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October 12, 2020 | FBN Insights | Kevin McNew

Markets Trade Mixed Overnight after Friday’s Reports

Reports were overall supportive for U.S. corn and soybean prices with wheat along for the ride

Monthly US WASDE & Crop Production Reports 

  • USDA’s monthly reports were overall supportive to markets.
  • The largest shocker was soybeans with US carryout now forecast to come under the 300 million bushel mark at 290 million.
  • That would be the lowest carryout realized in years for US soybeans.
  • USDA lowered harvested area for both corn and soybeans taking production lower but yields were hardly changed.
  • US soybean exports were raised as well.
  • USDA held its US corn export forecast; ending stocks are seen at 2,167 million bushels which is significantly lower than the previous forecast.
  • No major changes were made to the US all wheat balance sheet.
  • But, USDA raised global wheat production thanks to a large boost in Russia.

FBN’s Take On What It Means: The reports were overall supportive for U.S. corn and soybean prices with wheat along for the ride. We see additional upside potential for corn and soybean futures in the near term with Brazil’s dry weather and delayed planting gaining market attention. 

Wheat Prices Rise in Russia

  • Two issues are supporting Russia’s wheat export prices - strong demand and dry weather during planting season.
  • Prices rose $8 per tonne, week over week, with 12.5% protein quoted at $245 per tonne, FOB according to one agency.
  • Another agency quoted prices up $4 on the week at $239 per tonne.
  • SovEcon stated concerns about dryness and its impacts on planted area.
  • Russia is in the middle of winter wheat planting season but a lack of moisture has grabbed the market’s attention.
  • So far, plantings have not been delayed but with winter approaching, any delays this late in the season could result in smaller acreage.

FBN’s Take On What It Means: The dry weather issue does merit watching but with no significant planting delays reported yet, we are not getting overly concerned.  Plus, USDA just upgraded Russia’s current wheat crop by 5 million tonnes to 83 million which will keep the exporter’s stocks outlook hefty.  We do expect prices to remain supported in the near term thanks to steady demand and dryness concerns but we also expect winter wheat area to be higher across the Northern Hemisphere.  Absent spring wheat issues, we likely will have a large rebound in production and lower prices this time next year.

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