- As expected, the September USDA Crop Report offered few changes from August with the US corn and soybean yield fractionally lower amid reductions in plant populations. NASS pegged the US corn yield at 168.2 bushels/acre (down 1.3 bushels/acre from August) with the soybean yield at 47.9 bushels/acre (down 0.6 bushels/acre from August).
- NASS used an ear weight (0.343lbs/ear) that was the lowest since 2015 with plant populations being the weakest since the 2012 drought. Ear weights can move up or down depending on late season weather. Our considered view is that ear weights will move lower as the crop runs short of nitrogen and June corn struggles to reach maturity.
- NASS forecast the 2019 US corn crop at 13.8 million bu, a decline of 102 million bu from August. This crop total was on the high end of trade expectations. WASDE forecast 2019/20 US corn end stocks at 2,190 million bu (up 9 million from August) based on larger old crop stocks and 25 million bu cut in US ethanol production to 5,450 million bu. The US average farmgate cash corn price held at $3.60/bu. This would reflect a range for spot Chicago corn futures of $3.40-3.90.
- NASS estimated the 2019 US soybean crop at 3,633 million bu, a decline of 47 million from August. NASS lowered their soybean yield to 47.9 bushels/acre, down 0.6 bushels/acre.
- Note that NASS forecast that US soybean pod weight to be the highest in a decade at 0.35 grams/pod. This is up 0.1 gram from last year and likely too high. There are numerous reports of 3 and 4 bean pods in poorly populated plant areas. However, this pod weight looks high and a further reduction in US soybean yields is expected in October. And since 2014, note that NASS has tended to overstate soybean pod weights in Sept with the exception being 2013. We maintain our view of an Oct US soy yield closer to 47.0 bushels/acre. This would assume a normal end of the 2019 growing season. NASS made no attempt to provide information on the 6 million acres that have yet to pod. Soy yields appear to have more downside risk than corn.
- WASDE lowered 2019/20 soybean end stocks to 640 million bu, a 115 million bu drop from August. WASDE lowered old crop US soybean stocks by 65 million bu while making no adjustments to US new crop demand. The average US farmgate price was raised by 10 cents to $8.50/bu which equates to a $8.20-9.20 Chicago range.
- US wheat end stocks held steady at 1,014 million bu with the final US Small Grains Report due out later this month. WASDE did lower the 2019 Russian wheat crop to 72.50 million mt, down 500,000 mt. Russian 2019/20 wheat exports were left unchanged at 34.0 million mt. World wheat stocks were pegged at 286.5 million mt including China, and 141 million excluding China. The US and world wheat market lacks a fundamental story for either the bulls or the bears. Range trade is forecast.
- We hear that China is bidding for 1-3 million mt of us soybeans off the PNW with a total purchase package ranging from 3-5 million mt according to US exporter sources. The demand is helping to underpin Chicago. Note that this China demand will not create a new demand bull soy market. We hear no new China interest for either US corn or wheat.
- Reaction to a slightly bearish corn report will key future price direction with the timing right for a seasonal low. Early harvest results have been disappointing, a trend that should garner more trade attention during October.