lower. This morning at 11 AM CST the USDA will release their February Supply and Demand report.

Analysts are expecting a 2 million bushel increase to both corn and wheat ending stocks, while soybean ending stocks are expected to decline 12 million bushels to 398 MBU carryout. Soybean export sales continue to run well ahead of pace, building traders’ expectations that the USDA will revise export sales higher in this month’s report. Looking at the last five February WASDE reports we have seen the USDA revise ending stocks on average 56 bushels lower for corn and 9 bushels lower for soybeans.

South America will be highly focused on this report as harvest begins to pick up pace in the southern hemisphere. Some traders believe that revisions in Brazil and Argentina production will occur in next month’s WASDE report with such little harvest data available at this time. However, January was an exceptionally dry month for the northern part of Brazil providing 40 percent less moisture than normal over the last 30 days. With the precipitation significantly less than normal it is likely we see at least a minor revision in production in South America. The average analyst expects Brazil soybean production to be cut to 94.67 million metric tons, and corn production to be cut by nearly a half million metric tons. These production cuts will most likely be offset with increases in Argentina corn and soybean production, with the average analyst expecting 22.54 MMT and 55.58 MMT respectively.

In the overnight session Australia increased their 14/15 wheat crop estimates to 23.61 million metric tons, up from 23.22 million metric tons in December. Texas winter wheat condition also improved this week with 44 percent of the crop rated good-to-excellent up from 42 percent a week before.

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