Morning Musings

12/09/13 -- Well folks here we are, sitting waiting for another USDA report that may immediately be dismissed as being bollocks due to it being based on an unusually immature crop. Still, there's another one due out next month....

MDA CropCast have thrown their prediction hat late into the ring, cutting their US corn production forecast by 91 million bushels from last week to 13.376 billion. That's a bit below the average trade guess of 13.62 billion, although not outrageously so (and still a record crop). They do have a regular habit of being on the low side however, I find.

"Rains remained quite limited this past week, which favoured maturing corn across the southern Midwest and Delta. Rains are expected to build back across western areas this week, especially Iowa, northern Missouri, and western Illinois. However, the rains will be too late to improve conditions for corn, as growth is now finishing up there," they said. I'll agree with that bit at least.

They do seem rather bearish on soybean production prospects though, even more so than Allendale. They've cut their 2013 US soybean production estimate by 39 million bushels from last week to only 2.967 billion. That's 4.4% down on last year's drought riddled crop and below the lowest trade estimate in a recent Reuters survey. Rain might be coming but it's coming too late to help beans they say.

Allendale gave us a soybean yield estimate of only 39.0 bu/acre last week - the lowest in the range of trade estimates. I just can't buy that, not with the USDA having 52% of the crop rated good/excellent versus only 32% this time a year ago when yields ended up at 39.6 bu/acre. I don't see the USDA buying it either.

Some of the lower production estimates in the ring are partially down to an expected lower harvested area than the USDA said in August though. Remember all those unplanted acreage estimates from the USDA's own Farm Service Administration? An intended 1.6 million acres of US soybeans never got planted this year, along with 3.4 million acres of corn, that's what they said last month.

The question is will the USDA cut their harvested area forecasts to reflect this? We don't know, this is the USDA that we are talking about here remember. All we can do is sit and wait to find out the answer.

For beans the USDA's August estimate for harvested area was 76.4 million acres, and for corn it was 89.1 million. The average trade guess for today is 76.25 million on beans and 88.56 million on corn, so the market isn't expecting the USDA to lose that much in area, at least not this month.

I don't do predictions but if I did the this has nil nil written all over it. Who said that? Or was it "I saw the Russian weightlifter's snatch this morning and it was amazing" or "The batsman's Holding, the bowler's Willey" - I forget which. Anyway IF I was going to predict what will happen this afternoon then it would be that the corn and bean production numbers could be higher than the trade expects.

Harvested area might indeed end up being lower than what the USDA forecast last month, I just don't think that they will make any big adjustments today.

However, even if the numbers are big, and therefore bearish for prices, then it's entirely possible that they will be disregarded as inaccurate and that the market will return to trading what it perceives to be "the real numbers" regardless of what the USDA with their Spectrum ZX, a few coloured pencils and their back of a fag packet calculations say.

I therefore confidently predict that the market could do anything this afternoon! I'll get the old runes out about 4ish and see if I can get something a bit more concrete off my old deceased mucker Septic Peg, my spirit guide from beyond the grave, who has a fairly decent track record in these things.

Wooooooo, is there anyone in the room called John? Is your great, great grandfather dead John? He is isn't he, I knew it. I can see a man with a moustache wearing old fashioned clothing. Did your great, great grandfather  wear old fashioned clothing too John? He did. Well I never, this is going rather well isn't it. Was it dark clothing, John? He never wore yellow did he? No. I knew it. Did he sometimes wear a tie on special occasions? A coat when it was chilly? Yes. It's him alright and no mistake. He's got a message for you John, he says it's very important. Woooooo. He says.......what its it? He says hit the buy Nogger a beer button and all your dreams will come true, yes even the one featuring Kylie and her sister....he's fading now....leave the money on the plate on the way out John, there's a good lad.

Meanwhile, in other news, our old garlic munching chums Strategie Grains have released their latest September EU-28 crop production estimates today. They've raised their soft wheat crop estimate by 1.3 MMT, led by a 600 TMT upgrade for the French crop, to 135.5 MMT, an 8% increase on last year. They've also upped their EU-28 barley production estimate by 800 TMT to 59.1 MMT, also an 8% increase on 2012. For corn they've cut their forecast by 1.7 MMT from last month to 64.0 MMT, although that's still 11% more than last year.

The Russian grain harvest lumbers slowly on, now standing at 67.7 MMT off just over 64% of the projected crop area. Wheat accounts for 42.6 MMT of that off 64.5% of plan. Wheat yields stubbornly refuse to go down, averaging over 40% up on year ago levels. They could end up with a wheat crop of 60 MMT at this rate, even if a larger proportion of it than normal is only feed grade.

They've also currently harvested 13.4 MMT of barley (off 73% of plan), along with almost 600 TMT of corn (5%) and 1.1 MMT of sunseed (6%).

Is it 5 o'clock yet?