Thursday, March 31, 2011


The race for acres is on. In fact, it is heating up as farmers respond to the weather and crop prices to plant their 2011 crop.

Corn is still our number on U.S. crop and demand is large. You might call it huge. But soybeans is very far behind to supply the world's protein and oil needs.

The traders and hedgers are trying to figure out what to gamble on because the supply is so tight to demand, any little glitch will make the market run one way or another.

This farmer made a good post with his prediction. No one knows what the final acreage of each crop will be but the market does influence planting.

Weather is number one. I rely on wheat and soybeans more because of my rolling, eroded hills and management plan. I am not a traditional corn and soybean farmer here in the east where we raise good soybeans and wheat keeps my soil from eroding so much.

The market is very volatile and the price will move when the USDA releases their intended acreage report today.

Here is a news flash I just got which will affect the markets this year.

USDA's prospective plantings report shows farmers intend to plant 245 million acres of the five major crops, up from 236 million last year, and above USDA's estimate in its annual Agricultural Outlook Forum, which was greeted with skepticism at the time..

The estimate of 92.18 million acres of corn eases supply concerns modestly compared with the pre-report estimate of 91.84. USDA's soybean acreage, at 77.4 million, is within the pre-report trade estimates but above average expectations.
Corn and bean stocks were below expectations; slightly more wheat and sorghum on hand than the trade was looking for.

USDA's prospective corn plantings are modestly above pre-report expectations, which averaged 91.84. This could slightly ease supply concerns. But in order for ending stocks to use to gain in 2011-12, corn plantings would need to total an ambitious 93.4 million acres, according to DTN Senior Analyst Darin Newsom
Farmers told USDA they plan to plant 77.4 million acres. This is more than the average pre-report estimate of 76.9 million and equal to last year.
At 58.02 million acres, all wheat also is higher than the expected average of 57.3 million. Winter is pegged at 41.2; spring at 14.4 and durum at 2.4. Today's intentions report can't account for changes in spring wheat reductions due to flooding, which eventually may lead to a decrease in acres compared with the 13.7 million planted in 2010, according to Newsom.
Cotton acres, at 12.57 million, are up 15 percent from 10.97 million last year, but are surprisingly low given average trade expectations of 13.15 and a low projection of 12.97.

Pre-report estimates for corn stocks on hand at the end of February averaged 6.69 billion bushels, suggesting usage well above the five-year average pace for the second quarter.

The actual number came in at 6.52 billion, indicating December-February disappearance of 3.53 billion, up from 3.21 billion during the same period last year. This was even stronger use than expected on average, though at the exact lower end of the pre-report estimate range.
Soybean quarterly stocks were expected to come in at 1.299 billion bushels, representing second-quarter usage as a percent of supplies near the five-year average.

Soybean stocks were announced at 1.249, slightly below average expectations and below the 1.266 lowest projection. It represents disappearance of 1.03 billion bushels, a 4 percent decrease in usage compared with the same period a year ago.
The average pre-report estimate for all wheat ending stocks was 1.399 billion bushels, slightly above the 5-year average usage pace at this stage of the marketing year.

With wheat stocks pegged at 1.425 billion bushels, they are slightly above average expectations but within the pre-report range. The disappearance of 508 million bushels is up 20 percent from the same period a year earlier.

ACREAGE (million acres) Actual USDA Outlook
3/31/11 Average High Low 2010-2011 2010-2011
Corn 92.18 91.84 92.60 91.00 88.19 92.00
Soybeans 76.61 76.87 78.50 75.00 77.40 78.00
All Wheat 58.02 57.29 58.40 56.00 53.60 57.00
Winter 41.23 41.10 42.90 40.20 37.34
Spring 14.43 13.73 14.31 13.00 13.70
Durum 2.37 2.55 2.80 2.40 2.57
Grain Sorghum 5.65 6.65 6.75 6.50 5.40
Cotton 12.57 13.15 13.22 12.97 10.97 13.00



    At last - the mystery is over. We have some answers in terms of planting intentions. After asking
    86,000 farmers what they will plant this spring in the US, the survey says:

    corn: 92.2 million acres (vs. an expected 91-93)
    soybeans: 76.6 million (vs. an expected 76-77)

    Corn did buy acres, but the bearish number would have been from 93-94 million acres. And the other
    shoe to drop in terms of a bearish number would have been a big March 1 stocks number. That is
    not what we got this AM. The corn stocks number was not bearish, coming out 2.25 % smaller than
    expected. To quote Reuters: the corn stockpile was "drained by red-hot feed, fuel, and export
    demand". And there you have it. Corn will open higher today after undergoing a severe round
    of front contract liquidation amidst fear of a bearish exposure surprise.

    Soybean plantings at 76.6 million is a bit less exciting, with the average estimate coming in at
    77.0 million. China has plenty of beans right now, and their crush margins remain doggedly
    not as positive as in recent history. South American values are more than competitive
    which suggests that the largest lesson in today's trade is the probability that corn regain
    its upside leadership role again. But beans are going to open sharply higher along with
    all else this morning.

    In the more decidedly bearish camp is all wheat at 58.0 million acreage vs. the average
    market estimate at 57.3 million. The breakdown for wheat is as follows:

    winter: 41.2 mill acres vs. 41.2
    other spring: 14.4 mill acres vs. 13.7
    durum: 2.4 million vs. 2.6 million

    March 1 stocks: 1425 vs. 1399

    Right now wheat plantings in Kansas and Texas do not look very promising as dryness persists.

    The focus today is solidly on the stocks number which is friendly for corn and beans. Wheat is
    going to follow all higher. Have not seen an official call, but considering the price action overnight
    where corn again drove down to the lower end of the trading range losing another 3c, will go with
    Chicago chatter which is decidedly bullish:

    beans: 30-35 higher
    meal: 5.00-8.00 higher
    oil: 50-60 higher
    corn: 20+ higher
    wheat: 20+ higher

    The above is sure to morph as we head into the open. Corn could test limit if early indications
    are correct.

  2. Best news a farmer can hear, the market is up! Of course it always backfires on us!

    May corn: up 30
    May beans: up 44
    May oil: up 1.55
    May meal: up 8.80
    May wheat: up 22

    Prices gapped higher with corn locked limit bid off the bullish USDA report.
    Prices held their gains for the day around the board as corn synthetics
    turned higher.

    Technically each market drove into sharply higher values on the back of the
    USDA report. Crude oil headed into firmer territory, trading back towards
    recent highs of $108/barrel. Meal, which had been suffering technically with
    oil in the lead, finally saw some strength taking oilshare down a notch and
    back towards 44% from levels closer to .4425%. The July / November
    bean spread jumped up 14 1/4c regaining its inverse at 33c from an
    overall low of 17 1/2c at the start of the week.

    Corn locked limit for the first 2 months, with all limit bid shortly after the open.
    Bullish stocks and neutral / friendly acres, plus higher crude oil, helped in the
    sharply higher start. Corn synthetics for May traded up to $7.29-$7.31 back towards
    the contract highs of 7.44 1/4c. The July / December spread also jumped,
    up 28c on the day. Corn options and spread trade are said to be huge, with
    this being the last day of the month and the quarter.

    HI LO
    May beans - up 43 14.31 14.06
    May meal - up 11.50 376.50 368.80
    May oil - up 1.64 5959 5875
    May corn - up 30 6.93 1/4 6.59 1/4
    May wheat - up 36 7.67 3/4 7.21 3/4
    May canola - up 13.60 603.40 583.90

    fund recap
    bot 2000 wheat
    bot 4000 beans
    bot 2000 meal
    bot 2000 oil

    Crude oil and gold are higher today, with values for each trending up towards their
    previous contract highs. Commodities are having a firmer performance to end the
    month of March, after putting in a weaker performance and struggling at the beginning
    of the month. The Dow is steady as she goes, but recent gains suggest that this day
    is all about price consolidation

    What insight we have gained today: corn stocks are not as high as we thought - and
    that is bullish. Corn acreage is just on the fringe of enough, but we have an entire
    growing season to go through.

    Trading ranges have been resurrected to the upside and corn will most likely play a
    leadership role as we head into planting season.

    Only wheat remains well supplied, but will play follow - the - leader for the day. Soybeans
    are closer to their overall highs, hence the hesitancy to trade limit. but they have also been
    given a bit of new life. However, if you want the most bang for the buck, corn is probably
    the item to own once again.

    While corn remains limit, the next selling would have to come from the producer. On a locked
    limit move - he is quiet today. We may have just kickstarted a new leg of higher values, but
    absolute high prices now means directionally we have just invited more volatility into the market-
    place. Own deep breaks, as we are sure to probably get them now starting from as high a point
    as we are.

    On the screen, there are 176,000 contracts wanted for May corn, 103,500 for July and 42,500
    for December.

    Have a good evening........

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