USDA Supply and Demand Report Expectations
Traders will be looking for crop revisions in today's USDA Supply and Demand report.
In the overnight session the grains were mostly unchanged with corn up 1/4 cent, soybeans up 2 1/1/2 cents and wheat down 1/2 a penny. The dollar is trading a fraction of a percent higher and crude oil has fallen $1.32. This morning there was a reportable new crop sale of 180,000 metric tons of soybeans to unknown destinations.
The latest WASDE report will be released at 11 AM CST today. The August report produced significantly higher yield estimates and ending stocks than the market was looking, especially after the drowned acres and excessive rains damaged the crop in the eastern grain belt. The August surprise sent prices tumbling for the next month, so what is in store for the September report?
The September report is expected to bring slightly lower corn and soybean yield forecasts according to the latest Reuters poll of 20 analysts. The average analyst is guessing that corn yield will be 167.6 bushels per acre compared to 168.8 bushels per acre last month, with ending stocks declining 70 million bushels to 1.643 billion bushels for the 15/16 corn crop. In the latest forecasts from Planalytics, Pro Farmer, Informa and FC Stone three out of the four company's project yield at least two bushels below the August USDA forecast. Planalytics currently sees corn yield at 166.8 BPA, Pro Farmer projects 164.3 BPA, FC Stone forecasts 165.9 BPA. Informa corn yield is currently matching the August USDA expectations. Both Informa and FC Stone increased their yield estimates this month from around 165 bushels per acre last month.
Analysts are also expecting soybean yield to decline but only by a modest .5 bushels per acre to 46.4 BPA. Planalytics, Informa and FC Stone all increased their yield forecasts this month as weather throughout August remained mostly optimal for the oilseed’s development. Ending stocks are expected to decline to 415 million bushels which is still a burdensome carryout.
Global ending stocks are also expected to decline this month with expectations for global corn ending stocks at 193.44 million metric tons compared to 195.09 million metric tons last month. Global soybean ending stocks are expected to fall to 86.21 MMT from 86.88 MMT in August, and Wheat ending stocks are expected to rise this month to 221.90 MMT from 221.47 MMT last month.
Export sales were strong this morning for both old crop and new crop. Old crop corn beat expectations with 411,200 metric tons of sales with analysts anticipating cancelations around 50,000 metric tons. Old crop soybean sales also beat analyst expectations with 1,790,200 metric tons of sales. New crop sales were very strong also with corn booking 1.9 million metric tons and soybeans booking 2.6 million metric tons of sales this week which were well over the range of analyst expectations.
Strong Ethanol Production
Cody looks at ethanol production and stocks as well as expectations for tomorrow's export sales report.
Market Eyes Friday’s Report
With the market eyeing the UDSA report on Friday here is the yield forecast of some top analysts.
In the overnight session the grains are trading mostly lower with corn down 3/4 of a cent, soybeans down 3 3/4 of a cent and wheat up 1 1/2 cents. Crude oil is trading pennies higher and the U.S. dollar is trading down .1 percent. Export sales will be released on Friday due to the holiday shortened week. This morning, the weekly jobless claims report showed new unemployment applications dropped 6,000 to a seasonally adjusted 275,000 this week which was generally regarded as improvement in the strength of our labor market.
Tomorrow we will also see the USDA release their September Supply and Demand report as well as their Crop production report at 11 AM CST. Below are some analyst’s forecasts for corn and soybean yield.
In August the USDA pegged U.S corn yield at 168.8 bushels per acre and soybean yield at 46.9 bushels per acre which dropped prices in a sharp sell-off following the release of the report. In the latest forecasts from Planalytics, Pro Farmer, Informa and FC Stone three out of the four company’s project yield at least two bushels below the current USDA forecast. Planalytics currently sees corn yield at 166.8 bushels per acre, Pro Farmer projects 164.3 BPA, FC Stone forecasts 165.9 BPA and Inform corn yield matches the August USDA expectations of 168.8 bushels per acre. Both Informa and FC Stone increased their yield estimates this month from around 165 bushels per acre last month.
Soybean yield appears to be increasing with Planalytics, Informa and FC Stone all increasing their yield forecasts this month. Since the USDA pegging soybean yield at 46.9 bushels per acre in the August, the oilseed has continued to selloff. Planalytics yield this month projects soybean yield at 46.2 bushels per acre and increase of .3 BPA from the previous forecast. Pro Farmer forecasts 46.5 bushels per acre soybean yield only .4 bushels under the USDA. Informa increased their yield forecast this month by 1.6 bushels per acre to 47BPA and FC Stone also increased their yield estimate, but only by.4 bushels per acre to 45.4 BPA.
Will Soybean Exports Continue to Decline?
Tune in as Cody reviews export inspections, crop progress, and the yield forecast.
Grains Supported by Outside Markets
Grains were supported by outside markets alongside some good reportable export sales announced.
In the overnight session the grains traded higher with corn up 1 1/4 cents, soybeans up 3 3/4 cents and wheat up 4 cents going into the morning pause. Crude oil is trading lower by 35 cents and the U.S dollar index is up .44 percent. Yesterday morning two reportable sales announced that 120,000 metric tons of corn was sold to Mexico and 120,000 metric tons of new crop soybeans was sold to unknown destinations.
U.S. crop conditions were left unchanged this week with 68 percent of the corn crop rated good-to-excellent and 63 percent of the soybean crop rated good-to-excellent. Analysts were expecting to see a slight decline in soybean conditions this week. The U.S corn crop is now 76 percent dented which is in line with the 4 year average pace. Eighteen percent of the soybean crop is dropping leaves compared to 16 percent in the four year moving average.
Export inspections were mostly within expectations for corn and wheat but were disappointing for soybeans this week. Soybeans inspected for export totaled to 93,308 metric tons which was below the analyst guess which ranged between 125,000-275,000 metric tons. Wheat inspections totaled to 371,343 metric tons and corn inspections totaled to 894,609 metric tons this week.
The Brazilian soybean crop is only a couple days away from planting season where forecasts for the 15-16 crop expect the South American country to reach 100.9 million metric tons up substantially from the 96.2 million metric tons produced this year.
Positive Gains in the Overnight
Grains Bullish after three day weekend
Grains were in a bullish mood this morning coming back from the three-day weekend with positive gains across the board. Wheat and beans led the charge higher posting 8 cent gains in the overnight session while corn logged a 5-cent advance.
Global markets felt more at ease on Monday and Tuesday with China’s stock market showing a robust advance of 2.9 percent on Tuesday, although speculation exists that the buying may have been triggered by the government in an attempt to bolster the market. US stock futures were also higher in overnight trade with S&P futures up 1.9 percent suggesting a stronger open for equities this morning. However, there are still lingering doubts about the market’s strength. Japan's Nikkei Stock Index fell to a 7-month low on concern Chinese demand for Japanese goods remains weak after Chinese Aug imports fell for the tenth consecutive month.
In wheat, Russian agriculture consultancy IKAR said on Tuesday it had lowered its forecast for Russia's 2015 wheat crop to 60.6 MMT from 61.8 MMT. The downgrade was due to a slightly lower than expected harvest in Urals and Siberia, it said. Its forecast for corn remained unchanged at 12.5-13.0 MMT.
On Tuesday, a Chinese government think-tank cut its 2015/16 forecast for the country's corn output by 3 MMT to 229 MMT as a result of a localized drought. Nonetheless, it would still be a record output and an increase of 6.2 percent over last year. The consulting group expects China to curb imports of corn and milo. Imports of sorghum for 2015/16 were seen dropping to 7 MMT from the 10 MMT expected in the current marketing year, according to its latest estimate.
In Ukraine, the Ag Minister there said wheat exports are expected to jump to 15.9 MMT in the 2015/16 season from 11.2 MMT a season earlier due to a large harvest and stocks. For corn, they expect exports to be only 16.9 MMT this year versus 18.8 MMT in 2014/15 and a USDA forecast of 17.5 MMT.
USDA’s monthly WASDE report will be released on Friday and although no official pre-report estimates have been released, it would seem that early guesses are saying that there will not be much change by USDA in terms of production as they opt for more definitive data in October once harvest has started.
Corn and Beans to Continue to Trend Lower?
Cody looks at the technicals and fundamentals to weigh in on what he thinks will happen to corn and beans in the weeks to come.
Weekly Cash Comments
Cash Commentary for week ending September 4th
Soy basis continued to plunge lower this week as old-crop premium levels eroded closer to new-crop delivery levels. For the week, US average soybean basis fell 17 cents a bushel, while corn managed a positive 2-cent gain.
In corn, basis levels firmed mostly thanks to strength out of the ethanol sector which posted a 3-cent gain on the week. Western Cornbelt plants saw more improvement than the East this week as double digit gains were noted at plants from Iowa, Minnesota and North Dakota. At river terminals, basis levels were off sharply giving up 6 cents this week. Barge rates were up sharply this week helping push basis levels down along the river system. For spot versus new-crop, there is little premium difference for spot delivery as old-crop supplies are abundant. This week, basis levels for spot delivery are fetching only a 3-cent premium over new crop delivery.
For soybeans, spot premium levels plunged this week reaching a 30-cent premium over new-crop delivery after being at 48-cents last week. Soy crushing plants had the biggest loss this week giving up 23 cents on average, while river terminals dropped basis by 11 cents a bushel.
Grains Mixed Headed Into a Long Weekend
The grains are mixed as traders head into a long weekend. Precipitation expected late in the weekend is expected to benefit the crop.
In the overnight session the grains traded a bit higher with corn up 1/2 a cent, soybeans up 3 cents and wheat up 2 1/2 cents this morning. The outside markets are weaker with the mini Dow down 1.14 percent and the e-mini S&P down 1 percent. The U.S. dollar is trading mostly unchanged at the moment. This morning it was announced that job growth increase was less than expected last month as non-farm payrolls increased 173,000 in August, down from 245,000 in July. Unemployment fell to 5.1 percent, a 7 1/2 year low.
Rains are expected to cover most of the Midwest next week with the heaviest precipitation expected between Sunday to Tuesday. The precipitation should be up to 5 inches in parts of Kansas, Nebraska, Missouri, Iowa and the northern parts of Illinois. Despite the expectation for heavy rains there seems to be little concern that the precipitation will result in damage to the crop. Currently the early freeze risk remains very low.
Keep in mind that Monday is a Holiday and the grain markets will be closed until 7 PM CST when the night session opens for Tuesday’s trade. On Friday the 11th, the USDA will release their latest Crop Production report and Supply and Demand report at 11 AM. The latest 3rd party yield estimates have revised their corn and soybean yields higher from last month but few have lifted them to the current USDA forecast. Planalytics see’s corn yield potential shrinking slightly in its latest forecast as the heat throughout Midwest speeds up the maturity process and limits the maximum yield potential.
Big Surprises for New Crop Export Sales
Cody gives an update on global news, export sales, and yield forecasts.