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Market Bearish Going into USDA Report


Heading into Tuesday’s USDA Supply and Demand report, the market sentiment is bearish. Prices moved lower on Monday, and last week’s Commitment of Traders Report indicated that fund managers remain extremely short. The focus on tomorrow’s report will be on US production as this is the last meaningful change for the 2015 year. Analyst expectations are flat compared to the November numbers – expecting the USDA had enough early data to be close with their Nov estimate. That being said, the large short speculative position will be at risk of any report number that shows any downtick to production.  According to Waterstreet Solutions, “The key number to watch will be the December 1 quarterly stocks, which are anticipated to come in close to a year ago as this number gives an indication of both supply and demand.”


The January USDA report has a history of fireworks in the bean market, but the trade is not expecting much according to trade estimates, holding production steady 3.981 bln bu on yield of 48.3 bpa. Weakening demand has the trade estimating carryout to increase by 3 mbu and December 1 quarterly stocks estimated to increase from 2.528 bbu last year to an estimate of 2.720 bbu this year.


“The trade is anticipating an increase in ending stock for wheat from December’s estimate of 911 mbu to an average expectation of 919 mbu,” said Waterstreet. “Global carryover as of January 1 in wheat is anticipated to be adjusted only incrementally lower to an ample 229.6 mmt. Winter Wheat Seedings will be released with lower hard red acres anticipated to lower total wheat acres to 39.320 from the 2015 acreage of 39.461 m.”