Recent USDA Report Worksheet and China Visit - Wednesday, 15 November 2017

The highest corn yield in U.S. history is now predicted by the USDA following last week’s report that showed an incredible +3.6 bushel per acre increase from previous estimates.  This now raises the USDA corn yield from 171.8 bushels per acre to 175.4 bushels per acre and brings production up to 14.578 billion bushels.  The report increases the expected bushels used for feed and residual as well as raising export demand by +75 million bushels unfortunately these gains are still not enough to offset the yield increase.

The soybean yield was cut slightly but forecasts still expect total production to reach a record high 4.425 million bushels.  The agency did not change the demand number.  Ending stocks were adjusted slightly lower to 425 million bushels which keeps stocks at a burdensome level.

USDA Supply and Demand

 

Nov. Est.

Avg. Guess

Trade Range

USDA October

USDA 2016

Corn Production

14.578

14.333

14.250 - 14.459

14.280

15.1

Yield

175.4

172.4

171.7 - 174.0

171.8

174.6

Harvested Acres

83.1

83.103

83.00 - 83.20

83.119

86.748

Soybean Production

4.425

4.408

4.375 - 4.467

4.431

 

4.307

Yield

49.5

 

49.3

48.9 - 49.9

49.5

52.1

Harvested Acres

89.5

89.486

89.40 - 89.50

 

89.471

82.696

U.S. Ending Stocks

 

Nov. Est.

Avg. Guess

Trade Range

USDA October

Corn

2.487

2.366

2.286 - 2.438

2.340

Soybeans

0.425

0.420

0.377 - 0.461

0.430

Wheat

0.935

0.957

0.940 - 0.980

0.960

World Ending Stocks

 

Nov. Est.

Avg. Guess

Trade Range

USDA October

Corn

203.9

201.18

197.60 - 203.50

200.96

Soybeans

97.9

95.50

93.00 - 97.00

96.05

Wheat

267.5

266.78

261.00 - 269.00

268.1

This year’s USDA November report delivered the highest ending stocks estimate ever for the month. Last year the November report also served up an extremely large estimate which caused prices to fall similarly to what we are seeing this year.  Specifically, 2016 prices traded lower to around $3.31 by the end of November and then turned around and moved higher mid-February to $3.80 and eventually made advances near $4.00 by July.  Kevin Van Trump of the Van Trump Report says, “I would like to think this year we can hold the $3.20 to $3.30 area then start to climb higher out of the hole into 2018 on weather uncertainty in South America.  Bears believe they might have the ability to push the market down a bit further than last year, some sources thinking we could actually challenge $3.00, especially if the USDA yield continues to get stronger and demand is deemed to be a bit too optimistic into the January report.”

World-Grain.com ran an article Monday regarding CoBank’s outlook on Grains.  According to the article, the latest report out from CoBank’s Knowledge Exchange Division is that the overall attitude is “cautious optimism”.  The report “2018-2020: Pressure on Grain and Farm Supply Sectors to Persist” the author Tanner Ehmke explains the theory is based on expectations of rising income levels around the world that will ultimately support global demand for U.S. exports in grains, oilseeds and ethanol. Additionally, support is likely to come from the weakness of the U.S. Dollar which will make exports from the U.S. more competitive. Rising currency values in other major exporting countries like Brazil, Argentina, Russia, Ukraine and Canada will also push more business towards the U.S. agriculture export system.

This week round 5 of NAFTA negotiations begin once again, this time in Mexico City. Politico reports that the first few days of meetings are expected to focus on textiles, labor, cross-border trade and intellectual property.  The more difficult subjects like agriculture are likely to be discussed later in the round which is scheduled to conclude on November 21st.

President Trump has wrapped up his trip to Asia which included a very productive stop in China.  It’s been reported that the President and the U.S. Delegation have secured $250 billion in U.S.-China trade deals. One of the agreements is a deal that includes more than $1 billion in beef and pork exports to the nation. In addition 19 business agreements were established between the 2 countries valued at $9 billion, part of the $250 billion is also related directly to agriculture but specific details were not given.

Accuweather has released their outlook for Thanksgiving.  Unfortunately they predict “brutal cold across Midwest”. According to the forecast a resurgence of cold air may trigger snowfall in the Great Lakes region and produce a storm along the East Coast. The northern portion of the U.S. is expected to see a shot of cold air and strong winds make their way into the Midwest this weekend and remain in place for the long Thanksgiving weekend as well. Thanksgiving Day looks to be mostly dry across the entire country.

 

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