Ins and Outs of Grains
Understanding the fundamentals of commodity grain markets is both necessary and difficult for new traders. Oftentimes the difficult part isn’t deciphering the data; it’s getting your hands on it in the first place. That’s one problem this information may be able to fix for you. Here are two online sources and one underlying entity that will give you access to a vast amount of statistical data for commodity grain markets.
USDA- Data and Statistics:
- Go to the USDA homepage (www.usda.gov).
- On the left side of the page, click on the “Agriculture” link under the “Browse by Subject” tab.
- On the right side of the page, click on the “Data and Statistics” link under the “Related Topics” tab.
- The end link is http://www.usda.gov/wps/portal/!ut/p/_s.7_0_A/7_0_1OB?navid=DATA_STATISTICS&parentnav=AGRICULTURE&navtype=RT
Once you arrive at the Data and Statistics portion of the USDA site, you’ll notice it’s broken down by its three divisions: Economic Research Service (ERS), Foreign Agricultural Service (FAS) and National Agricultural Statistics Service (NASS). If this is your first time visiting this site, it’s probably going to be a little overwhelming, so here’s how to get started. If it’s commodity grain fundamentals you seek, start by clicking the link entitled: “Production, Supply, and Distribution Online Database”. Under the “Reports” sub-heading, there’s a list of commodities; open up the grains database. There you have it; over forty reports broken down by different commodities and the world, regions, and countries that produce and consume them. You’ll find figures for commodity grain imports, exports, production, supply, usage, yield, and more.
Another great tool to take advantage of is the World Agricultural Supply and Demand Estimates (WASDE) reports. This can be found by going to the USDA Office of the Chief Economist’s site; clicking on the “Commodity Forecasts” link; and finishing by opening the “Latest WASDE Report” link. A nice attribute of this report is that all of the commodity grain markets driving fundamental statistics are listed. This also has nice forecasts for the coming crop year. The WASDE reports are used by a large percentage of individuals who trade commodity grain markets. An example of something to watch is how estimates for the current crop year’s acreage and yield around the world are changing with things like weather conditions. There is a very important notion to keep in mind here. Traders of the grain commodities have a price in expectation, but when expectations aren’t met, or are exceeded, markets may move. Let’s say for example it has been overly dry in the U.S. Corn Belt. The commercial and speculator traders are all expecting a drop in corn yields as a result, so prices may have traded down all week. If the WASDE falls in line with expectations, little price action may occur. Then the WASDE report gets released and yields, although down, weren’t hit as bad as they were expected to; markets sold off on the notion that supply will be greater than expected.
This is just one example, but using the reports and the statistical figures they offer is going to be helpful. Having a general understanding of perceived market conditions and expectations is going to assist traders in understanding price directions. Futures Press is excited to be able to offer you an in house report on grains with free instant access by clicking COMMODITY GRAIN REPORT
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