CBOT Soybeans Soar; Corn and Wheat Try To Follow

Oct 12, 12:24 pm | Mid-day Commentary | Share this:

** Our Apologies; This is the correct File!

** USDA October Crop Report Analysis: The USDA Crop report was bullish for soybeans, and neutral to slightly bearish for corn and wheat. The report highlighted a fall in the ’17 US soybean yield, but also larger harvested acres. The ’17 US corn yield rose, while world wheat production was record large and grew another 7 MMTs to 751 MMTs. The 2017 Russian wheat crop was raised 1 MMTs to a record large 82.00 MMTs. The funds are massive buyers following the report. However, ARC looks for hedge pressure late day.

 ** The US 2017 US corn crop was increased to 14,280 Mil Bu, up 96 Mil Bu from September with a yield of 171.8 BPA with harvested acres estimated to be down 400,000 acres to 83.1 Mil acres. This left 2017/18 US corn end stocks at 2,340 Mil Bu, up 5 Mil Bu from last month.

 ** WASDE raised 2017/18 US feed/residual by 25 Mil Bu via the larger crop, while US 2017/18 corn exports held unchanged at 1,850 Mil Bu.  The average cash corn price forecast for the crop year was left unchanged at $3.20. On face value, the increase in yield was modified by acres and demand.

As the graph below reflects, US corn ear weights were the 4th largest on record with corn ear numbers the 3rd largest on record in the 10 objective states. There is a good chance of a further gain in the US corn yield in November with US corn production the 2nd largest on record. NASS indicated that they had harvested just 51% of their objective corn plots, compared to 73% last year. This is the lowest NASS corn harvest pace since 2013.

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** The 2017 October soybean yield of 49.5 BPA was down .4 BPA from September. The IA, IL, and MN soybean yields were all down 1.0 BPA (each) with OH and KS yields down 2 BPA at 52.0 BPA & 41 BPA, respectfully.  There is a strong historical case to be made for a further decline in the US soy yield in November based on the trend from September into October. ARC notes that NASS has harvested 49% of their objective soybean plots, compared to 53% last year.   

  Further yield reductions are expected in the more Northern Lake States. A final US soybean yield at or slightly below 49 BPA appears likely. The NASS data will likely place a shelf of support under $9.50 in nearby soybean futures until the S American harvest.

** The US soybean yield chart below reflects a reduction pod weight for October of .335 grams per 18 sq ft from .34 in September. Pod counts were only up marginally from September.

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 ** 2017 world what production was a record at 751 MMTs, up 7 MMTs from September. The Argentine crop was raised 1 MMTs last year, while the Russian wheat crop was increased 1.0 MMTs to a record 82.0 MMTs. Russian wheat exports were left unchanged at 32.5 MMTs on logistical constraints. World wheat stocks were raised 5 MMTs to a record large 268 MMTs, which does not offer a bullish landscape for world wheat prices. However, 127 MMTs of these stocks reside in China are not not available to world end users. The wheat data was viewed as bearish.

 **  AgResource Market Comment: The October NASS report confirms that seasonal lows have been scored in soybeans amid reduced 2017/18 stocks. However, the grains will struggle on rally amid ample supplies. March corn has solid resistance above $3.70 while rallies in Mar Chi wheat will be capped at $3.70. Use sharp breaks to buy beans and sell corn on rallies.