November 16, 2018

Trade Awaits USDA

Good Morning! From Allendale, Inc. with the early morning commentary for September 12, 2017.

Grain markets consolidate ahead of this morning's USDA Supply and Demand report as traders wait to see if yield and production numbers will come in as expected.

Crop Conditions out yesterday afternoon had US corn rated 61% good to excellent, inline with last week. The corn crop was reported 21% mature, a little behind the 31% five-year average. Soybeans were reported 60% GTE, a drop of 1% from last week. 22% of the crop was said to be dropping leaves vs. the 25% five-year average.

Average analyst estimates from Reuters for today's USDA report are 168.2 bpa for corn yield and 14.035-billion-bushel total production. Harvested corn acres are estimated at 83.428 million. Soybean average estimates are 48.8 bpa and a total crop of 4.328-billion-bushel. Harvested soybean acres are estimated at 88.752 million.

"As a reminder, Tuesday's supply/demand report is not the final word on August 31 old crop ending stocks for corn and soybeans. We still don't have the complete numbers for exports, corn for ethanol production, soybean crush, and a few other numbers. It won't be until the September 29 Grain Stocks report, which reports September 1 physical stocks, that we see the true old crop ending stocks. USDA will then incorporate that into the October 12 supply/demand report with an appropriate demand breakdown," says Allendale's Rich Nelson.

Export Inspections for the week ending September 7th reported wheat exports of 446,957 tonnes, corn 662,173, and soybeans at 1,106,268.

Soybean plantings in key areas of Brazil including Parana, Mato Grosso, and Mato Grosso do Sul may be delayed due to a lack of rain in the region according to Rural Clima's Marco Antonio dos Santos. At this time, however, the delays are of little concern.

ABARE lowered their Australian wheat production forecast down from their March estimate of 23.98 million tonnes to 21.64. This would be the lowest production in eight years. USDA was at 23.5 last month.

Egypt's Agriculture Ministry indicated the quarantine authority was examining poppy seed contaminated wheat from France. They are considering officially rejecting the cargo. That would be the second rejection in one month.

Managed money funds were estimated buyers of 2,000 corn contracts, and 2,000 soyoil contracts in yesterday's trade. They were sellers of 2,500 soybeans, 3,000 wheat, and 1,500 soymeal

Today's supply & demand report may have bigger changes for the beef balance sheet than any of the grains. The Q4 production estimate is at 7.165 billion bushels, and has been left unchanged in both the July and August reports. That would be 8.2% over last year. Over the past six weeks actual US beef production has run 4.6% over last year.

With Irma now over from the trade's perspective, the market will now wonder if National Pork Month procurement will be a factor again. Last year the market ignored it. In most other years a rally from August 28 to September 15 is seen.

Dressed beef values were mixed with choice down .32 and select up .41. The CME Feeder Index is 149.01. Pork cutout value is down .04.

Technical Chart of the Day

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