This is a sample entry from Craig Turner’s email newsletter, Turner’s Take, published on August 12, 2014.
The USDA released their August WASDE today. A summary table of the report is below. I’ll have more tomorrow but here are my thoughts after reading it over:
- Corn was mildly bullish. The trade was looking for a 170 yield and the USDA had 167.4. The trade was looking for production of 14.25 billion bushels and got 14.03. Ending stocks are projected to be around 1.8 billion instead of 2.0 bill expectations. Corn is getting some buying support now as a result of the report. We still have a big crop and adequate supplies, but just not as big as expected
- If things stay this way we are going to have record production
- There is a saying that big crops get bigger. The USDA tends to be cautions when increase and decreasing yields. I do think we get to 170 and I think the USDA will raise yield again in September.
- Trade is going to start focusing on reports from the field. Traders will be very excited to hear about the latest crop tours. I’m very interested to hear harvest reports from IL and IA.
- New Crop global ending stocks increased over 3 million metric tons. Not only will the US have a lot of corn, so will other producing nations. I have to question the US export numbers now as they may be too high.
- Overall, I am neutral on corn and I think we see a slow bleed lower as we get into harvest. I think we test that $3.58 low in Dec Corn when harvest is in full swing.
- Yield was inline at 45.4 but I think we get to 46 by harvest.
- Production will be a record as things are now.
- Old crop ending stocks at 140mm bushels is bearish
- New crop ending stocks at 430mm bushels is bearish
- World stocks were down a little for old crop but up a bit for new crop – neutral
- August is the most critical month for Soybeans when it comes to weather. As long as the weather holds up this Soybean crop is going to get bigger. You can make the case Soybeans still has a $1.00 to $1.25 weather premium built in.
- Going forward export sales, hot temps, and lack of rain will be bullish catalysts
- Potential bearish catalysts are going to be the reports from the field. We are still weeks away but as we get towards the end of August/beginning of September.
- I think Soybeans finds some support here for the next few weeks. We have been heading steadily higher since we made the lows of the day right after the report. This crop still needs to be made and until we get through these next few weeks it is hard to see Soybeans trade below $10.55 for an extended period of time.
- I like selling Nov Beans on rallies. I also like buying puts in the $9.50 to $10.00 range in both Nov and Jan.
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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.
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