The USDA released stocks today and acreage today. The report has potential long term ramifications. The acreage is 6 million acreas higher than a year ago and 1 million more than anticipated. This is a very large number and if realized will increase the carryover to 550-600 million bushels. This with the already burdensome global availability can spell lower prices ahead. The stocks number came in approx. 50 million bu higher than anticipated. either use or last years crop is off a little given the larger number. This in and of itself is not a major deal,but with the other news today adds to the bearish tone.
The corn market rallied today after the report. The acreage reduction was 4 million acres. This needs to be watched given the current wet pattern. The stocks level is more than ample. As is the global availability of grain. The funds are short and this could lead to more buying. The rally however will be met with cash selling.
Two things to watch
- the corn bean relationship
- The oil share
Both relationships have been working and may continue .
as always quantify the risk