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September 13, 2018 | FBN Insights | Kevin McNew

Ethanol Production Reaches 5-Month Low

Corn and wheat sell off sharply following yesterday's WASDE report

Corn, Wheat Sold Off Sharply Following Yesterday’s WASDE Report, Soybeans Find Support

Yesterday’s report from the USDA raised their projection for corn yield to a record 181.3 bpa, resulting in estimated production of 14.827 billion bushels, the second largest corn crop on record. Analysts largely anticipated a reduction in yield and were caught off guard. The USDA also increased their estimate for ending stocks by 90 million bushels from Aug to 1.774 billion bushels. Dec 18 corn was down -12.75 cents on the day. For wheat, the USDA raised their estimates for global old crop ending stocks to 274.36 MMT, surpassing analysts expectations of 272.92 MMT. New crop global ending stocks were also increased to 261.29 MMT. Russian wheat production was increased by 3 MMT to 71 MMT, as growing conditions in their spring wheat belt have improved. Dec Chicago SRW lost -12.75 cents, KC HRW was down -15.25, and MN HRS gave up -9 cents. The USDA increased their soybean yield estimate by 0.6 to 52.8 bpa, bringing total bean production to 4.693 billion bushels, up 44 million bushels from August. Nearly the entire Midwest saw good amounts of moisture throughout the entire month of August, likely boosting soybean yields. The estimate for Chinese soybean imports was also cut by 1 to 94 MMT. Nov 18 soybeans gained +9.25 cents on the day.

USDA Sales Announcement

  • Export sales of 142,876 metric tons of corn for delivery to Costa Rica during the 2018/2019 marketing year.
  • Export sales of 108,010 metric tons of soybeans for delivery to Mexico during the 2018/2019 marketing year.
  • Export sales of 120,000 metric tons of soybeans for delivery to unknown destinations. Of the total 40,000 metric tons is for delivery during the 2018/2019 marketing year and 80,000 metric tons is for delivery during the 2019/2020 marketing year.

USDA Weekly Exports: Mexico Continues To Buy Cheap Corn, More Beans Headed to Europe

For the week ending on Sep 6, total sales of corn were reported at 774,200 MT, slightly below the range of estimates from analysts. The countries making the most purchases were Mexico, Colombia, and Japan. Net sales for new crop soybeans came in at 693,500 MT which was to the low end of the analysts’ range. Top buyers of US origin soybeans were Egypt, Japan, and Iran. Notably, the Netherlands had reported purchases of 70,500 MT, likely to go feed the robust Dutch bean crushing industry. Wheat sales were reported at 387,600 MT, up only 2% from last week but down 16% from the 4 week average. Major buyers were Taiwan, Mexico, and Italy.

Ethanol Production Reaches 5-Month Low, Supplies of the Biofuel Grow

The Energy Information Administration’s weekly report announced that production of ethanol was 1.02 million barrels per day, the lowest level of production since April 20. Last week, production was reported at 1.087 million barrels per day. This time of the year marks maintenance season for many ethanol plants around the Midwest. For the week ending on Sep 7, ethanol stockpiles grew to 22.894 million barrels, up 191,000 barrels from last week. Yesterday’s WASDE report showed an increase in expected grind for ethanol, with the USDA forecasting 5.65 billion bushels of corn to be used in the production of ethanol.


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