Market Perspectives July 12, 2013

Chicago Board of Trade Market News

Outlook: USDA released their July WASDE report Thursday and slight adjustments were made to reflect the data that was released in the June 28 Acreage and Stocks reports, and the report contained no major surprises. The July 11 WASDE made the following changes to coarse grain projections:

– U.S. feed grain supplies were lowered moderately, as harvested acreage was reduced by 400,000 acres for corn (from 89.5 to 89.1 million acres), reduced by 500,000 acres for sorghum ( from 6.6 to 6.1 million acres) and reduced 100,000 acres for barley (from 3.2 to 3.1 million acres).
– Yields forecasts for 2013/14 were left unchanged for corn at 156.6 bushels/acre, increased for sorghum from 64.4 to 64.9 bushels/acre and increased for barley from 68.8 to 71.4 bushels/acre. USDA will publish more precise yield estimates on August 12.
– U.S. corn ending stocks in the 2013/14 season were increased by 10 million bushels to 1,959 million bushels. 50 million bushel decreases for both exports and feed and residual stocks more than offset the 55 million bushel reduction from less harvested acres and a 40 million bushel decrease in beginning stocks.
– USDA projects that U.S. corn production will be a record at 13,950 million bushels this fall.
– The seasonal average U.S. farm price was left unchanged at $4.40-$5.20 per bushel.
– Projected changes in foreign coarse grain supply and use were largely insignificant.

The short-run outlook is that the market’s attention will now focus primarily on factors such as weather, crop conditions and export announcements. Market participants recognize that unfavorable weather during the rather short-window of pollination can have a pronounced influence on yields. Many individuals remember that rain patterns improved last season – after corn pollination was over. They also realize that short-term forecasts are much more dependable than are the 10- to- 14 day weather forecasts. Consequently, the market will be keeping an eye on weather for the next few weeks.