The May 9th USDA crop production report is scheduled for a noon release, Eastern Time, on Friday. It will be the agency’s first supply and demand balance sheet of the year. Analyst Tom Fritz at EFG Group says this report is not usually much of a market mover, and he expects that to be the case this time too.
“The problem with the May report as far as new crop is concerned, they’re going to use the acres they gave us at the end of March. For yield they won’t deviate to far from trend line yield. So, normally this May report shows us some pretty decent numbers, but I’ve seen this time and time again, especially in the case of soybeans, where they’re going to give us a big projected carryout on new crop beans, but then you go through the growing season and that could all change.”
Arlan Suderman with Water Street Solutions says this report sets the table for the summer growing season for acreage, yield, and the coming year’s demand.
“And the general expectation of the trade is that USDA is going to use a high yield for corn of 165 or 166 bushels per acre and probably 44 to 45 bushels per acre for soybeans,” he told HAT. “That’s going to result in 2014-15 marketing year ending stocks several hundred million bushels above current levels at about 1.64 billion bushels for corn and over 300 million bushels for soybeans. So the trade is anticipating a bearish report from USDA on Friday and as we get closer to Friday we’ll increasingly build that into the price structure.”
With the bearish expectation Thursday’s and Friday’s markets could yield some downward pressure to position for such news. Fritz anticipates a game changing report only for the wheat market, if that, and little impact on corn and soybeans.