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Winter Corn Price Tone Will Be Set by Jan. 11 Reports


By: Nate Birt, Farm Journal Social Media and News Editor

via AgWeb - January 8, 2013


Farmers can expect market movement for corn prices after the Jan. 11 release of the Annual Production Summary and Quarterly Grain Stocks Report, Pro Farmer senior market analyst Brian Grete says.


"I would say if the corn crop size comes in smaller because of the reduction in harvested acres, the odds are that the Dec. 1 corn stocks will be lighter than anticipated," Grete says.


A total of four reports will be released Friday, but those two reports will have the greatest implications for corn and soybean producers. USDA is expected to cut total harvested corn acres, further constricting an already tight supply, Grete says. If the corn crop comes in smaller than expected, that will have to be offset likely with reductions in exports.


By contrast, USDA is expected to increase its soybean crop estimate, which would allow for an increase in the export projection, likely keeping soybean carryover fairly steady. In both cases, market numbers argue those adjustments are needed.


Quarterly grain stocks on the corn side remain the wild card, Grete says. Those numbers–-which represent total bushels held on farms and off-farm–-have been a market mover for the past two years, and there have been major surprises, Grete says. The figures will set the tone for corn prices through winter until mid-March, when focus shifts to planting intentions for this year.


Regardless of what the numbers actually say, the volume of data set to be released Friday means someone will be surprised...





DJ SURVEY: Forecasts For US Dec 1 Grain Stocks Report


Andrew Johnson Jr. - Dow Jones Newswires

via - Jan 8, 2013


CHICAGO (Dow Jones)--The following are analysts' estimates in billions of bushels for U.S. grain and soybean stocks as of Dec. 1, 2012, as compiled by Dow Jones. The U.S. Department of Agriculture is scheduled to release its report at 12:00 p.m. EST (1800 GMT) Friday. Parentheses denote the number of estimates in that average and range.


2012 Sept.1 2011 Dec.1
USDA       USDA 
                     Average    Range     Stocks      Stocks 
   Corn (16)         8.210   8.050-8.450  0.988       9.647 
   Soybeans (16)     1.984   1.915-2.056  0.169       2.370 
   Wheat (15)        1.674   1.553-1.721  2.104       1.663 
                            Corn   Soybeans  Wheat 
   ABN Amro                 8.450  1.993     1.705 
   ADM Investor Services    8.172  1.932     1.716 
   AgriSource               8.125  1.980     1.620 
   Agrivisor                8.395  1.955     1.655 
   Allendale                8.050  1.942     1.682 
   Doane Advisory Srv       8.259  1.959     1.685 
   Futures International    8.290  1.987     1.704 
   Jefferies Bache          8.353  2.002     1.643 
   Kropf/Love Consulting    8.207  1.994     1.667 
   Linn Group               8.105  2.017     1.553 
   Newedge USA              8.126  2.009     1.696 
   Prime Ag                 8.100  2.000     1.700 
   Rice Dairy               8.228  1.915     1.671 
   RJ O'Brien               8.248  1.996     1.721 
   U.S. Commodities         8.120  2.005      n/a 
   Water Street Solutions   8.130  2.056     1.696


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Power Hour: Pendulum Could Swing in 2013


By: Ed Clark, Top Producer Business and Issues Editor

via AgWeb - January 4, 2013


The hallmark of farming 2013 can be summed up in one word you’ve become used to the past two years: volatility.


Early forecasts for harvest corn prices, for instance, range all the way from $4 to $7, and no one, frankly, has any idea which is correct. A bearish scenario for all major crops could play out if global acreage responds in a major way to last year’s record prices, weather and in turn yields, return to historical averages and trend lines reemerge, says Nathan Kauffman, economist with the Federal Reserve Bank of Kansas City.


To illustrate just how fast things can turn, consider this: Last May, analysts were projecting season average 2012 prices below $5/bu. That seemed reasonable given all the additional acres that had come into production, but even the nation’s smartest weather forecasters weren’t foreseeing the drought that slashed yields and production and made farming the No. 1 news story.


The bearish price scenario is no means a given, however, not even necessarily likely. Looking at corn, stocks remain very tight and a good chunk of the country remains locked in a serious drought. Even in areas that have received moisture, soils remain very far from being recharged. If dry conditions once again slash yields and production, "we could see a spike in prices," closer to the $7 level, Kauffman admits


A return to trend yields and lower crop prices could greater improve the margins for livestock producers in 2013, however, Kauffman says, particularly when combined with lower numbers that several livestock sectors are carrying right now. Continuation of the drought would delay any economic recovery for livestock producers, however.


"High volatility is not going away," Kauffman says. That makes it very difficult for producers to plan, he acknowledges. Because of that, it’s crucial for producers to maintain adequate levels of working capital, Kauffman adds...





Morning markets: grain prices gain as specs cover shorts


08:25 GMT, Tuesday, 8th Jan 2013, by


Grains and oilseeds, having bucked their losing streak in the last session, faced the Chicago phenomenon of the Turnaround Tuesday.


This, by repute, sees futures reverse the trend of the previous session – implying losses in store this time.


And sentiment was hardly helped by a small uptick in the dollar, making dollar-denominated exports such as many commodities less appealing, and by falls in Asian share markets.


Japan's Nikkiei index shed 0.9%, as did Hong Kong's Hang Seng, while Sydney stocks lost 0.5%.


Asian retreat


And, signally, the Asian weakness spread into agricultural commodity markets there too.


Crude palm oil futures extended their 2013 retreat – they have risen only in one session so far this year – easing 1.2% to 2,388 ringgit a tonne, depressed by expectations that Malaysian inventories remain high.


Official data on Thursday will show stocks at 2.5, tonnes, a little below November's top of 2.56m tonnes, with lower exports just about balancing a drop in output.


In China, Dalian soybeans eased.


The fall was not much, by 2 yuan to 4,739 yuan a tonne, but did little for sentiment in Chicago, which has seen Dalian prices, and talk of strong crushing margins in China, as a major support to soybean futures.


'Supply risk on the upside'


If that was one depressant to Chicago values, the increasing expectations for South American soybean and corn harvests were another.


Consultancy Clarivi on Monday became the latest commentator to nudge higher its forecast for the Brazilian soybean harvest, by 110,000 tonnes to 83.11m tonnes, ahead of Conab data on Wednesday which look set to be particularly closely watched.


Conab, the Brazilian crop bureau, currently has the domestic soybean harvest at 82.6m tonnes.


At broker RJ O'Brien, which also keeps close tabs on Brazilian crops, said that "we think the current weather pattern suggests supply risk is on the upside".


Chicago soybeans for March eased 0.1% to $13.87 a bushel as of 08:20 UK time (02:20 Chicago time) looking for their fifth decline in six sessions.


'Subdued outlook'


Grains at least managed gains.


Cargill's Australian AWB grain handling business took a more cautious stance on prices than the likes of Societe Generale.


"We expect international wheat prices and the market to be subdued until there is a clearer picture on the northern hemisphere weather market in March /April this year," AWB's Richard Williams said.


However, one big plus for grains is the prospect on Friday of a slew of US Department of Agriculture data, including the benchmark Wasde world crop supply and demand briefing, US winter wheat sowings data and grain stocks figures.


Not that the data themselves are necessarily expected to be bullish.


But they are expected to be market moving, especially in corn futures, which on the January mega-data day have undertaken limit moves in five out of the last six years.


'Wide range in trade estimates'


And the range of estimates for inventory data, on corn especially, indicates the level of uncertainty over what Friday will produce.


RJ O'Brien's Richard Feltes said: "It is interesting to note wide range in trade estimates of December 1 US stocks—750m bushels in corn, 300m bushels in soybeans and 200m bushels in wheat.


"The wide range in corn stocks stems mostly from widely divergent trade views on final 2012 corn production - 475m bushels from high to low.


"I suspect trade will be cautious this week given well known volatility surrounding January crop reports."


'Active buyer'


Another potential plus point for the grains complex is, ironically, the prospect of large selling by index funds expected to sell a stock Chicago contracts as part of the annual rebalancing process, which rejigs portfolio weightings back to those of the index they follow.


This is occurring at a time when speculators have rebuilt a healthy net short position in Chicago wheat.


"The trade is very likely positioned the way it wants to be with the index fund rebalance," Brian Henry at Benson Quinn Commodities said, noting the lack of spread between Chicago and Kansas wheat futures, even though the former faces selling by index funds, and the latter buying.


"Don't be surprised if the short in Chicago proves to be an active buyer of an index fund offer, if it happens at all."


At Commonwealth Bank of Australia, Luke Mathews said that "further speculative short covering is probable in the lead up to Friday's much-anticipated USDA Wasde and winter wheat planting reports".


'Begin to turn the tide?'


And could this spark something of a most sustainable recovery in values? ...





DJ U.S. Corn Up on Pre-USDA Positioning

Owen Fletcher - DJ/ - Jan 8, 2013


--U.S. corn futures trading up on positioning ahead of USDA reports due Friday


--Analysts on average expect USDA to trim final estimate of 2012 domestic corn output, raise forecast for domestic corn inventories


--South Korea animal-feed manufacturers buying corn, but shipments likely to come from South America


CHICAGO--U.S. corn futures are trading up Tuesday morning, boosted by positioning ahead of government crop reports due Friday.


In electronic trading, Chicago Board of Trade futures for March delivery are up two cents, or 0.3%, at $6.87 1/2 a bushel.


The USDA on Friday at noon EST will release key crop reports, including a final estimate of the size of the U.S. corn harvest last year and data on the size of domestic corn inventories as of Dec. 1.


Analysts polled by Dow Jones on average said they expect final corn production to fall from the USDA's last estimate by 0.9% to 10.626 billion bushels.


But due to weak corn demand, analysts on average also predict the USDA will raise its forecast for domestic corn inventories at the end of the current marketing year by 3.1% to 667 million bushels.


Positioning for the USDA reports is leading to modest gains in futures prices.


Futures are also benefiting from technical buying. March corn had settled below its 200-day moving average Friday but bounced back to settle above that level Monday, a positive technical signal.


Futures on Tuesday are trading above their 200-day moving average of about $6.85 1/2 a bushel.


Corn's gains are limited by uncertainty about what the USDA reports will show, amid a wide range of analyst estimates.


Some analysts expect the USDA to cut its forecast for U.S. corn exports due to a slow recent pace of demand...





DJ Soybean Futures Edge Higher Ahead of Key Crop Reports

Andrew Johnson Jr. - DJ/ - Jan 8, 2013


--Trade positioning in focus ahead of Friday's government crop reports


--Futures stabilize, traders digesting estimates ahead of Friday's reports


--Record South America crop production forecasts limit gains


CHICAGO--U.S. soybean futures are up slightly Tuesday, extending a rebound from sharp losses last week amid short-covering and trade positioning ahead of closely watched government crop reports.


Chicago Board of Trade soybeans for January delivery recently were up 2 3/4 cents, or 0.2%, at $14.13 1/2 a bushel, and March soybeans were up 1/2 cent, or 0.04% to $13.89.


The market is regaining some ground after tumbling for most of the last three weeks as traders shed risk before Friday's U.S. government forecasts on supply and demand.


Futures are higher in light volume, indicative of pre-report pos itioning, said Tregg Cronin, an analyst with brokerage CHS Hedging Inc. in St. Paul, Minn. "Traders are simply trying to position themselves in front of the biggest crop reports of the year," he said.


The U.S. Department of Agriculture will release its annual crop production, supply and demand, quarterly grain stock and winter wheat seeding reports on Friday at noon EST.


Analysts expect choppy trading throughout the week amid the potential for higher government production estimates and forecasts for big crops in Brazil, the world's second-largest soybean producer after the U.S.


Analysts surveyed in a Dow Jones Newswires poll expect the USDA to report higher U.S. production and yields and larger end-of-year stockpiles than previously forecasted.


Futures are finding some stability digesting estimates ahead of Friday's reports.


Advances will remain limited amid record crop production forecasts for South America, Mr. Cronin said. Weather is currently a nonissue for Brazil and Argentina, as it is very difficult to find any trouble spots in South America, Mr. Cronin added.


Light pressure is also seen from slower export demand for U.S. soybeans in recent weeks. Many traders are looking to the South American harvest to begin replenishing global supplies, giving buyers an option besides U.S. soybeans...





DJ U.S. Wheat Up On Pre-USDA Positioning

Owen Fletcher - DJ/ - Jan 8, 2013


--U.S. wheat futures trading up on positioning ahead of key USDA crop reports due Friday


--Analysts expect USDA to report U.S. farmers planted more winter wheat than a year earlier


--Parched southern Plains has wet weather forecast


CHICAGO--U.S. wheat futures are trading slightly higher Tuesday morning, as traders position themselves for major government crop reports due Friday.


In electronic trading, Chicago Board of Trade futures for March delivery are up 1/2 cent or 0.1% at $7.51 3/4 a bushel. Kansas City Board of Trade March wheat is up 2 1/4 cents or 0.3% at $8.09 3/4 a bushel. MGEX March wheat is up 1 1/4 cents or 0.1% at $8.47 3/4 a bushel.


The U.S. Department of Agriculture on Friday at noon EST will release key crop reports, with figures including acreage of winter wheat planted in the U.S. and domestic wheat inventories as of Dec. 1.


Analysts polled by Dow Jones on average said they expect total winter wheat seedings of 42.6 million acres, up 3.1% from last year.


Analysts, on average, also expect the USDA to trim its forecast for domestic wheat inventories at the end of the current marketing year, by 1.5% to 743 million bushels.


Traders are lightly buying futures to bet on higher prices or to exit bets on lower prices, after steep recent declines. Speculative managed funds had a net position betting on lower prices of CBOT wheat futures and options as of early last week, regulatory data show.


Wheat futures remain underpinned by concerns about parched soil in the southern Plains threatening the region's winter wheat crops, though the region's near-term weather forecast is wet.


The National Weather Service forecasts from one-tenth inch to one-half inch of precipitation in most of Kansas in the next five days, with some precipitation in neighboring Nebraska and Colorado, and greater levels in Oklahoma. The six-to-10-day forecast for the region also predicts above-average chances of precipitation...





Anticipating Friday's Multitude of Reports


by Chris Lehner of Archer Financial Services

via Inside Futures - Tuesday, January 08, 2013   


First of all, the timing of the reports will be interesting.  At 12:00 PM Eastern Standard Time, there will be 12 reports released. Of course, some of the reports are more important than others, but needless to say, it will be one heck of a lot of information to break down while markets are trading. I am not sure how many pages of information will be in total in all reports but following is a list of reports that will certainly be a speed readers dream; Oilseeds: World Markets and Trade; World Agricultural Productions; Grains: World Markets and Trade; Cotton: World Markets and Trade; Cotton, Grains, and Oilseeds Database; World Agricultural Supply and Demand Estimates, Winter Wheat Seedings, Rice Stocks, Grain Stocks, Crop Production Annual, Crop Production, and Cotton Ginning's.


I am sure there are wire services and analytical departments having meeting this week assigning who will take each section and how fast each report must be posted and printed. As I look at it, the biggest impact will be the restaurants around the Chicago Board of Trade. Tables will be empty at noon and the take out service lines before and after the report will be busy. Seriously, I do not know who came up with the time to release the reports but I can't help but think that the firms that are primarily frequency trading firms had more than a few fingers in the pot to decide the timing.


Be careful how you react to reports. Lately, within seconds after the release of reports, trading has been wild with several up and down moves. This may be a time to use options to cover futures. After all, when options began in the early 1980s, the intention was to protect the underlying futures.


With all the reports released on Friday, and like all reports, it will take time for all the dust to settle and by Tuesday or Wednesday of the following week traders will have time to evaluate what should be used and what should be disregarded.  Be patient.


Actually, US ending stocks for corn and wheat should see large additions, but I doubt it will happen to the extent I believe it should. Up to now, I have seen very few analysts or reports looking at the drop of cattle on feed that started to show by late summer 2012 and will exponentially increase into 2013. Already, cattle slaughter has shown weekly slaughter often down six to seven percent with calf slaughter often 12 to more than 13 percent off week after week throughout 2012. With the cattle liquidation that began early 2010 with cow herds dropping by 5 percent after the low prices of late 2009 and super liquidation of breeding herds in 2011 in the Plains, Southwest and Mexico to the liquidation of last summer, the drop in feedlots easily could be off 17 percent or more. Another way to look at it; it will be as though packers will need to adjust to having enough cattle for one less day of the week. It is a lot of cuds that won't be chewed and corn and wheat that won't be needed.


I also have to wonder how the USDA will estimate grain in storage. As noted, in previous reports, US as well as Canadian farmers stored grain after selling enough to pay production loans and cash needed for anticipated supplies into 2013. With the high prices at harvest, US farmers were more concerned with paying taxes on the 2012 crop than how the drought reduced their yields. When I wrote about stored crops in previous reports, the amount of farmers that agreed with me far outweighed the very few that disagreed with me. By far the question I receive at least four out of five is what to do with old crop and now what to do with new crop. Since the new year began, emails and calls center upon what to do with stored crops more than new crops even though the price differential between March 2013 corn and December 2013 new crop is currently over $1.10/bushel and March 013 soybeans to November is currently over $1.00/bushel with basis for new crop often 40 to 50 cents more than old crop. In other words, producers are hoping there is still a chance for a rally for stored old crop and they will worry about new crop after old crop is sold.


It will be interesting how the USDA takes into consideration all the talk of rain in Argentina versus the good growing conditions in Brazil. Over the past two to three months, the number of reports claiming rain has dropped yields in corn and wheat by as much as 20 percent, quite an exaggeration in my opinion, but now the reports from Brazil show early crop yields above earlier estimates. Any surprise will come if the USDA estimates for soybeans are anywhere near what took place last year and aren't showing estimated yields above US production. Personally, I am estimating both soybeans and corn in Brazil both in the record breaking territories with soybean estimates over 83 million metric tonnes and record exports for 2013 close to 40 mmt.


The export number out of Brazil will be the straw that finally breaks the back of US prices. US and Canadian producers holding any old crop oilseeds and who haven't contracted new crop could feel a blow that will make any price recovery difficult to take place. North American farmers seem to overlook that producers in Brazil have been willing sellers, By October 2012 it was estimated soybeans contracting and sales were close to 47 percent. Recent estimates are now over 60 percent and it is likely higher especially for the areas that will produce the early crops.


Is there any wonder why China is canceling US beans? They aren't going to send ships to sit at US ports without firm commitments when Brazil is willingly selling soybeans. As I have pointed out in previous reports the same can be said for the Southeastern US hog and poultry facilities that have made commitments to secure supplies months ago and will likely continue to secure feed supplies from SA now through the summer of 2013.


When it boils down, any bullish excitement that might happen at noon on Friday due to tight drought reduced US crops, will be erased by crops in South America specifically Brazil and new production throughout the Southern Hemisphere. Traders will also focus on anticipated growth in the Northern Hemisphere for 2013 with many weather forecasters saying the drought is now over. Take a look at weather in Texas and sections of the Plains and Southwest after reading this report and you will want to agree with the forecasts.


This week, the US is seeing near record warm temperatures with average temperatures about 20 degrees above normal. However, the following week forecasters are calling for a return to winter with the possibility of heavy snows coming from the Pacific  Northwest and from the rains now in Texas. The rains now in Texas are called a drought lifter and with the possibility of snow for next week, the same may be said for the Midwest.


With twelve reports clogging the trade on Friday, look for traders to quickly pass over the old news in favor of new bearish news. Whatever the USDA may call for planted corn acres in the US for the coming new crop the actual number will be huge. If last year farmers intended to plant 95.9 million acres, it will be much larger in 2013. If the estimate comes in above 100 million and up to 102 million plus, it won't surprise me.


Wheat acres will be large especially through the northern Plains and Midwest but it is likely the USDA will use the dry conditions in the Southwest and Plains to reduce yields. However, the extent of estimated damages to Kansas wheat will be quickly washed over with forecasted rains and the estimates for large supplies of Chicago wheat. It is very possible to see traders in the next week to buy Chicago and sell Kansas wheat with heavy rains possible for the Plains...