The USDA released it's first major reports since September, after the government shutdown put a damper on the October reports. Here's a breakdown of the November WASDE, as well as what we're hearing from large traders about a long-term cycle for corn.
Total production raised by 146 million bushels while total demand jumped by 275 million. Net-net the market is slightly higher on the news.
style="margin-left:.5in;"> • Yield reported @ 160.4 bpa yield … up 30% vs. last year
• Total Production @ 13.989 billion bushels
• Harvested Acreage @ 87.2 million
• Ending Stocks @ 1.887 billion… up 129% vs. last year
• Global Ending Stocks @ 164.33
• Exports - pushed higher from 1.225 billion to 1.40 billion
• Ethanol Usage - Unchanged.
• Feed Usage 5.1 to 5.2 billion bushels - Tough to argue for higher feed usage numbers when the most recent Cattle on Feed report shows net placements 1% smaller than the previous year.
• Brazilian corn crop lowered from 72.0 to 70.0 million metric tons
Total production raised by 109 million bushels while total demand jumped by 110 million. Net-net the market is slightly higher on the news.
• Yield reported @ 43.0 boa yield
• Total Production @ 3.258 billion bushels
• Harvested Acreage @ 75.7
• Exports raised from 1.370 to 1.450 billion bushels
• Crush 1.655 to 1.685
• Ending Stocks @ 170 million
• Global Ending Stocks @ 70.23
Large traders are starting to talk about a long-term bearish cycle for corn, wheat and soybeans starting to settle in. The fear is that with no major weather hiccup corn could be the immediate leader to the downside, followed by wheat in early-2014, then soybeans by mid-2014.
The main argument by the bears, which is hard to refute, is that ethanol basically kicked off the rally we have been so fortunate to be a part of for the past five plus years. The growth in ethanol coupled with the extremely poor growing conditions created the perfect environment for a major price rally. Take away the strong growth in ethanol, which is obvious by the EPA's move to try and reduce the mandate, and big oil starting to put up a major fight, then half of the bullish tag-team is no longer. Weather…who knows? The point is: Ethanol growth was the sure bet, weather provided some additional excitement, but one without the other is going to be like "Laurel without Hardy," "Sonny without Cher," or "Brooks without Dunn"... It just ain't the same!