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Not Much Sense in USDA Numbers

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Suderman March 31 reaction

Arlan Suderman 14-2The highly anticipated March 31st reports from USDA caught some traders leaning the wrong way, and when the numbers were released Tuesday the markets, as they often do with the prospective plantings report, gyrated in the first half hour. From that point on it was a strong sell-off in the corn and wheat markets.

Arlan Suderman at Water Street Solutions explained both the corn and soybean planted acreage figures from USDA were not what most traders expected.

“Not much increase in soybean acres at all and that doesn’t make sense,” he said. “But I want to say these are the numbers the trade is going to trade. We can argue about the numbers but they are the numbers the trade is going to trade so we need to accept it as that. But soybeans didn’t see the expansion in acreage expected in this survey’s results and corn saw more acreage than expected although still down from year ago levels by about 1.1 ½ million acres or so.”

With unexpected numbers traders started making adjustments.

“Traders who had been leaning long corn, short soybeans were leaning the wrong direction, so their initial reaction has been to unwind those spreads and that’s created those double digit losses in corn while we see gains in soybeans, even though longer term soybean fundamentals are still more bearish than are corn.”

USDA expects corn to be planted to 89.199 million acres, and soybeans are pegged at 84.635 million acres. The corn market was also pressured by a bearish quarterly stocks report, 7.745 billion bushels vs. the average trade guess of 7.609. Reported soybean stocks were 1.334 billion bushels, near what analysts expected.

The figures from Water Street Solutions:

USDA March 31 Acreage 2015-16
Corn Soybeans All Wheat Winter Wheat Spring Wheat Durum
millions of acres
USDA March 1 Survey Results 89.199 84.635 55.367 40.751 12.969 1.647
    Pre-Report Estimates
Average Trade Estimate 88.731 85.919 55.796 40.727 13.334 1.759
Highest Trade Estimate 89.700 88.000 56.800 42.000 14.503 2.202
Lowest Trade Estimate 87.000 83.100 54.950 40.425 12.500 1.400
USDA Previous Year 90.597 83.701 56.822 42.399 13.025 1.398
Water Street Solutions 88.900 86.800 55.753 40.673 13.350 1.730
  

Quarterly Stocks

Wheat Corn Soybeans
billions of bushels
USDA March 1 Estimates 1.124 7.745 1.334
    Pre-Report Estimates
Average Trade Estimate 1.140 7.609 1.346
Highest Trade Estimate 1.200 7.800 1.404
Lowest Trade Estimate 1.083 7.459 1.273
USDA Previous Year 1.057 7.008 0.994
Water Street Solutions 1.163 7.459 1.304


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