There’s a lot to cover in the US Corn and Soybeans markets so let’s dig in.
WEEKLY PRICING SUMMARY: December corn futures sold off aggressively on Friday afternoon closing down 8 ½-cents per bushel on the day at $3.82 ¾. Week-on-week CZ5 finished down 6 ½-cents versus last Friday’s close of $3.89 ¼. November soybean futures however, managed a positive close on Friday finishing up 4 ½-cents per bushel at $8.85 ¾. For the week SX5 traded 11 ½-cents higher versus last Friday’s close of $8.74 ¼.
OCTOBER 2015 WASDE REPORT: Friday’s price action was certainly influenced by the USDA’s October 2015 WASDE report. There were several surprises in the report relative to what I believe many in the market were anticipating. As far as the 2015/16 US Corn S&D was concerned, the USDA increased the US corn yield 0.5 bushels per acre versus September to 168.0 bpa. The average trade guess pre-report was 167.1 bpa; however several of the estimates I was hearing discussed privately were much lower (in the 164 to 165 bpa ranges). Therefore the USDA’s corn yield increase was without question a blow to Corn Bulls, especially those hoping that harvest progress in the Eastern Corn Belt would potentially reveal sharply lower yield estimates in Illinois, Indiana, and Ohio.
That didn’t happen. Illinois’s corn yield was lowered 3 bpa versus a month ago to 170 bpa; however Indiana’s yield was unchanged at 156 bpa with Ohio enjoying an unexpected 2 bpa yield increase (165 bpa). Total US corn production declined 30 million bushels month-on-month to 13,555 million despite the national yield improvement due to a 500,000 acre cut to planted acreage; however that corn production forecast was still in-line with the average trade guess. US corn ending stocks dropped a negligible 31 million bushels to 1,561 million and remain substantially higher than the 5-year average of 1,180 million.
December Corn Futures Chart
In soybeans the USDA increased the 2015/16 US soybean yield 0.1 bpa versus a month ago to 47.2 bpa, which was equal to the pre-report average trade guess and just 0.5 bpa below last year’s record yield. Total US soybean production however dropped to 3,888 million bushels, down 47 million versus September following a 1.1 million planted acreage cut. Harvested soybean acreage fell to 82.4 million acres, which was 500,000 acres below what the market was anticipating. The combination of both lower soybean production and carryin stocks resulted total US soybean supplies dipping to 4,109 million bushels versus 4,175 million in September. 2015/16 US soybean ending stocks however only declined 25 million bushels to 425 million due to US soybean exports decreasing 50 million bushels. The lower export forecast was likely attributed to the USDA increasing their estimate for 2015/16 Brazilian soybean production to a record 100 MMT versus 97 MMT in September and 96.2 MMT in 2014/15. Brazil is the world’s largest soybean exporter with 2015/16 soybean exports now projected at 56.45 MMT. Also of note, World soybean stocks pushed back over 85 MMT, approximately 7 MMT higher than last year.
#NoFilter: PRICE FORECAST
December Corn Futures:
See the Corn futures chart above for reference. December corn futures came under increasingly more pressure throughout Friday’s session after the implications of the October Crop report started to sink in. I truly believe the Bulls were hoping for a 164 bpa type yield and a carryout falling closer to 1,400 million bushels. With the US corn harvest already reported at 27% complete as of the release of the October WASDE, which included Illinois at 50% harvested, Indiana 29%, and Ohio 18%, time is now running out for a supportive yield surprise in the ECB. There was also considerable technical damage done to the charts following the sharply lower close Friday afternoon.
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