Grain Prices Mixed Ahead of USDA Reports
Today’s Spotlight Market
Grain traders may have had a restless night?s sleep over the weekend in anticipation of the release of a key government report. We will have the first ?official? forecast of expected grain plantings by the USDA released in the Prospective Planting Report.? Planted acreage for Soybeans is expected to be around 81 million acres vs. 76.5 million acres last season. For Corn, traders expect acreage to decline this year with an average forecast of 92.5 million acres to be planted vs. 95.4 million acres last year. Total wheat acreage is expected to be little changed from last year?s 56.15 million acres planted.??? ?
Fundamentals
The ?official? start to the 2014 grain production season begins today as the USDA releases its outlook for grain plantings this year. The ?Prospective Plantings? reports as it is known in the trade will provide the first glimpse on the amount of acreage producers will dedicate to crops such as Corn, Soybeans, Spring Wheat, and Cotton.? Historically, there have been large price moves following the release of the USDA plantings data, with limit price moves in either direction not unusual. This potential for heightened price volatility causes many traders to scale back on their positions in the days prior to the release of the report.Many traders also turn to the futures options market for hedging purposes, as well as to establish positions that may benefit from changes in market volatility levels.
In addition to an estimate of prospective plantings, the USDA will also release its estimates for U.S. Grain Stocks as of March 1st.? While not as ?exciting? as the plantings figures, the grain stocks figures are also widely watch by traders can trigger significant price moves, especially for old-crop months, if the USDA totals differ significantly from pre-report estimates. Soybean inventories as of March 1st are expected to be a total of 990 million bushels vs. 998 million bushels last year. Corn inventories are expected near 7.1 billion bushels, which would be over 30% above U.S. inventory totals last year. Wheat stocks are expected to total 1.04 billion bushels, down nearly 200 million bushels from this time last year.
Technical Notes? -? View Today’s Chart
Today we are going to take a quick look at both the new-crop November Soybean chart as well as the new-crop December Corn chart.? We first notice a similar price pattern the past several months that has now cumulated in a consolidation pattern just prior to the USDA plantings report. Current prices have the new-crop Soybean vs. Corn ratio at 2.43 to 1. This is fairly neutral ratio that does not favor Soybeans or Corn for marginal acreage. Support for November Soybeans is seen at 1147.25, with resistance found at 1198.00. For December Corn, support is found at 471.25, with resistance seen at 493.75.
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