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Analyst provides estimates for July WASDE

Photo courtesy of Zaner Group

Grain market traders have their eyes set on a lot this week, including: Trade negotiations, weather and the World Agricultural Supply and Demand Estimates report.

We break down these hot topics, below.

Another notable report will be released by the U.S. Department of Agriculture (USDA) this week. The World Agricultural Supply and Demand Estimates (WASDE) report, to be released Thursday, has producers on the edge of their seats, after a surprise in last month’s Planted Acreage report. Brian Grossman, market strategist with Zaner Ag Hedge, shares his expectations for the monthly release.

“The big question, of course, is going to be the final ending stock number for corn. That is the wildcard,” Grossman said. “We saw the acreage report and the dispute that is going on about that. The USDA is going to stick to that number. That is going to potentially be a shock on paper, but shouldn’t be a surprise to anyone.”

The other element analysts have their eyes on is demand.

“The other question is, ‘How is the USDA going to address demand?,’” Grossman asks. “Stocks for the end of Quarter 3 came in (at) about 250 million bushels less than what the average trade was looking for. That was also a hair less than (what) the USDA increased prior, at the end of Quarter 2. We saw a bit of washout there, so that may force thee USDA to increase (the) residual demand and potentially lower ending stocks, even if we do see a higher acreage.”

Another item producers need to be aware of is volatility. Seasonal trends lean toward a weather market or market pressure.

“We are going to see down days,” Grossman said. “There are a lot of questions regarding how big of a crop we’re going to have, the accuracy of the USDA number and what (would) happen if it came in a little higher. Producers should take advantage of opportunities when they have them. You can pick up call options cheaper than you can sustain a 40-cent selloff.”