<\/p>\n<\/a>Grains<\/u> –
\nToday we\u2019ll focus mainly on the Quarterly Grain stocks portion of Thursday\u2019s USDA reports.\u00a0 I always hesitate to cover expectations for stocks figures as they are notoriously unpredictable and it always provides a good opportunity to look foolish.\u00a0 For the sake of argument in corn and soybeans, I\u2019m going to assume the average guesses on production prove to be correct.<\/p>\n
Corn<\/u> –
\nFirst it is worth pointing out that the average guess is calling for a slight reduction in production compared to Nov, though not really big enough to change sentiment on stocks.\u00a0 From there, I have to admit I\u2019m a bit surprised to see the average guess on ending stocks where it is.\u00a0 Given all the talk that WASDE is too high on their MY projection on F&R, I would have thought the average guess would be higher.\u00a0 Note the attached graphic showing F&R for Q1 in actual terms and as a percent of final.\u00a0 The implication of the average guess would call for a record Q1 F&R and would put that quarterly use relatively inline with historical averages.\u00a0 In other words, IF the average guess on stocks proves to be correct, everyone really needs to stop complaining that WASDE is too high on their MY F&R figure.<\/p>\n
<\/p>\n
Personally I have been assuming a higher stocks figure closer to 12,420 mil bu.\u00a0 Even if that figure turns out to be correct, I\u2019m still not sure it will warrant a major change in the WASDE MY F&R estimate.\u00a0 Q1 demand figures are not strong indicators of what will happen for the remainder of the year and WASDE is unlikely to deviate sharply from their feed model for now.\u00a0 If WASDE were to make a move, it would probably come with an offsetting increase to FSI (ethanol) use.<\/p>\n
Soybeans<\/u> –
\nWe have a Q1 Census export total of roughly 933 mil bu and the Q1 crush at roughly 485 mil bu.\u00a0 That leaves only residual as the item to guess on soybeans, but that is a very difficult guess to make.\u00a0 I typically follow two data sets when looking at Q1 residual.\u00a0 I look at Q1 residual vs. Q1 exports and I also look at Q1 residual vs. the change in the export pace between Q1 and Q2 (specifically the change in the export program from Sep to Dec).\u00a0 This second comparison is an attempt to get an idea for how much export \u201cpipelining\u201d has taken place.<\/p>\n
The scatter charts of the two figures are shown below.\u00a0 In the first instance, the comparison of Q1 exports vs. Q1 residual would imply the average guess is implying too low of a residual or the potential for a lower than expected stocks figure.\u00a0 The second comparison showing the difference in Q1-Q2 export \u201cpipelining\u201d and Q1 residual shows the average guess for stocks is implying too high of a residual or the potential for a higher than expected stocks figure.\u00a0 Obviously these opposing views are not especially helpful.<\/p>\n
I think my bias right now is that I feel this year\u2019s comparison of Sep\/Dec exports vs. residual will prove less helpful than usual as the export program was already rolling at a pretty solid clip as we entered the new marketing year thanks to a surge in summer exports.\u00a0 With that in mind, I\u2019m somewhat inclined to look for a slightly larger residual number.\u00a0 The fact that Q1 export inspections were 17 mil bu larger than Census\u2019s total (compared to being 11 mil bu smaller than Census last year) also supports the idea of a slightly higher residual.<\/p>\n
So the bottom line here is that I find myself believing the average guess on soybean stocks is probably pretty close to correct but that there is some downside risk due to potential for larger residual.\u00a0 I am assuming a stocks figure of 2,937 mil bu.\u00a0 Considering some of the contradicting data, I must admit this is not a high confidence call.\u00a0 Even if that figure were realized, it really wouldn\u2019t necessarily mean anything to the soybean balance sheet and Q1 stocks would still easily be record large.<\/p>\n
<\/p>\n
<\/p>\n
DISCLAIMER<\/u><\/strong>:<\/strong> Grains – Today we\u2019ll focus mainly on the Quarterly Grain stocks portion of Thursday\u2019s USDA reports.\u00a0 I always hesitate to cover expectations for stocks figures as they are notoriously unpredictable and it always provides a good opportunity to look foolish.\u00a0 For the sake of argument in corn and soybeans, I\u2019m going to assume the average […]<\/p>\n","protected":false},"author":4,"featured_media":1686,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[13],"tags":[],"yoast_head":"\n
\nThe information contained herein has been taken from trade and statistical services and other sources we believe are reliable. Opinions expressed reflect judgments at this date and are subject to change without notice. These materials represent the opinions and viewpoints of the author\u00a0 and do not necessarily reflect the opinions or trading strategies of Nesvick Trading Group LLC and its subsidiaries. Nesvick Trading Group, LLC does not guarantee that such information is accurate or complete and it should not be relied upon as such. Officers, employees, and affiliates of Nesvick Trading Group, LLC may or may not, from time to time, have long or short positions in, and buy or sell, the securities and derivatives (for their own account or others), if any, referred to in this commentary. There is risk of loss in trading futures and options and it is not suitable for all investors. PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE RETURNS. Nesvick Trading Group LLC is not responsible for any redistribution of this material by third parties or any trading decision taken by persons not intended to view this material.<\/p>\n","protected":false},"excerpt":{"rendered":"