USDA releases January agriculture supply and demand data

Watch for potential volatility in:
Agriculture equipment manufacturers (DE, AG, CNH)
Ethanol (ADM, ANDE, PEIX, VSE, AVR, USBE, BIOF, XNL)
Secondary ethanol plays (VRNM, MGPI and OTD)
Fertilizer (TRA, CF, POT, AGU, SYT, MOS)
Livestock (TSN, SFD, HRL) Seed (MON)

11-Jan-08 08:48 ET Update:
USDA releases January agriculture supply and demand data; ending stocks in corn declines 20% -Update : USDA's World Ag Supply and Demand Estimates January report came out. Corn production expectations were lowered to 13.074 bln, down from 13.168 bln in December. Ending corn stocks (inventory) declined 359 mln bushels to 1.438 bln, down from 1.797 bln bu, and the yield was lowered to 151.1, down from 153.0. Corn use for ethanol production was unchanged at 3.2 bln, while the projected price of corn was raised $0.35 on each end to $3.70-4.30, up from $3.35-3.95. Wheat production expectations were unchanged at 2.067 bln bu. Ending wheat stocks were raised 12 mln bushels to 292, up from 280 mln, and yields were unchanged at 40.5 bu per acre. The projected price range for wheat increased $0.25 on each end to $6.45-6.85, up from $6.20-6.60. Soybeans production expectations were slightly lowered to 2.585 bln, down from 2.594 bln bu, ending soybean stocks were lowered 10 mln bu to 175 mln, down from 185 mln and the yield slightly lowered to 41.2, down from 41.3 bu per acre. The projected price range for soybeans was significantly raised to $9.90-10.90, up from $9.25-10.25. The changes in corn results were most likely not entirely anticipated, especially the decline in ending stocks, and this report is likely to create more volatility in corn trading than expected. Overall, this report is bullish for agriculture equipment manufacturers, fertilizer, and seed stocks, and bearish for ethanol stocks, and livestock stocks.

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10-Jan-08 16:57 ET
Agriculture sector watch: USDA’s January supply/demand preview : The USDA will release its January World Agricultural Supply and Demand (WASDE) report tomorrow for corn, wheat, soybeans, cotton, sugar and other crops at approx 8:30 EST. In last month's WASDE report, the USDA raised the price forecast for corn, wheat, and soybeans, which was positive for agriculture farm equipment makers such as DE, AG, CNH and ARTW, fertilizer stocks (TRA, CF, POT, AGU, SYT, MOS), and seed stocks (MON), while negative for livestock stocks (TSN, SFD, HRL). In tomorrow's report, ending stocks and yield are key. It's likely that lower inventory is expected, so a large decline in inventory is probably needed to really move prices, especially in corn. For corn, the important numbers to watch are the exports figure (currently 2.45 bln) and the amount of corn to be used for ethanol (currently at 3.2 bln). Overall, ending stocks for some major crops are still low, and exports are a key reason for this. Ending inventory for corn has increased from March through October, and then saw a decline in November and December of ~100 mln bushles, leaving its stocks-to-use ratio at 14.2%. The low in ending stocks for this crop season was in May with a stocks-to-use ratio at 7.6%, and if exports continue to knock down inventory levels, we could be headed right back to that level, which is more likely than not... As you can see in our chart, ending stocks in corn have been increasing since March and have peaked so far this season in October. And in the last three months, you can see that ending stocks have gone from 1,997 to 1,797, while the mid-point of corn has increased to $3.65 from $3.30. Currently the USDA's price forecast for corn, wheat and soybeans are $3.35-3.95, $6.20-6.60 and $9.25-10.25, respectively. And today's March futures prices for these three major crops are currently well above these price range forecasts, which is a key reason the USDA may look to increase its price forecast (positive for DE, AG and CNH) in it's supply/demand report tomorrow again... Any increase in crop prices in the USDA report will further help fertilizer companies performance, due to recent increases in sulfur prices, which was a cost mostly passed onto the farmer. (Last month's corn production was 13.168 bln, ending stocks were 1.797 bln; Soybeans production was 2.594 bln, with ending stocks at 185 mln, and wheat production was 2.067 bln, with ending stocks at 280 mln).