- US grain markets are deep in the red, while beans are flat, following a bearish September USDA report. US soybean yield was pegged at 52.8 bushels/acre, at the higher end of trade guesses but a boost was largely expected. This morning’s surprise, however, is NASS’s national US corn yield at 181.3 bushels/acre, up 2.9 from Sep and which boosted production another 240 million bu. Implied ear weight is forecast at a new record. The US wheat balance sheet was left untouched.
- Total US corn consumption was raised 125 million bu amid upward revisions to ethanol, feed and exports. End stocks were lifted to 1,774 million bu. Recall the trade expected very modest cut to yield and production. US corn stocks/use are pegged at 11.7%. This in itself is not overly bearish relative to current prices, but corn stocks will be adequate without a downward revision to production in production in the Oct or Nov releases. Old crop corn stocks were lowered 25 million bu amid a hike in exports.
- New crop US soybean end stocks are estimated at 845 million bu, up 60 million from September. Carry-in was lowered 35 million bu amid higher old crop crush and exports. New crop crush was raised 10 million to a record 2,070 million. This could not quite offset the 107 million boost in production. New crop exports were kept unchanged. Old crop Chinese soy imports were lowered 2 million mt to 94 million. New crop Chinese imports were lowered 1 million mt to 94. We would mention that the US is proposing a new round of talks with China. Treasury Secretary Mnuchin has invited his Chinese counterpart, and so, should they accept this next round of talks, will between higher level officials. This won’t fully solve the issue of ballooning US soy stocks, but without a deal the market needs to find all available domestic demand as well as work to curtail 2019 acreage. The soy market, largely expecting a yield hike, is focused on renewed trade negotiation efforts.
- New crop world corn stocks were raised 1.54 million mt to account for larger US production. Global corn use and trade were raised slightly. USDA also lowered this year’s S American crops to better account for government estimates in Brazil and Argentina. New crop major exporter corn stocks/use is unchanged at 11%, vs. 12.6% last year. World wheat ending stocks were raised 2.3 million mt.
- Russian wheat production was pegged at 71 million mt, vs. 68 million mt previously. Russian exports were left at 35 million mt with feed use up 2 million. The rest will go into stocks. USDA cites favorable spring wheat growing conditions, but talk this week surrounding ongoing rainfall in Siberia (following very late planting) is noted. Also of note, spot WTI crude is trading another $1.20/barrel higher at $70.40. US crude stocks last week fell 5.3 million barrels to new multi-year lows. Seasonally, crude stocks tend to shrink further in mid/late autumn.
- The central US GFS weather forecast at midday is wetter across the Plains and Midwest in the 6-15 day period. Needed warmth and dryness continues across the Plains and Midwest into the early part of next week. Thereafter a more active pattern of moisture returns. Two events of note are forecast Sep18-26. Cumulative totals are estimated in a range of 1-4”. Favored areas will include KS, MO, IA and N IL.
- It is no doubt another bearish WASDE release, and further damage has been done to grain market charts. Major exporter corn and wheat stocks/use remain very tight, and so sales are not advised on breaks. Keep in mind the global wheat and corn end stock figures for the 2018/19 season compared to 2017/18! Gulf wheat this evening will widen its discount to European and Aussie origins. Gulf HRW should be offered at $232/mt, which matches Russian quotes reported this morning.