Managing for Profit

U.S. Commodities president previews Friday’s WASDE report

USDA released its Quarterly Grain Stocks report September 30^th, and Don Roose, president of U.S. Commodities, says it was slightly friendly for soybeans.

“It was 14 million (bushels) under what the trade had estimated and 19 million under the last report.  It was actually two times what we had a year ago, so it tells you we are still in a growth pattern.”

For corn, Roose tells Brownfield ending stocks were down slightly, but the headline was feed usage during the last quarter.

“It was at a five year high, so we have strong feed usage.  But despite that, we still had big ending stocks.”

The next round of USDA numbers come in the form of the World Agricultural Supply and Demand Estimates, out Friday at 11am central. Roose says he thinks the crop is getting bigger.

“Historically, when you have an extended growing season, which we did; and some timely moisture towards the end of the crop, which we did have (the size of the crop grows).  When you look at the soybeans, you think the 47.1 bushels-per-acre can grow to this 47.5 million bushels or higher that we had last year; particularly with the yields so far.”

For corn, he says the yield might be reduced one or two bushels, but that wouldn’t be a game changer. The WASDE report may create some marketing opportunities.

“On corn, we think you can take advantage of some risk-management.  Lock in a floor with $4.20 on July corn with some options strategies.  Sell $5.00 July calls (and) that gives you a pretty big range.”

His strategy for soybeans:

“Without weather problems in South America, look in March and make sure you buy some $9.00 puts and sell some $10 calls.  Give yourself a window to go up (and)cover yourself on the downside.”

Roose says it’s an El Nino year, which typically leads to good growing seasons in South America.

Again, the WASDE report comes out Friday at 11am central.