Grain and oilseed markets continue to move higher on serious concerns about supplies.

The U.S. Department of Agriculture published its latest numbers on Wednesday morning. Most of the production and ending stock figures came in at the lower end of or even below trade estimates.

"We definitely had a friendly report here today," says Jonathan Driedger, market analyst with FarmLink Marketing Solutions. "I think the most surprising numbers overall were the size of the drop in the corn production estimate - they estimated yields lower than what people were looking for coming into the report - and the lower soybean production estimate. The trade was looking for a flat number, or even a little higher, so that caught everybody off guard."

Corn production is pegged at 12.447 billion bushels, down from the December estimate of 12.54 billion. Soybean production comes in at 3.329 billion bushels, down from 3.375 billion in December, as the average soybean yield was decreased.

U.S. corn ending stocks are estimated at 745 million bushels, with soybean ending stocks at 140 million bushels. All-wheat ending stocks are projected at 818 million bushels.

Driedger says there's no room for any further tightening of supplies.

"Any kind of setback, for example in spring planting or any further threats to the South American soybean or corn crops, will tighten the market up even further. That means we would have to ration demand even further and that only gets done through higher prices."

Producers now have some decisions to make. He says the acreage battle between soybeans, corn and cotton could take prices even higher.

"If any growers are well behind on sales, here's an opportunity to pull some sales along at very good values. At the same time, I think there are still some factors at play out here. If possible, producers may want to make sure they have an opportunity to add to sales going forward," he says.



~ Wednesday, January 12, 2011 ~