MarketsFarm — Traders on the Chicago Board of Trade (CBOT) will play close attention to a pair of reports due out from the U.S. Department of Agriculture (USDA) on Friday at 11 a.m. CT.
The Grain Stocks and Prospective Plantings reports will provide a glimpse as to how much of each crop remains in the U.S. and how much of them will be planted. The trade’s pre-report average estimate for U.S. corn area is projected to be 90.88 million acres, up 2.3 million from last year.
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“Assuming we hit that number, I think we’re slightly overpriced,” said Ryan Ettner, trader at Allendale Inc. in McHenry, Ill., citing recent Chinese corn buying as the reason for higher prices of late.
“If we raise acres on corn more than two million, we would assume a fair price might be somewhere in the US$5.60 (per bushel range).”
The trade also estimated 740,000 more soybean acres than last year on average for a projected total of 88.24 million. Unlike corn, soybeans haven’t seen as much Chinese demand as corn and current prices appear to be fair value, according to Ettner.
As for U.S. wheat, the trade is expecting 48.85 million acres on average, 3.11 million more than last year. While the additional area and speculation Russia may limit grain exports are affecting prices, Ettner said traders may instead choose to focus on crop ratings.
April 3 “is the first official good-to-excellent rating from the USDA coming out of dormancy for wheat,” he said. “We might see a little bit of pre-buying going into this first good-to-excellent rating if it moves from 34 to 38, 39 or 40 (per cent), which would be incredibly low ratings to start the year… Acreage might actually play the smallest role.”
Ettner explained the primary reason for the weekly rises for corn, soybeans and wheat was a technical bounce back after heavy fund selling the week before. After USDA’s two reports on Friday, traders will shift their focus to weather, he added.
“You don’t see the trade get too worked up about weather forecasts until (April 3). Starting (then and) through the end of June, you will see weather bounces and traders seeing every weather map.”
— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.
