Market Analysis
The upcoming USDA November crop report has the trade anticipating modest changes in the size of US corn and soybean crops with similar limited impact on each 2017/18 balance sheets on November 9 update. A wire service survey is projecting 53 million rise in the US corn output to 14.333 billion bu. crop while this same trade group is expecting a 23 million drop in the US soybean crop to 4.408 billion bu. This will mean a 0.6 bu. increase in the US corn yield to 172.4 while soybeans’ average US yield could slip to 49.3 bu. from 49.5.bu. last month.
This year’s delayed corn harvest because of above normal rainfall in the western Midwest and producers desire to naturally dry their production to reduce their cost has limited yield reports. However, recent field up-dates has noted strong test weights, which is behind our higher expectation & the trade average increase from last month. Corn’s November yield has been higher than October, four of the last 5 years, but the USDA’s crop level has been lower than the trade’s November estimate in 7 out of last 10 years (not shown). With US ethanol output running at a record pace, November’s demand could increase by 25-50 million bu. while other demand is left unchanged. Overall, corn’s ending stock may only rise by 30 million to 2.370 billion bu. this month.
In soybeans, recent field reports have been lackluster prompting trade ideas of a slight yield decline this month. Interestingly, the US yield has risen 6 times vs. 4 years of declines with some hefty yield jumps the past 5 years. Nov’s output has also been above the trade’s average by 47 million bu. on 6 of the last 10 years. The trade is expecting a 23 million bu., the decline on average from Oct. resulting in a 0.2 bu yield drop to 49.3 bu. Given no changes in export & crush, any decline or increase in output will be reflected in bean’s ending stocks.
With no wheat update, no stocks change is expected.
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