Corn
- USDA’s November WASDE report pegged US corn ending stocks at 2.154 billion bushels, ahead of the consensus call for 2.136 billion and up from 2.110 billion in September.
- Corn yield estimates totaled 186.0 bushels per acre compared to expectations for 184.0 and 186.7 in the September report.
- The November corn production estimate totaled 16.752 billion bushels, up from the consensus call for 16.557 billion, but down from 16.814 billion in September.
- December corn closed at $4.3025 per bushel, three cents higher on the week. The March contract ended the week at $4.4400 per bushel, up two cents.
- Ethanol production dropped to 1.075 million barrels per day, down 4.3% on the week and -3.4% year-over-year. Stocks totaled 22.219 million barrels, down 1.9% week-over-week, but up 0.8% on the year.
CORN COMMENTARY BY COLE WEINKAUF
- Is this the end of choppy, sideways trade? Potentially. With the government set to reopen this week, we should see an influx of data and news coming back to the corn market, and it may be the breath of fresh air we have been looking for. Since October 27, December corn futures have traded between $4.26 and $4.37. That is an awfully tight range for this key time in the US harvest season. Now, with the government reopening, we should expect weekly export numbers and commitment of trader reports to reappear soon.
- Thursday morning, CONAB estimated Brazil’s total corn crop at 138.84 million metric tons, slightly above last month’s estimate but below pre-report expectations of 141.10 million. Export expectations increased to 46.5 million tons, up from 40.0 million last season. Analysts seem more concerned about the possibility of Safrinha corn planting delays in Brazil due to the slow planting pace for beans in parts of Mato Grosso and Goias. Favorable showers are expected in most of Brazil, but Southern areas are expected to begin to dry out next week after a wet start to the season.
- The WASDE released Friday morning reported a smaller adjustment to yield than what the trade was expecting, but we did see another increase to exports. Moving forward, we will still need to see a cut to yield to see a substantial rally in corn and ending stocks drop back closer to 2 billion bushels.
Soybeans
- According to USDA’s November WASDE report, US soybean ending stock estimates totaled 290 million bushels, short of the consensus call for 304 million and September’s estimate of 300 million.
- US soybean yield estimates reached 53.0 bushels per acre compared to expectations for 53.1 bushels and 53.5 bushels in September.
- In November, US soybean production estimates reached 4.253 billion bushels, below expectations for 4.266 billion bushels and the September report’s 4.301 billion bushels.
- The January soybean contract finished Friday at $11.2450 per bushel, up 7.5 cents week-over-week. March futures settled at $11.3600 per bushel, more than 10 cents higher.
SOY COMMENTARY BY MEG JOHNSTON
- Earlier this month, news articles made it sound like the trade tensions between the US and China were over. The White House fact page stated that China would buy 12 million metric tons of US soybeans by the end of the year and that other Asian counties had agreed to buy more for the next three years. We saw the futures market take run with it, causing soybean futures to jump 40+ cents.
- However, as Brandon mentioned last week, we still have not seen any confirmation from the Chinese side of this trade deal and have not seen any actual export purchases come across. Instead of US soybean sale confirmations, we have seen several South American soybean purchases, which is disappointing for growers. Right now, it feels a bit like we traded the rumor and that soybean futures are more inflated than they should be. However, soybean futures are still trading in the green and running on optimism.
- Once the WASDE was published and the market had a moment to digest the information, we saw the futures board turn red. Soybean futures tanked, trading +10 cents lower on the day. While the WASDE was not outwardly bearish on beans, the export expectations and export numbers printed seemed to take the market lower, which makes sense given the current export environment.
Wheat
- In its November WASDE report, USDA pegged US wheat ending stocks at 901 million bushels compared to the consensus call for 867 billion and September’s estimate of 844 billion.
- Nearby wheat futures ended the week at $5.2725 per bushel, a half cent lower versus the previous Friday.
WHEAT COMMENTARY BY NATALIE MCCARTY
- Wheat continued to trade on both sides of the 100-day moving average for the last two weeks. December Kansas City wheat has had almost a 50-cent rally since the contract low of $4.7725 on October 14. This is in comparison with corn, which has seen prices go up almost 35 cents, and soybeans, up $1.30 per bushel. Abundant global wheat supplies and a lack of government data have been keeping a lid on pricing.
- Today, however, was data dump day which caused the market to retrace. USDA published its first WASDE since September 12. US and world ending stocks increased versus the September report. Larger crops are seen in most major producing areas — US, Canada, Australia, Argentina, EU, Kazakhstan, and Russia. Last week, Rosario Grain Exchange projected Argentina at 24.5 million metric tons while the USDA increased it in the report to 22.0 million.
- Overnight, conflict between Russia and Ukraine intensified. Russia hit the city of Kyiv with a barrage of missiles and drones. Ukraine responded, damaging one of Russia’s major export ports. In the counter-attack. Russia produces 10% of the world wheat and is the largest exporter of wheat.
- The USDA lowered its price expectations by 10 cents per bushel, noting the abundant global wheat supplies. Continued watching of geopolitical situations and global weather forecasts will be important as we are still currently towards the bottom of the price ranges.
Futures and options on futures trading involves significant risk and is not suitable for every investor. Information contained herein is strictly the opinion of its author and not necessarily of Ever.Ag and is intended for informational purposes. Information is obtained from sources believed reliable but is in no way guaranteed. Opinions, market data and recommendations are subject to change at any time. Past results are not indicative of future results. Jon Spainhour maintains financial interest in the commodity contracts mentioned within this research report at the time it is published. Katie Burgess, Kathleen Wolfley, Phil Plourd, Cole Weinkauf, Meg Johnston and Natalie McCarty do not maintain financial interest in the commodity contracts mentioned within this research report at the time of publication. This report is in the nature of a solicitation.
