USDA BASELINE...... THE BOTTOMLINE - "HILARIOUS"......F.C.Stone Comment: "HILARIOUS" LONG TERM PROJECTIONS - BASICALLY, THE USDA SEES ENDING STOCKS IN 07-08 (ON AN UPDATED CARRYIN NUMBER) NEAR AN UNTENABLE 477! ACRES UP 7.4, A "HIGH" 153 YIELD, ETHANOL UP 1.0 BIL,
WHAT IS HILARIOUS ARE FORWARD 2008 AND BEYOND NUMBERS WHICH CAP CORN ACRES AT 90 MLN AND EFFECTIVELY CUT BACK ETHANOL GROWTH TO ONLY UP 500 MLN BU IN 08, 200 MLN BU IN 09. THEY ARE EFFECTIVELY USING 3.35 - 3.55 TYPE CORN PRICES TO SAY WE WILL STOP ETHANOL. ACTUAL EXPANSION COULD BE FAR GREATER THAN THIS. USDA REALLY ADMITTING WE ARE IN A BIG PROBLEM AND ULTIMATELY WILL HAVE TO DECIDE TO EAT OR DRIVE. EATING WINS OUT . FEED USE DOES NOT CONTRACT DESPITE DDGS IMPLYING MORE ANIMAL UNITS.
THIS IS AN OUT OF CONTROL BULLISH LONG TERM PROJECTION - DESPITE CHGO REACTION TODAY.
BOTTOM LINE : THE USDA SHUTTING DOWN ETHANOL TO HAVE FOOD SUPPLY LEFT
SOY STOCKS DECLINE TO AN EFFECTIVE 385 WITH NEW CROP BEAN DEAMAND AT 3114 (HIGHER THAN EARLIER SEEN). WHEAT STOCKS INCREASE IN THEU.S. TO 493 FROM 418 ON A CROP 200 MLN LARGER THAN LAST YEAR. BOTTOM LINE: NO SURPRISE IN SOY AND WHEAT. WHEAT LOSES TO CORN.
AS FAR AS I AM CONCERNED, DESPITE THE MUTED "BUY THE RUMOR, SELL THE FACT IMMEDIATE CHGO RESPONSE, USDA JUST CONFIRMED AN OUT OF CONTROL LONG TERM STORY IN CORN. AND THEY DONT KNOW WHAT TO DO ABOUT IT EXCEPT TO SLOW DOWN ETHANOL. MARGINS ARE STILL GOOD ENOUGH TODAY TO ALLOW CONTINUED EXPANSION BEYOND THEIR FORECASTS. .......... BULLISH CORN...... PERIOD end.
