Initial Post-report Reaction

*Results from this morning’s USDA Reports>
Quarterly Stocks:
Corn= 10.269, vs estimates of 10.550 bil avg, range= 10.437-10.800
*This will be seen as very bullish. The market will now begin to believe we can't solve the acreage mix problem and we must force usage reductions through higher prices.
Soybeans= 2.329, vs 2.268 avg, range= 2.240-2.316
Wheat= 1.128, vs 1.116 avg, range= 1.075-1.150

Final 2007 Production:
Corn= 13.074, vs 13.109 avg, (152.3 bpa), range= 13.012-13.212, Nov= 13.168
Soybeans= 2.585, vs 2.584 avg, (41.2 bpa), range= 2.562-2.614, Nov= 2.594
*No surprises in either corn or soybeans.
*However, a general disappointment in yield trends vs late summer/early harvest ideas will make it seem all that more difficult to produce large enough crops in 2008.

Carryout:
Corn= 1.438, vs 1.698 avg, range= 1.564-1.785, Dec= 1.797
*Well below trade expectations.
Soybeans= 175, vs 170 avg, range= 144-185, Dec= 185
Wheat= 292, vs 274 avg, range= 230-316, Dec= 280

Winter Wheat Acreage:
2008 Winter Wheat= 46.610, vs 48.657 mil avg, range= 46.6-51.436 mil, 2007= 44.987.
*Much lower than traders expected, with a general pre-report bias that maybe this part of today's report could be a bearish surprise.

**Overall theme from today's reports is that the markets may begin to percieve current supply/acreage expectations will not be able to satisfy demand. Some will begin calling for price action that immediately begins to restrict usage.

Published Friday, January 11, 2008 7:19 AM
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