Most of you are reading this USDA report preview on Tuesday, Nov. 8, also known as Election Day here in the U.S. The results of today could override anything USDA releases Wednesday, particularly if the doomsday scenario many have talked about comes to pass. Or, markets could go on as usual, viewing the election as nothing more than a quick volatility spike. We'll soon find out.
USDA will release its latest Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports at 11 a.m. CST Wednesday.
For the most part, few surprises are expected if the world survives Election Day and USDA actually releases its latest numbers. Corn production is expected to be trimmed by about 40 million bushels from October's 15.057 billion bushels, due to slightly lower average yield expectations of 173.0 bushels per acre. On the other hand, U.S. soybean production is expected to be increased by 49 mb to 4.318 bb, again due to an adjusted national average yield. The pre-report estimate pegged the latter at 52 bpa, as compared to October's 51.4 bpa.
The interesting data set could be in supply and demand. Pre-report average estimates pegged corn ending stocks at 2.291 bb, down from October's 2.320 bb, while soybeans add 25 mb to 420 mb. However, the extraordinary pace of early export shipments for both could lead to a larger-than-expected decline in corn and an unexpected reduction in soybeans. "Unexpected" by most. Keep in mind my analysis continues to show a dramatic decrease by the time we get to the September 2017 Quarterly Stocks report.
Also, just so it is noted, domestic wheat ending stocks are expected to climb to 1.153 bb, an increase of approximately 15 mb from USDA's October report.
World ending stocks are expected to show minor changes as well. The average pre-report estimate pegged corn at 217.2 million metric tons, up slightly from October's 216.8 mmt. Global wheat stocks are actually expected to decline slightly (yes, you read that right) to 247.7 mmt from last month's 248.4 mmt. World soybean ending stocks are expected to hold steady at 77.4 mmt.
Starting with soybeans: If world ending stocks are unchanged while demand increases (logically, theoretically), then production is likely projected to increase as well. We already know the U.S. production number is expected to be larger, but Brazil's could be increased from last month's 102.0 mmt as well. Global corn demand could be trimmed slightly, most likely due to a possible switch to wheat as feed. Interesting numbers for corn could be Mexico's demand and China's production estimates.
In the end, USDA's November numbers aren't expected to be earthshattering or market moving. Yes, there is the potential for some sort of ending stocks surprise, particularly in soybeans (both domestic and world). But all of this could pale to global market reaction to the next U.S. president.
Just a reminder that DTN will be providing extensive coverage of the election both in its Ag News segment and the Market Matters blog. The latter will have around-the-clock updates, closed to public comments short-term, from DTN Market Analyst Todd Hultman and me starting Tuesday afternoon.
|U.S. CROP PRODUCTION (Million Bushels) 2016-17|
|U.S. AVERAGE YIELD (Bushels Per Acre) 2016-17|
|U.S. Harvested Acres (Million) 2016-17|
|U.S. ENDING STOCKS (Million Bushels) 2016-17|
|WORLD ENDING STOCKS (Million Metric Tons) 2016-17|
|WORLD PRODUCTION (Million Metric Tons)|
|FSU - 12 wheat||131.4||117.7|
|European Union wheat||143.2||160.0|
Darin Newsom can be reached at firstname.lastname@example.org
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