WASDE was released today at 11 AM. Here are the results:
Below is a video version of my view on WASDE, if that is your speed.
HIGHLIGHTS
- Corn production was left pretty much unchanged near 1.8 billion. Anything below 2.0 billion at the end of the year and I think corn is a buy here in Dec 15.
- Corn Yields were left as is (for now) while harvested acres fell from 84.3 to 83.8 million acres.
- Corn Feed usage dropped from 5.300 billion down to 5.175 billion bushels, a reduction of 125 million bushel in demand. New crop feed usage lowered from 5.250 billion down to 5.200 billion, a reduction of 50 million bushels. The result of this was a higher new crop carryover as supplies from this year are added to next year.
- The USDA lowered to the average corn prices for this year to between $3.65 and $4.35
- Chinese corn imports lowered from 4.0 MMTs down to 3.5 MMTs. I don’t see this as a big price mover, but I think over the long term lower Chinese corn imports are not what we want to see at this point in the season.
- Wheat ending stocks come in much higher than the trade was anticipating. This was the most bullish part of the report. Harvested acres were taken up from 45.9 million acres to 46.2 million. The yield went up from 45.9 to 46.2 bu per ac.
- Soybean yields were left unchanged while harvested acres jumped from 80.5 to above 84.0 million. This brought total soybean production higher by 165 million bushels.
- Overall Soybean demand remains solid with old crop exports raised higher by +20 million bushels to 1.620 billion.
- USDA raised the crush raised higher by +25 million to 1.725 billion. Also raised 14/15 exports raised by +50 million from 1.625 billion to 1.675 billion. Crush also raised higher by +40 million bushels from 1.715 billion to 1.755 billion.
- This was all offset by the higher acreage number from the end of June.
MY TAKEAWAYS
- I’m more bullish corn than most you will find, especially 2015 new crop corn. I did some acreage analysis. If we go back to when prices were this low in 2009 and apply that to planted acres for the next year, were looking at an 85-87 million acre number. Even with falling demand, we need to keep acres at these levels.
- Soybeans are still a sell in my opinion. Between the new acreage set up and the higher production both here and in SAM, I think the funds look to exit a lot of their bull bean spread positions over coming weeks. I expect to see beans below 10 dollars if corn stays below 4.
- The wheat report was horribly bearish, but I hesitate to sell much more here. I think the funds have added too many shorts at once and 5.00wheat is very competitive to other world markets.
- Stay long livestock if you have them on. I don’t see anything in these reports that should affect demand. Low grain prices support higher feeder prices as long as fat cattle stays supported.
THE CHARTS
DEC 14 CORN
NOV 14 BEANS
CONTINOUS WHEAT (WEEKLY CHART)
Subscribe to This Week In Grain
This Week In Grain - This Week in Grain (T.W.I.G.) is a weekly grain and oilseed commentary newsletter designed to keep grain market participants on the cutting edge, so they can hedge or speculate with more confidence and precision.
Futures Traders’ Guide to the WASDE
Designed exclusively for futures traders, this comprehensive guide will help you understand the USDA World Agriculture Supply & Demand Estimates For Corn, Soybeans and Wheat reports.
Risk Disclosure
STRATEGIES USING COMBINATIONS OF POSITIONS, SUCH AS SPREAD AND STRADDLE POSITIONS MAY BE AS RISKY AS TAKING A SIMPLE LONG OR SHORT POSITION.
EXAMPLES OF SEASONAL PRICE MOVES OR EXTREME MARKET CONDITIONS ARE NOT MEANT TO IMPLY THAT SUCH MOVES OR CONDITIONS ARE COMMON OCCURRENCES OR LIKELY TO OCCUR.
THIS MATERIAL IS CONVEYED AS A SOLICITATION FOR ENTERING INTO A DERIVATIVES TRANSACTION.
THIS MATERIAL HAS BEEN PREPARED BY A DANIELS TRADING BROKER WHO PROVIDES RESEARCH MARKET COMMENTARY AND TRADE RECOMMENDATIONS AS PART OF HIS OR HER SOLICITATION FOR ACCOUNTS AND SOLICITATION FOR TRADES; HOWEVER, DANIELS TRADING DOES NOT MAINTAIN A RESEARCH DEPARTMENT AS DEFINED IN CFTC RULE 1.71. DANIELS TRADING, ITS PRINCIPALS, BROKERS AND EMPLOYEES MAY TRADE IN DERIVATIVES FOR THEIR OWN ACCOUNTS OR FOR THE ACCOUNTS OF OTHERS. DUE TO VARIOUS FACTORS (SUCH AS RISK TOLERANCE, MARGIN REQUIREMENTS, TRADING OBJECTIVES, SHORT TERM VS. LONG TERM STRATEGIES, TECHNICAL VS. FUNDAMENTAL MARKET ANALYSIS, AND OTHER FACTORS) SUCH TRADING MAY RESULT IN THE INITIATION OR LIQUIDATION OF POSITIONS THAT ARE DIFFERENT FROM OR CONTRARY TO THE OPINIONS AND RECOMMENDATIONS CONTAINED THEREIN.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE. THE RISK OF LOSS IN TRADING FUTURES CONTRACTS OR COMMODITY OPTIONS CAN BE SUBSTANTIAL, AND THEREFORE INVESTORS SHOULD UNDERSTAND THE RISKS INVOLVED IN TAKING LEVERAGED POSITIONS AND MUST ASSUME RESPONSIBILITY FOR THE RISKS ASSOCIATED WITH SUCH INVESTMENTS AND FOR THEIR RESULTS.
TRADE RECOMMENDATIONS AND PROFIT/LOSS CALCULATIONS MAY NOT INCLUDE COMMISSIONS AND FEES. PLEASE CONSULT YOUR BROKER FOR DETAILS BASED ON YOUR TRADING ARRANGEMENT AND COMMISSION SETUP.
YOU SHOULD CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES AND FINANCIAL RESOURCES. YOU SHOULD READ THE "RISK DISCLOSURE" WEBPAGE ACCESSED AT WWW.DANIELSTRADING.COM AT THE BOTTOM OF THE HOMEPAGE. DANIELS TRADING IS NOT AFFILIATED WITH NOR DOES IT ENDORSE ANY TRADING SYSTEM, NEWSLETTER OR OTHER SIMILAR SERVICE. DANIELS TRADING DOES NOT GUARANTEE OR VERIFY ANY PERFORMANCE CLAIMS MADE BY SUCH SYSTEMS OR SERVICE.
GLOBAL ASSET ADVISORS, LLC (“GAA”) (DBA: DANIELS TRADING, TOP THIRD AG MARKETING AND FUTURES ONLINE) IS AN INTRODUCING BROKER TO GAIN CAPITAL GROUP, LLC (GCG) A FUTURES COMMISSION MERCHANT AND RETAIL FOREIGN EXCHANGE DEALER. GAA AND GCG ARE WHOLLY OWNED SUBSIDIARIES OF STONEX GROUP INC. (NASDAQ:SNEX) THE ULTIMATE PARENT COMPANY.
