Floor Talk February 9 (Report Day)

[Tony_Dreibus]

USDA SAYS:

The U.S. corn and soybean stockpiles continue to get larger, while the world crop outputs grow too, according to the USDA Tuesday.
The governmental agency released its February Supply/Demand and World Crop Production Estimates Tuesday.
As a result, the CME Group corn, soybean markets reacted negatively. Following the report, the corn market dropped a few cents, soybeans dipped 2-cents and wheat fell too.
In its report, the USDA pegged the U.S. 2015/16 marketing year corn ending stocks at 1.837 billion bushels, compared with the surveyed analysts’ average estimate of 1.809 billion bushels and the USDA’s January estimate of 1.802 billion.
For U.S. 2015/16 soybean ending stocks, the USDA estimates a total of 450 million bushels, vs. the average trade estimate of 445 million and the USDA’s January estimate of 440 million.
USDA pegged the U.S. 2015/16 wheat stocks at 966 million bushels, compared with the average trade estimate of 947 million bushels and the USDA’s January estimate of 941 million.
WORLD ENDING STOCKS
In its report, the USDA estimates the world wheat 2015/16 ending stocks at 238.87 million metric tons vs. the trade’s average estimate of 231.48 mmt and the USDA’s January estimate of 232.04 mmt.
For world 2015/16 corn ending stocks, the USDA pegged them at 208.81 mmt, compared with the average trade estimate of 208.25 mmt and the USDA’s previous estimate of 208.94.
World soybean ending stocks, for 2015/16 marketing year, are pegged at (80.42 mmt. vs. the average trade estimate of 78.97 mmt and the USDA’s January estimate of 79.28 mmt.
WORLD PRODUCTION
Brazil’s 2015/16 soybean output is pegged at 100.00 mmt vs. the USDA January estimate of 100.00 mmt. Brazil’s corn production, for 2015/16 is estimated at 84.00 mmt. vs. the average trade estimate of 81.50 mmt.
Argentina’s soybean production estimate is marked at 58.50 mmt. vs. the USDA’s previous estimate of 57.00 mmt.
For Argentina’s 2015/16 corn output, the USDA sees 27.00 mmt. vs. the USDA’s previous estimate of 25.60 mmt.

TRADE REACTION:

--Nick Mueller, Senior Market Advisor for Stewart-Peterson, says that there is not much to take away from this report.  
“It was kind of a dud,” Mueller says.
Regarding the corn data, the USDA raised ending stocks from 1.802 in Jan to 1.837 by increasing imports and trimming its export forecast.  “I feel these adjustments are appropriate.  It also raised its production forecast for Brazil and Argentina which needed to be done,” Mueller says.
 
For soybeans, the USDA raised 10.0 million bushels to 450 million bushels by lowering the crush 10.0 million bushels. “Again, this seems appropriate.  They kept Brazil’s production the same, but raised expected production for Argentina 1.5mmt,” Mueller says.
 
Mueller adds, “The market digested this report very quickly with corn and beans both sitting on support.  Expect two sided trade, but for the market to trade sideways to lower over the next month or two.  Path of least resistance.  Corn back to 350 and beans could still test 800-8.25.”

--Pete Meyer, PIRA Energy grain analyst, says that with rising inventories across the board, a weather event is unfortunately the only thing that can save these markets now. “Globally, the now-expected 111.0 mmt of corn production out of Argentina and Brazil combined is sobering for exports.  With local currencies continuing to decline, and U.S. exports lagging at a sizeable pace, closer scrutiny of the World Board’s export figures is required,” Meyer says.  
Meyer adds, “Let’s be honest, demand for U.S.-grown grains and oilseeds are teetering on the edge.  If not for a very questionable 25 million bushel increase in ethanol demand, the carry-out would have been close to 1.9 billion.  With the USDA’s annual Outlook Forum upon us, I have no idea how they keep carry-out below 2 billion in their forecast for next year.”

--Steve Kahler, Chief Operating Officer of Teucrium Trading, says that the February WASDE is not known as a report with a lot of big changes and today’s release was no different.  
“Corn, wheat and soybean ending stocks migrated higher due to the reduction in either exports or domestic crush.  South American corn and soybean production saw slight increases with both estimates at or above trade expectations,” Kahler says.  
Kahler added, “South African corn production was reduced and is a reminder that El Nino has had an impact in many parts of the world.”
Going forward, the trade will continue to focus on South American weather and harvest, Kahler says. “In addition, the important upcoming March 31 Planting Intentions and Quarterly Stocks Reports will be eyed.”

--Matt Pierce, Futures International trader, says, "Bearish beans with world stocks higher but market should not drop because it was generally expected. Big domestic wheat stocks should weigh on front end but how much has already been priced in? Corn bearish on higher domestic stocks. Big question remains Chinese stocks viability."

--

Mike

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At the close:

At the close, the March corn futures settled 1 1/4 cents lower at $3.61. March soybean futures finished 3/4 of a cent higher at $8.63 1/4. 
March wheat futures finished 1 cents lower at $4.57 1/2. March soymeal futures settled $1.40 per short ton lower at $263.10. March soyoil futures ended $0.06 lower at $30.69.  
In the outside markets, the Brent Crude oil market is $1.68 lower per barrel, the U.S. dollar is lower, and the Dow Jones Industrials are 27 lower.

The Funds' activity today: Sold 1,000 corn futures contracts, added 3,000 soybean contracts, and sold 2,000 wheat contracts.

Mike

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At mid-session:

At mid-session, the March corn futures are trading 1 1/2 cents lower at $3.60. March soybean futures are 1/4 of a cent lower at $8.62. 
March wheat futures are trading 1 1/4 cents lower at $4.57. March soymeal futures are $2.00 per short ton lower at $262.50. March soyoil futures are trading $0.11 higher at $30.86.  
In the outside markets, the Brent Crude oil market is $0.22 lower per barrel, the U.S. dollar is lower, and the Dow Jones Industrials are 91 lower.

Mike

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At the open:

At the open, the March corn futures are trading 1 3/4 cents lower at $3.60. March soybean futures are 3/4 of a cent higher at $8.63. 
March wheat futures are trading 1/2 of a cent lower at $4.58. March soymeal futures are $0.20 per short ton higher at $264.70. March soyoil futures are trading $0.20 lower at $30.55.  
In the outside markets, the Brent Crude oil market is $0.26 lower per barrel, the U.S. dollar is lower, and the Dow Jones Industrials are 43 lower.

Mike

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Good morning. 

Corn, beans and wheat were mixed in overnight trading ahead of today's WASDE report. It's supposed to show increased esimates for domestic stockpiles, but shorts are likely buying back contracts to avoid any suprise bullish figures. 

At 6:20 am:

Early calls:

Wheat unchanged to 1 higher, corn 1-2 lower and soybeans unchanged to 1 higher. 

Trackers:

Overnight wheat, corn and beans mixed.  

Brent Crude Oil = 1% higher.

West Texas Intermediate Crude Oil = 1.6% higher.

Dollar = down 0.1%.

Wall Street = Stock futures down overnight on worries about global economy.  
World Markets = Global stocks mixed as world currencies normalize.