USDA Reports Preview

USDA's next round of supply and demand estimates are due out Tuesday, Nov. 10. Given the recent strength of export sales for corn and soybeans, lower estimates of ending stocks for both are anticipated.

CORN

I can't remember a November World Agricultural Supply and Demand Estimates (WASDE) report where USDA's corn harvest estimate wasn't the center of attention, but as we know by now, 2020 has not been a typical year. Tuesday's attention will largely focus on demand as the strength of early export sales have surprised markets this fall, largely due to China.

That's not to say we won't be interested in USDA's corn crop estimate, as harvest is roughly 90% finished, waiting for the next update in Monday afternoon's Crop Progress report. Dow Jones' survey of analysts expects USDA to lower this year's crop estimate from 14.722 billion bushels (bb) to 14.645 bb, based on a slightly lower yield of 177.5 bushels per acre (bpa) and no change in harvested acres.

USDA said Iowa's corn harvest was 87% finished on Nov. 1 as producers appear to be handling the challenges of gathering corn downed by the August derecho. There may be some minor tweaks in the numbers for Iowa, but no major surprise is anticipated, thanks to USDA's October survey.

Dow Jones' survey expects USDA's estimate of U.S. ending corn stocks to drop from 2.167 bb to 2.048 bb in 2020-21, suggesting corn's demand estimate will increase by 42 million bushels (mb). U.S. export sale commitments totaled 1.307 bb at the end of October, which is 56% of USDA's entire export estimate for 2020-21.

There is room for sales to go higher while China's domestic corn price remains high. Judging by Dow Jones' survey, many, including me, expect USDA to be cautious in raising corn's export estimate.

For world ending corn stocks in 2020-21, Dow Jones' survey expects USDA to lower its estimate from 300.5 million metric tons (mmt) to 297.8 mmt (11.72 bb). The survey's 106 mb reduction for the world estimate is not as large as the 119 mb reduction for the U.S. estimate, so there is room for the world estimate to come in lower. According to private estimates, a lower crop estimate for Ukraine is likely.

South American crop estimates probably won't change this early in the new season, but there are hints of dry weather concerns in southern Brazil and Argentina that need to be monitored.

USDA took criticism for keeping China's corn import estimate at 7.0 mmt in October. According to USDA's weekly export sales figures, China has already signed up for 10.76 mmt of corn sales from the U.S. alone. It will be interesting to see if China's corn import estimate gets adjusted higher Tuesday, as it should.

The elephant in the room among USDA's world estimates is the 188.90 mmt (7.44 bb) of ending corn stocks for China in 2020-21. It probably won't be changed Tuesday but hardly seems accurate when January corn is trading near $9.80 per bushel on the Dalian exchange. Unfortunately, China's lack of cooperation in sharing verifiable grain supply information taints the reliability of USDA's world estimates and makes it even more difficult for USDA to estimate corn demand.

SOYBEANS

On Friday, January soybeans closed at $11.01 1/2 per bushel, which was the January contract's highest weekly close in over four years. Speculators have high hopes and are holding the largest net-long position in soybean history. In this excited environment, analysts in Dow Jones' survey expect USDA to lower its estimate of U.S. ending soybean stocks from 290 mb to 239 mb, which is a new five-year low if true.

USDA is also expected to slightly reduce the production estimate from 4.268 bb to 4.253 bb. The yield estimate is anticipated slightly lower, at 51.7 bushels per acre, while harvested acres are not apt to change.

Greater attention will be on the demand side of the market where soybean export sales are on record pace. As of the end of October, USDA showed 1.786 bb of export sales on the books, or 81% of USDA's entire export estimate for 2020-21.

So far, China's domestic soybean price near $15.95 per bushel shows no sign of coming down, so it seems reasonable to expect more sales on the way. The problem, of course, is that, with U.S. supplies already estimated at a five-year low, there is little room to accommodate more sales without endangering U.S. domestic supplies. The soybean market is growing more tense, and any surprise in Tuesday's numbers could have a volatile impact on soybean prices.

Dow Jones' survey expects USDA's estimate of world soybean supplies to be reduced in 2020-21, from 88.7 mmt to 87.6 mmt. Keep in mind, USDA's world soybean stocks estimates are tallied in the middle of the marketing years for South American countries. USDA's most recent estimate of ending soybean stocks in Brazil is 82 mb, much less than the 757 mb cited in the October WASDE report.

WHEAT

When it comes to wheat, I'm usually explaining why prices are bearish and will continue to be bearish after low expectations in past November WASDE reports. This year, however, we find KC winter wheat prices near their highest level in two years, supported by estimates of U.S. ending supplies of hard red winter (HRW) wheat at their lowest in five years and by dry weather concerns for winter wheat crops due to be harvested in early 2021.

According to Dow Jones, USDA's estimate of U.S. ending wheat stocks is expected to be lowered slightly, from 883 mb to 874 mb for 2020-21, which is the lowest in six years. In recent reports, analysts have shown a bullish bias when it comes to world ending wheat stocks. For Tuesday, Dow Jones' analysts expect USDA to lower the estimate of world ending wheat stocks from 321.5 mmt to 320.0 mmt (11.76 bb).

Since traders are currently focused on weather conditions for the new winter wheat crop, Tuesday's WASDE report is not likely to have much price impact for wheat. Wheat prices may be influenced by corn's response to Tuesday's report.

As usual, the risk of USDA's WASDE report is that there may be a surprise lurking in the numbers. Join us Tuesday, Nov. 10, at noon CST, as we examine USDA's latest estimates and what they mean for crop prices. I'll also be glad to answer any questions you may have.

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U.S. PRODUCTION (Million Bushels) 2020-21
	Nov	Avg	High	Low	Oct	2019-20
Corn		14,645	14,820	14,250	14,722	13,620
Soybeans		4,253	4,320	4,189	4,268	3,552
U.S. AVERAGE YIELD (Bushels Per Acre) 2020-21 (WASDE)
	Nov	Avg	High	Low	Oct	2019-20
Corn		177.5	179.2	175.0	178.4	167.5
Soybeans		51.7	52.5	50.9	51.9	47.4
U.S. HARVESTED ACRES (Million Acres) 2020-21
	Nov	Avg	High	Low	Oct	2019-20
Corn		82.5	82.7	82.3	82.5	81.3
Soybeans		82.3	82.3	82.3	82.3	74.9
U.S. ENDING STOCKS (Million Bushels) 2020-21
	Nov	Average	High	Low	Oct
Corn		2,048	2,215	1,950	2,167
Soybeans		239	308	195	290
Wheat		874	902	818	883
WORLD ENDING STOCKS (million metric tons) 2020-21
	Nov	Avg.	High	Low	Oct
Corn		297.8	302.2	292.0	300.5
Soybeans		87.6	89.0	86.3	88.7
Wheat		320.0	322.6	318.9	321.5

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

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