The January crop report will be issued by USDA Friday and there is great anticipation to see the final 2012 production figures. But there is also a new twist with this report. It is the first time that the release comes at noon eastern time instead of early in the morning before floor trading starts, and that’s cause for some concern according to senior market analyst for Water Street Solutions, Arlen Suderman.
“That’s going to give the opportunity for full volume trade. The concern of course is for high frequency traders where the computers are set to read the headline will be able to react in tenths of a second vs. farmers and end users needing to take this massive mountain of data in and try to respond while high frequency traders are already doing so. So that leaves them at more risk and a lot of concern. How will it go this first time around at the new time, although we’ve had the market open in recent months during trading, just at an earlier hour.”
Suderman says there is a pattern in the last 6 months of fearing bearish surprises in the government reports, so there has been heavy liquidation leading up to them. The January report in particular is known for surprises.
“In fact five out of the last six years we have seen daily limit moves in corn, three to the down side, two to the upside, as a result of surprises in this January report. Traders are very cautious about establishing any positions.”
Starting Tuesday it’s expected the major index funds will begin an approximately 5-session run of rebalancing, “and generally that’s expected to lead to selling of Chicago wheat, selling of soybeans, selling of soy oil, buying of soy meal, depending on the fund. But that’s kind of the average of it all.”
But Suderman says a lot of that has been expected and is already priced into the market.[audio:https://www.hoosieragtoday.com//wp-content/uploads//2013/01/Jan-report-twist.mp3|titles=Jan report twist]