Markets have been moving slowly.  By the end of February, farmers are looking at the grain markets scratching their heads, wondering when the market will move in their favor.  Cash grain prices in Central Indiana have not changed much since fall delivery prices.

By the end of Friday, March 4, grains were higher.  Brazil had heavy rains towards the end of the week delaying their harvest progress. Political news in Brazil is also weighing in the markets. Their former president is under investigation.

A strong job report was reported this week. US employers added 242,000 workers in February, higher than then 200,000 expected.  US unemployment rate held steady at 4.9% in February.

Next week we are looking towards the USDA S&D report that will be released Wednesday, March 9 at 12 Eastern time.  I don't think we will see numbers change that much, bigger report will be on Thursday, March 31st for the USDA Prospective Plantings Report.

These numbers made the corn and bean market  decline when it was released midday. Corn came in at 89.2 million acres.  Corn acres look to be higher in the south and Texas.

Soybeans came in at 84.6 million acres.  This is a new record high for soybean acres, but still below most estimates. 

Corn Stocks came in 7.745 billion bushels, 136 million bushels higher than the average guess, and over 736 million bushels more than a year ago. Indiana, Iowa, and Illinois are the the state holding most of the corn, and that is not surprising since they sit right in the middle of the corn belt. April Supply and Demand Report might show more ending stocks, depending on the feed usage.

Bean Stocks came in at 1.333 billion bushels, 12 million bushels lower the the average guess, and 340 million bushels more than a year ago.  Indiana, Iowa, Illinois and Ohio still has the majority of bushels on hand.

Wheat usage and stocks had no surprises, no record highs or lows.

What does this report mean? In my opinion, we are looking at another big crop year.  We are far from it being harvested, and many factors can change the game at any time.  Traders will keep an eye out on the weather this spring, of course.  Planting in the south and Texas is currently being delayed with rains moving in, but they are not wide spread. They will also watch corn stocks closely, and the bushels being distributed. If farmers hold on to their bushels going into summer, they might see a very supportive basis level, but they might also see the basis level go the other way very quickly.  

USDA reports are not always easy to decipher.  But understand the timing of the report and how it might affect the grain markets is important for your operation and marketing plan.

What are the USDA markets? How do they come up with these numbers?

It is very hard to describe into one post everything that goes into the USDA reports. The Agricultural Marketing Service, AMA, has been conducting reports for over 90 years.   It is a very comprehensive, monthly report.  Reports come in from all over the United States and international locations from USDA officials. 

Reports include markets, prices, volume, and bushels.  Commodities included in the report are corn, beans, wheat, tobacco, cotton, fruits, for example. Certain fields are earmarked to be a representative field for the year.  No one outside the Washington, D.C. office is to know about the final numbers of the report until it is released to the public.  There are many USDA employees who work all night compiling the numbers into the report.  Until a few years ago, the report was released in the morning. Now it is released in the afternoon. 


A few years ago, actually it was four years ago, I traveled to Washington, DC with a group of ag professionals.  We were invited to watch the August 2010 USDA report being presented to Agriculture Secretary Tom Vilsack. 



 

Before we were led into the room for the presentation of the report, we were briefed in a separate conference room.  They explained us the procedure, gave us a USDA pass, and we left all forms of communication in the conference room.  All cell phones, tablets, etc were left in the middle of the table.  Then we toured a media room.  It wasn't time for the report to go public yet, but some had the numbers in front of them, entering the information into a computer.  It is entered into a decrypted data system, and that information is not released electronically until the published time.

Many people play a part of the report, and it is a very big process.  They also described the history of the report. Before computers, the report was shared via telephone.  Those reporting from DC were in a media room, standing in the middle. At the time of the report being released, they were allowed to go to the perimeter of the room and use the telephones. The USDA employees who gather the information for the report are not allowed to leave the designated areas of the USDA building until the report is released.  That means some work all night long.

I realize there is so much that goes into preparing each monthly USDA report. The results that come from these reports impact the grain markets because if the report numbers are not within private analyst estimates, it is impacted immediately.  Grain markets can go limit up or limit down if there is a big change in the USDA markets.  It doesn't happen every report, but it is possible. 

 

This post is part 2 of a 3-part series sponsored by Indiana’s Family of Farmers.