USDA will be out tomorrow.

[SASKFARMER3]

The USDA will be out tomorrow and the guess is on as to how much corn is going to be planted and how much wheat will be ripped up to plant corn and how low will Soybean acres be.
Its amazing how gearing a country up for ethanol is greatest way to get out of direct subsidies to farmers WTO green and at the same time make Farmers the New Millionaires.
But back to the results, looks like bet is on for extra 10 million acres of corn from soybean's.
My guess is they will get their corn acres their looking for soybean's will be lower and Wheat numbers will be their but will drop as year goes on due to weather.
Whats everyone else see.

[joedales]

From Farms.com Expert Commentaries:
Author: Stu Ellis, University of Illinois Extension

USDA Crop Intentions Report - Due March 30, 2007

The Hour Is Nigh. What Is Your Decision?


The clock is rapidly ticking toward one of the most anticipated crop reports in recent history. Unlike the August 1 production reports in the drought years of 1983 and 1988, this spring 2007 prospective plantings report will have brief market impact, but long term planning impact for producers and consumers of agricultural commodities. On Friday morning we will hear what you and your neighbors are “intending” to plant. The grain traders have their positions squared away, but do farmers? Are you protected from a sudden upward or downward move in the market? You have two days to take care of business. So let’s see what the brightest and best have to say.



Corn



If you check local cash corn prices, you will find them no where near futures prices, because of an unusually wide basis. In his weekly newsletter, Outlook Specialist Darrel Good at the University of Illinois says, “The weak old crop basis reflects higher futures prices and ample supplies, while the weak new crop basis may reflect concerns about storage capacity for the coming harvest.” He says corn is being sold to keep up with the export and ethanol demand, and the basis will remain wide until supplies become tight.



At Purdue, Outlook Specialist Chris Hurt belives prices could be as high as they are going to go without an unusually bullish report on Friday or growing season weather concerns. And he suggests, “Pricing some portion of remaining old-crop and new-crop prior to the report should be considered. When ready to price old-crop, be sure to ask about bids for June or July delivery. At some locations, those bids are sufficient to cover storage costs. This is especially true at locations that have an ethanol plant starting in production this spring.” Hurt also believes the old crop may still have some higher values, which can be captured by selling cash, and buying call options on 20% of your old crop inventory if you have that much left. Consider liquidation in mid-July if the new crop is maturing on schedule. For the new crop, Hurt says, “The traditional guidelines are to have 25% to 35% of expected production priced in the spring pricing window from mid-March to mid-May. Thus, having around 1/3rd of that done prior to the March 30th report might be a guideline. “



At Ohio State University, Outlook Specialist Matt Roberts, agrees that holding corn over the report without some pricing protection is more risk than should be assumed. He thinks corn acreage above 11 million and good growing weather could take 50-75¢ out of corn prices. He suggests an option strategy as well, but recommends, “The purchase of $3.90 July puts for about 18¢ if you would like longer-term protection, or $3.90 May puts for about 10¢ if you want very short-term protection for old crop bushels. For new crop, if you haven’t marketing any, I would advise some forward sales to lock in what are undoubtedly significant profits. New crop options remain expensive, but the calls are a bit more expensive than the puts, meaning that the better option is to buy puts and hold the corn unless the prospects for basis improvement are poor, in which the sale of the physical corn and purchase of out-of-the-money ($4.60 or higher) calls is the better choice.”



At the University of Missouri’s Food and Agricultural Policy Research Institute, Outlook Specialist Melvin Brees says if you don’t use options, at least call your elevator and put in bids if the market goes up or down. “Downside price traps near $3.90 (December corn futures) could capture this price before the market declines to fill the chart gap near $3.75 or lower. For those expecting prices to rally, upside price goals near previous highs would capture higher prices. Then setting traps near $4.00, or above, would capture a higher trap price if a rally failed to reach previous highs.” How much do you sell? Brees says that depends on your production, available storage, and whether you have crop insurance. “If corn acreage is increased, locking in a profit on expected production from the increased acreage may be advisable. Those with crop insurance may be more confident in making pre-harvest sales if production is reduced.” He says no strategy is perfect, but having a plan is better than nothing, and your plan may need action before the March 30 report. “Upside price goals may not be reached. Downside price traps may be triggered and then prices may reverse, moving higher than before. In spite of these difficulties, spreading sales insures that profitable sales are made while additional quantities remain to be sold if prices surge higher. The objective is to capture favorable prices and avoid the risks associated with pricing everything at once or selling at low harvest time prices.”



Beans



If you check the soybean basis, it is also parallel to the wide corn basis, and Darrel Good at the University of Illinois says that is significant. “The new crop basis is also weaker than the actual harvest time basis experienced in recent history, except in 2005 when hurricane Katrina closed the Gulf Port for a period of time. The weak basis currently being experienced is likely a function of high soybean futures prices resulting from high corn prices and anticipation of storage capacity issues. As with corn, the storage capacity issues may not be as extensive as expected, but with substantial regional variation possible.”



His colleague, Chris Hurt at Purdue says soybean prices should be moving up this spring in a seasonal cycle. “Short-term forecast into later March do suggests dryer and warmer than normal temperatures which may cause markets to anticipate somewhat fewer bean acres.” Nevertheless, he is expecting basis levels to remain wide, new crop prices in the fall to exceed old crop, and no premiums for early delivery. “Old-crop pricing should be advanced in the next 60 days during the traditional spring pricing window. This is a period to consider pricing 25% to 35% of anticipated new crop production. Corn and soybean prices should come back into alignment in the 2007/08 marketing year, with soybeans 2.2 to 2.4 times the price of corn. If corn is to average $3.70 for the 2007 crop, then soybeans should be in the $8.14 to $8.88 range. This suggests that soybean prices still have some “catching up” to do relative to corn prices.”



Matt Roberts at Ohio State agrees that you should prepare to sell some soybeans in the next few weeks. “Global supplies are ample, as Brazilian production has been very good this year. Further, because the US has such carry-in and expected carry-out, it would take a significant yield even to significantly increase soybean prices. Therefore, in spite of the higher call premiums, I would recommend forward sales of soybeans. At this point, I lean toward forward sales because I think that there is much more downside risk in basis on beans than upside potential. If you want to maintain some upside, purchase November $9.20 calls on some of your sales.”
Those are some ideas, but only you can pull the trigger, if you feel the need for some protection from potential market pitfalls.



And Outlook Specialist Mike Woolverton at Kansas State says there are plenty of dynamics in today’s market that demand the need for attention. "A domino-effect linkage among the general economy, the stock markets, energy commodities, and crop commodities has become more apparent in recent days. When rumors of a slowing economy caused the Chinese stock market to tumble and take U.S. stocks down briefly, commodity prices also fell. Here are links in the chain: global economy – the U.S. economy - oil price – ethanol price – corn price - and the prices of other crop commodities. Ethanol is the connector. An economic slowdown would reduce the demand for fuels, ethanol included. If ethanol production fell, so would the price of corn fall and take the prices of other crop commodities down with it.



"What this all means to producers is marketing of grain and oilseeds has become a more critical managerial function. Over the next five or six months, because of higher priced grains and oilseeds and frequent and wide price fluctuations, excellence in marketing could add tens of thousands of dollars to gross revenue. It will take constant vigilance of markets, extra time allocated to marketing decision making, and regular contact with grain and oilseed buyers to capture those extra dollars. It would be a shame to let golden opportunities slip through the fingers."




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To post a question or comment for Dr. Ellis please go to http://www.farmgate.uiuc.edu/



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This commentary is for informational purposes only. The opinions and comments expressed herein represent the opinions of the author--they do not necessarily reflect the opinion of Farms.com. This commentary is not intended to provide individual advice to anyone. Farms.com will not be liable for any errors or omissions in the information, or for any damages or losses in any way related to this commentary

[rosco]

My SWAG is that they won't get 10 more, more likely about 7.5 intended, and again, that is intended. With this storm that is hitting the central states right now, it is really going to disrupt planting in the lower tier states, but not so much in the "I" states, where the bulk of the corn comes from. So the more important report is in a month, when we will see just how much of the "intended" actually got into the ground. My dart board says about a 6.5-7 increase at the end of the day.
JMHO, Rosco

[cottonpicken]

I wonder what any of those guys were thinking a year ago.

[charliep]

Numbers from a newsletter I get (Ken Ball/Union Security)

CORN acres big - up 12.13 million

BEAN acres down 8.38 - more than expected - will be bullish beans, but if corn down, beans may not show lasting strength.

OATS - perhaps most interesting number on report. US OAT acres only estimated down a small 139,000.In combo with a nagetaive corn number, the oat rally will likley see some stiff selling.

WHEAT - all numbers negative. US winter acres revised up by over 400,000. Spring acres only down by about 1 million.

[charliep]

Here is the link for those of you who want to look at all the crops (including pulses) and the state breakdowns.

http://www.usda.gov/nass/PUBS/TODAYRPT/pspl0307.pdf