Once again, grain traders find themselves waiting with bated breath on the USDA’s much anticipated January 2021 WASDE and Crop Production reports on Tuesday, January 12th.
The USDA turned reality TV show in 2020, equal parts dysfunction and Comedy Central, after offering exceptionally flawed March Prospective Plantings estimates on March 21st 2020, followed by a second consecutive “where were you when” September Grain stocks reports.
Am I being too harsh? Not when in corn specifically the USDA’s March versus June U.S. corn planted acreage adjustment alone (reduced a record 5 million acres) changed the U.S. corn balance sheet by nearly 900 million bushels. Again this was pre-Biblical wind storm in Iowa on August 10th.
That said, I have a hard time offering them a mulligan on that one. The 2020 spring planting season went-off without a hitch, therefore any excuse or attempted defense from the USDA feels very much my dog ate my homework-ish.
And then came the September Grains stocks report, in which the USDA offered a Sep 1 corn stocks figure that was 255 million bushels below trade expectations, the second largest miss in 13 years, trailing only 2019’s 314 million bushel differential. This same scenario played out in soybeans. Furthermore we now also have the USDA adjusting June Grain stocks figures in the September report, which begs the question, how many chances does a person (or group) get? Apparently in 2020 even the USDA is exempt from any real consequences…blame it on COVID-19. That should suffice.
As a trader and hedger, I’ve made a career at looking for patterns and behavior tendencies from the USDA, relating to prior monthly reports and methodologies. However we’ve now reached a point where it’s becoming more and more apparent that my 16-year old son, who believes corn comes from a bag at Hy-Vee, arguably has as educated a view as I do on what the USDA/NASS will do in next week’s reports (sorry Tanner…we’ll chalk it up to on-line school).
Therefore this week, I’ll offer you no charts or past history on the USDA’s November versus January corn or soybean yield adjustments because with Uncle Eddy calling the plays, all bets are off on what the USDA does on yield, acreage, and exports on Tuesday. That said I will say in corn this is still, in my now very humble opinion post-2020 marketing PTSD, a house built on sand. Friday’s Commitment of Traders report showed Money Mangers now carrying a net long in corn of +349,888 contracts as of the market closes on January 5th, 2021, which officially EXCEEDS the maximum length the Money held in 2012. I get it…night sweats for sure on Monday p.m., the struggle is real for us all. God speed.
Author hedges corn futures and may have a position at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.