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Ag Markets Firmer Post Election Day

Solid USDA oilseeds, grain crushing; analysts trim U.S. crop forecasts

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Solid USDA Oilseeds and Grain Crushing

  • USDA reported 401 million bushels of corn were used for ethanol production in September, down slightly from 411 million in August.
  • Usage was slightly less than last September, despite estimated ethanol production in the month being down nearly 7% from last year.
  • In order to reach USDA's forecast of 5,050 million bushels, corn usage would need to increase nearly 4.5% from last year.
  • USDA reported September soybean crush at 171.1 million bushels, right in line with average market expectations of 171.3 million.
  • Crush was down from 174.7 million bushels in August, but solidly above last year's September crush of 162.3 million and a new record for the month.
  • Soybean oil production was 1,968 million pounds vs 2,013 billion in August and 1,901 million last year.
  • 2019/20 total production is at 24,910 million pounds vs the USDA's last projection of 24,890 million.
  • Soy meal stocks were surprisingly low at 342,000 tons, down 80,000 from August.

FBN’s Take On What It Means: This was the second consecutive month the USDA listed sorghum use for ethanol as “non reportable” due to insignificant volumes as stocks were depleted by the major export program to China. The ample bean stocks at crush plants, healthy crush margins, and strong product demand incentivized plants to run hard to begin the 2020/21 season and end the 2019/20 product crop year. Demand is expected to remain solid and continue to support prices in the new marketing year.

Analysts Trim U.S. Crop Forecasts

  • IHS Markit (Informa) cut its forecast for the US corn yield to 175.7 bushels per acre (bpa), from 177.8 bpa last month.
  • Estimated US corn production is at 14,502 million bushels, down from 14,812 million.
  • For soybeans, IHS Markit projected the yield at 50.8 bpa, down from 51.9 bpa in October.
  • The firm put soybean production at 4,183 million bushels, down from 4,294 million last month.
  • StoneX slightly reduced its corn yield forecast to 178.9 bpa, from 179.0, and lowered the crop forecast to 14,762 million bushels from 14,942 million.
  • StoneX trimmed its bean yield forecast to 52.1 bpa from 52.4 bpa, and the firm forecast production at 4,291 million bushels, down from 4,351 million.

FBN’s Take On What It Means: USDA will update its crop forecasts next week on Tuesday, November 10. In October, USDA slightly reduced its corn yield forecast to 178.4 bpa, and lowered the crop forecast to 14,722 million bushels. The agency left its bean yield forecast 51.9 bpa and trimmed production to 4,268 million bushels. FBN forecasts yields and production lower (see table below), which will likely support prices.

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