USDA Reports Preview

Just one month ago, we were looking ahead for lower ending stocks estimates for corn and soybeans, but that may not be the case this time around. Analysts are slightly bullish ahead of Friday's next round of USDA estimates, but slow corn exports and yield surveys could lead USDA to say otherwise.

As we have frequently mentioned, 2019 has not been a typical year for U.S. row crops and that remains true heading into Friday's World Agricultural Supply and Demand Estimates (WASDE) report. USDA said Monday that 52% of corn and 75% of soybeans were harvested at a time when 75% of corn and 87% of soybeans are typically out of fields by now. It is the remaining crops that are most in question.

The past five years, the November WASDE report has leaned bearish for December corn with prices down 6 cents or more on three of the five report days. For January soybeans, prices have been down five years in a row on November's WASDE report day, with the largest loss being a 20-cent drop in 2016.

CORN

The last time we went through a WASDE report, analysts were expecting USDA to lower its U.S. corn crop estimate to 13.611 billion bushels (bb). Instead, USDA issued only a slight reduction, to 13.779 bb, finding no reason to reduce corn yield.

About the same time USDA's report was released, the Dakotas got hit with an early winter storm, and subfreezing temperatures covered crops across the northwestern U.S. Plains. Given all the challenges of adverse weather this year, it remains difficult to believe USDA's October estimate that U.S. corn production will only be down 640 million bushels (mb) in 2019 from the previous year.

On the other hand, we cannot deny that there have been several anecdotal reports on Twitter of better-than-expected harvest totals, many from across the central Midwest. This year's unusual weather and wide regional variations make guessing a national corn yield extremely difficult, and USDA's abilities will be tested again Friday.

Leaning on our usual benchmark, the average estimate of Dow Jones' survey of analysts expects 1.799 bb of U.S. ending corn stocks in 2019-20, down from USDA's October estimate of 1.929 bb. Analysts also expect a lower corn crop estimate of 13.602 bb, based on a lower yield of 167.3 bushels an acre (bpa) and 81.3 million harvested acres.

If true, that would be slightly friendly for corn prices, but may not be enough to push the December contract above $4.00. There is also a good chance that USDA's ending stocks estimate may not drop at all as the corn export estimate is at high risk of being cut again.

Dow Jones' survey expects USDA to lower its estimate of world ending corn stocks from 302.55 million metric tons (mmt) to 299.5 mmt (11.79 bb), a small bullish adjustment, which also is not certain. More important will be any changes in USDA's corn export estimates for the top three competitors: Brazil, Argentina and Ukraine.

SOYBEANS

For U.S. soybeans, Dow Jones' analysts expect U.S. ending stocks to be reduced, from 460 mb to 429 mb. Getting to the lower stocks estimate includes a slightly smaller soybean crop estimate of 3.513 bb, a slightly lower yield of 46.6 bpa and slight reduction in harvested acres to 75.4 million.

Those reductions are reasonable, and in the case of soybeans, any reduction in the crop estimate should translate to lower ending soybean stocks as soybean exports have been active since September.

For world soybean stocks, Dow Jones' survey does not expect much change at 95.0 mmt (3.49 bb) versus October's estimate of 95.2 mmt. In October, USDA estimated Brazil will only have 178 mb of soybeans on hand Jan. 31, 2020, the end of the current local season.

WHEAT

If you have read DTN's WASDE previews before, you know that wheat estimates don't typically change much, and if they do, they tend to be bearish. Sad to say, but that is true again this time around with one exception: Friday's Crop Production report will include updated harvest estimates for spring wheat and durum from several Northern states affected by adverse harvest weather. Dow Jones survey expects ending stocks of U.S. wheat to be reduced from 1.043 bb to 1.035 bb, a slight change that should not have much impact on prices.

For world ending wheat stocks, Dow Jones' survey expects a slight reduction from 287.8 mmt to 286.8 mmt (10.54 bb). Minor tweaks are expected for foreign crops and there is room for a more bearish crop estimate for Russia. In spite of analysts' slight optimism, USDA's estimate of world ending wheat stocks is likely to remain at a record high.

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As usual, we will have a webinar at noon CST Friday to talk about USDA's new estimates and what they mean for grain prices. Please join us by registering at: https://dtn.webex.com/…

U.S. PRODUCTION (Million Bushels) 2019-20
	Nov	Avg	High	Low	Oct	2018-19
Corn		13,602	13,786	13,030	13,779	14,420
Soybeans		3,513	3,609	3,396	3,550	4,428
U.S. AVERAGE YIELD (Bushels Per Acre) 2019-20 (WASDE)
	Nov	Avg	High	Low	Oct	2018-19
Corn		167.3	170.0	164.5	168.4	176.4
Soybeans		46.6	47.6	45.9	46.9	50.6
U.S. HARVESTED ACRES (Million Acres) 2019-20
	Nov	Avg	High	Low	Oct	2018-19
Corn		81.3	81.8	79.2	81.8	81.7
Soybeans		75.4	77.2	74.5	75.6	87.6
U.S. ENDING STOCKS (Million Bushels) 2019-20
	Nov	Average	High	Low	Oct
Corn		1,799	1,959	1,479	1,929
Soybeans		429	521	306	460
Wheat		1,035	1,078	995	1,043
WORLD ENDING STOCKS (million metric tons) 2019-20
	Nov	Avg.	High	Low	Oct
Corn		299.5	304.1	291.1	302.5
Soybeans		95.0	109.4	88.0	95.2
Wheat		286.8	287.8	285.4	287.8

Todd Hultman can be reached at todd.hultman@dtn.com

Follow Todd Hultman on Twitter @ToddHultman1

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