Commentary
Thursday Jan. 12, 2023, at 11am Central, the supply and demand report will be released. Generally, this is the most important report of the year in my opinion which includes the final acres for the year, final yield results, revised carryover and the supply and demand for the coming year. Surprises vs expectations occur in this report in my view as the USDA in the past has revised on farm stocks from two to three prior crop seasons. We also have a CPI release Thursday morning, which in my view is the most important economic release lately given it’s a key inflation gauge. I wouldn’t be surprised to see some fireworks across many commodities sectors Thursday and Friday. How the USDA calculates ending stocks for corn, beans, and wheat will be key as always. Demand for corn and wheat has been disappointing especially corn in my view. Bean demand was stellar in 2022, but will it remain as Brazil is ready to harvest a bin buster. Some analysts have pointed to an increase in the amount of 1 billion bushels from the year prior in Brazil alone. Argentina however is suffering its worst drought in 20 years, holding bean and meal values higher. Report day estimates for ending stocks comes in as follows.
The average guess for ending stocks for Corn are 1.314 billion bushels. This is up from 1.257 last month, with a range of 1.181 on the low end to 1.405 on the high end.
The average ending stocks guess for soybeans is 236 million bushels versus 220 last month. The range is from 205 to 289.
The average ending stocks guess for wheat is at 580 million bushels. That’s up from 571 last month, with a range of 556 on the low end to 601 on the high.
Last year’s January report revealed this on ending stocks. For corn,1.377 billion bushels was the number on the 21/22 crop. Futures were in a range 5.85 to 6.08. Soybeans ending stocks from last January’s report had ending stocks at 274 million bushels for 21/22. Futures were trading in a range of 13.60 to 14.10 into last years report. Wheat ending stocks for 21/22 January crop report at 669 million bushels, futures were trading near 7.50 to 7.70. We are slightly below last year’s prices in wheat. Should ending stocks come in above the trade guesses in beans and corn, we could break to where we were last year in my opinion.
Trade Idea
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Risk/Reward
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