USDA Worksheet, Brazil and Declining Exports - Tuesday, 29 September 2015

Tomorrow, September 30th the USDA will release the Quarterly Stocks numbers.  There can be some grey area involved with this report because many may argue that the early new-crop that has been harvested can be blended with some of the old-crop supplies.  Historically this report has had a tendency to cause prices to move lower according to data research from FC Stone.  In their research they looked back over the past 4 years and found that 3 out of the 4 years the corn market turned lower and 2 of those 4 years we had limit moves-1 time we saw limit higher and 1 time limit lower.  Soybeans have also taken a downturn in 3 out of the past 4 years.  The trade will likely be most interested in last year’s soybean production numbers which many analysts believe was exaggerated at 3.97 billion bushels.  The real question will be how much was the production exaggerated, anything less than 100 million bushels will likely not receive much attention.

USDA's September 30, 2015 Quarterly Stocks & Wheat Acreage Worksheet

Quarterly US Grain Stocks

 

Sep #

Avg. Trade Est.

Trade Range

Sept. 2014

June 2015

Corn

???

1.739

1.647 - 1.850

1.232

4.447

Soybean

???

0.205

0.165 - 0.250

 0.092

0.625

Wheat

???

2.149

1.987 - 2.285

1.907

0.753

US Wheat Acreage

 

Sep #

Avg. Trade Est.

Trade Range

Prior USDA

2014

All US Wheat

???

2.133

2.105 - 2.160

2.136

2.026

All Winter

???

1.430

1.406 - 1.447

1.438

2.026

Hard Red Winter

???

0.855

0.845 - 0.870

0.856

0.738

Soft Red Winter

???

0.384

 

0.360 - 0.390

0.389

0.455

White Winter

???

0.192

0.185 - 0.195

0.193

0.184

Spring

???

0.625

0.615 - 0.636

0.621

0.595

Durum

???

0.079

0.075 - 0.082

0.077

0.053

 

Harvest continues to move ahead and yesterday’s reports put corn harvest at 18% completed and soybeans at 23%.  The maps below show the overall 5 year average for crops harvested by this date and the color/percentage number indicates how much below or above average each state is.

 

 

 

As I’ve mentioned before U.S. corn is overpriced on the global market.  Advanced Trading Co. has found that buyers can currently book out of South America for $11.00 to $16.00 per ton less and we are $6.00 per ton higher than the Black Sea market as well.  All of this plays a primary role in why corn exports from the U.S. have fallen by 30% from just one year ago.  There looks to be no end in sight at this point either, the USDA is estimating that corn loadings will be down 25 million bushels from last year.  This figure may be too low though because just a few weeks into the current marketing year and the U.S. is already down 10 million bushels.  Much of this is due to our competition out of Brazil they may increase their exports by as much as 50 million bushels this year.

U.S. soybeans are sitting in a much better situation than corn as we are just 3 million bushels under last year’s loadings for this time.  Currency values have fallen in Brazil over the past months which give them an advantage over U.S. soybeans but when this situation gets resolved then buyers will likely import newly harvested beans from the U.S.

 

Brazil remains in in a state of unrest with dramatically increasing debt and a recent scandal in the country’s largest company, Petrobras which may indicate that the state may be forced to get involved with a bailout.  All of this may persuade larger money-managers to take hedges against a complete equity meltdown and default in Brazil which could result in higher prices in the soybean market.  Remember Brazils’ economy is in risk.  In the last two months over 240,000 jobs have been lost and over the past year close to one millions jobs have been eliminated. 

Weather for the next 4 weeks shows normal temperatures are expected across much of the Midwest with below normal precipitation.  If this forecast holds harvest will move ahead quickly.

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