Hello Pro Farmer Members!
USDA's February Supply & Demand Report next Tuesday should be a yawner. The February report typically features just minor fine tuning to the domestic balance sheets. And that's exactly what the pre-report expectations indicate traders are anticipating. According to a Reuters survey, traders expect U.S. corn carryover to rise 7 million bu., domestic soybean ending stocks to increase 5 million bu. and U.S. wheat carryover to jump by 6 million bu. from January.
Of more importance this month will likely be global production and carryover projections. But even there, traders are anticipating just minor adjustments from last month. Global corn ending stocks are expected to decline 560,000 MT, global soybean carryover is anticipated to fall 690,000 MT and global wheat carryover is expected to drop 310,000 MT from last month. Argentine corn and soybean production are seen down slightly from January. The Brazilian soybean forecast is expected to decline slightly, while the Brazilian corn crop estimate is expected to be virtually unchanged.
If expectations are right and the report is a yawner, there's still risk. The biggest risk to you as producers is a bearish reaction — even if the report isn’t negative — that drives prices lower during the February spring crop insurance price discovery period. The spring insurance price essentially acts as a put option. The higher the spring insurance price, the better the "strike price" for your crop insurance. Therefore, the reaction to next Tuesday's reports -- and price action through this month -- is exceptionally important to you as producers.
That's it for now...
... have a great weekend!
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