In the Jan. 11 USDA Crop Report, corn led the bullish surprises mainly based on the Grain Stocks report.

Stocks as of Dec. 1, 2012 were estimated at 8.03 billion bushels which indicated a 300 million bushel higher feed and residual use than earlier projected.

The trade, on the average, expected 8.21 billion bushels.

Production was increased 55 million bushels in the annual production summary on a 1.1 bushel per acre bump in yield to 123.4 bushels per acre.

Planted acreage in 2012 was increased 300,000 acres to 97.2 million acres, while harvested acreage was cut 300,000 acres to 87.4 million acres.

The average trade estimate for production was 10.626 billion bushels compared to USDA’s number of 10.78 billion bushels. Although feed and residual use was increased, exports were reduced 200 million bushels reflecting the slow pace of sales and shipments.

Total usage was increased 100 million bushels from last month.

Ending stocks were cut 45 million bushels from last month to 602 million bushels or a 5.3 percent stocks to use ratio.

The trade was expecting stocks to increase to 667 million bushels.  

The season average price was left unchanged at $6.80 to $8.00 a bushel.

Global stocks are projected at 4.566 billion bushels, 63.8 million bushels lower than last month.

World production was raised 126 million bushels reflecting increases in U.S. and foreign production while consumption was raised in the U.S but cut in the foreign numbers.  

The global stocks to use ratio is 13.4 percent, down 0.2 percent from last month.

March corn closed down 2 cents at $7.28 a bushel with support at $7.19 and resistance at $7.41 with a strong sell bias.

Producers with corn in storage should use this rally to price out un-priced corn.  

September 2013 corn closed at $6.02, down 5 ¼ cents with support at $5.84 and resistance at $6.22 with a strong sell bias.  

I would have 10 percent of 2013 production priced. Target the $6.20 – $6.50 range for additional pricing but if prices start to drop back below $6.00, also be ready to price part of the crop.

Over the past 31 years the average difference between the January projection for U.S. ending stocks and the final estimate has been 230 million bushels with 19 years below the final estimate and 12 years above.

The next USDA Supply & Demand report will be released Feb. 8, 2013.