Pick A Number

11/07/12 -- Yes folks, it's USDA report day! Someone asked me last month what I thought the report would hold, and I said I thought it would be bearish for corn but that the market would be back to trading the weather within 10 minutes.

I was nearly right, it was bearish for corn, but the market was back trading the weather within five minutes! Today I really don't have a strong feeling yet what they will say, but I do have a gut instinct that whatever it is the market will be back trading the weather within a couple of minutes.

As I have mentioned here earlier in the week, I can't recall a previous report when corn yields were widely expected to drop my such a margin in just one month as today. Neither do I recall a report where the difference between what the trade expect the USDA to say, and what the trade think that yields really are are so far apart. That already seems to suggest that today's yield estimate will immediately be discounted as incorrect.

For the record the trade guess at what the USDA might say for corn today is around 154bpa, 7% down on last month.

The real fun for corn will come from how the USDA alter demand to attempt to stop projected 2012/13 ending stocks falling back to the very tight scenario that we have lived with for the last 12 months.

It has been widely rumoured this week that one leading US feed company may have bought up to a million tonnes of Brazilian corn for Oct/Dec shipment, due to price differentials.

There is also demand from the ethanol sector, with crude having fallen from around USD105/barrel to USD85/barrel since mid to late April whilst corn has risen from USD6/bu to approaching USD8/bu in the same time.

Both those factors could see them lower domestic demand.

It is also reported that Australian feed wheat is lining up around USD25/tonne cheaper into Asia than US corn at the moment, with optional origin wheat at around a USD35/tonne discount. That could impact on their projected US corn exports.

For soybeans, we maybe won't see potential yields drop by that much, with the USDA still hanging their hat on late life-saving rains still to come. The trade is forecasting a cut from 43.9bpa to 42.3bpa, a reduction of around half that compared to corn in percentage terms.

For soybeans though the USDA don't appear to have the same leeway for tinkering with the demand side of the coin to prevent projected ending stocks falling too low. Not with China banging the door down on an almost daily basis and South America already seemingly pretty much sold out.

Now at this point I would probably throw some of last month's USDA supply and demand numbers are you. However the USDA website is now not showing what last months numbers were, which I notice has been the case regularly of late 24 hours or so before the release of their report.

A team of people in Washington are obviously number crunching away in readiness for today's figures to be available online as soon as possible after 13.30 BST. Which makes you think, how many people already know what these numbers are? That's potentially a bit of pretty useful information isn't it, if you had access to it?

I noticed last month that, now that we have the electronic market trading right up to the release of these figures, there seemed to be a little clue as to whether the numbers were likely to be bullish or bearish based on a sudden change to a significant sea of red an hour or two before the scheduled release.

Coincidence? Maybe, but I will be watching today to see if something similar happens.

As ever I will endeavour to get the pertinent numbers up here within 10-15 minutes of their release. I'm just typing out what they are now...!!