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November WASDE Unlikely to Answer Big Questions

Todd Hultman
By  Todd Hultman , DTN Grains Analyst
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USDA will release its November Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports at 11 a.m. CST Thursday. (Logo courtesy of USDA)

Now past Halloween and heading toward Thanksgiving, USDA is set to release its November Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports at 11 a.m. CST on Thursday, Nov. 8. Typically known for its more accurate harvest estimates, this year's November report may lack its usual reliability after this fall's wet harvest conditions.

CORN

In spite of wet fall conditions, the 2018 corn harvest is moving along, close to its five-year average pace at 76% finished, USDA said late Monday. On Thursday, USDA will update its corn crop estimate, and analysts in Dow Jones' pre-report survey are only expecting a small reduction, from 14.778 billion bushels (bb) in October to 14.711 bb in November. That also goes along with a slightly lower national corn yield of 180.0 bushels per acre (bpa), down from USDA's estimate of 180.7 bpa in October. Dow Jones' selected analysts anticipate harvested corn acres will stay unchanged at 81.8 million acres.

Along with a slightly lower corn crop comes a slightly lower estimate of U.S. ending corn stocks. Dow Jones' survey expects ending corn stocks to be trimmed from 1.813 bb to 1.781 bb -- a number that may support corn prices if true, but isn't small enough to generate much buying. What may inspire buying Thursday is if USDA decides to raise the export estimate more than expected. As total corn export commitments are up 28% in 2018-19 from a year ago, I would be glad to help them make that case.

For the world estimates, Dow Jones' survey expects USDA's estimate of 2018-19 world ending corn stocks to be trimmed from October's 159.4 million metric tons (mmt) to a new estimate of 158.6 mmt (6.24 bb). If close to being true, USDA's estimate of world ending corn stocks will again be down 20% from a year ago and remain a source of support for cash corn prices that are still near their lowest levels in 10 years.

SOYBEANS

One of the glaring problems of making supply and demand estimates for soybeans in 2018-19 has been that it is extremely difficult to estimate U.S. soybean demand when the U.S. is in the middle of a trade war with the world's largest buyer. If that wasn't difficult enough, we now have several crop areas where soybeans were either flooded, buried under snow or pelted by so much rain that crop quality has become a significant concern.

Late Monday, USDA said 83% of soybeans have been harvested, slower-than-normal progress for Nov. 4, and more rain is expected again in the southeastern Midwest this week. Thursday's WASDE report will not have the final say on the 2018 soybean harvest, but it will be interesting to see if USDA has any additional comments other than a new crop estimate.

Analysts in Dow Jones' survey seemed shy about straying from USDA's October estimate, but their best guess is USDA will estimate a slightly lower soybean crop of 4.676 bb, based on a yield of 53.0 bpa, and keep harvested acres unchanged at 88.3 million. While it is possible that USDA's numbers won't change much on Thursday, there could still be a surprise on the way in the January Grain Stocks report.

Dow Jones' survey also expects USDA to increase its estimate of U.S. ending soybean stocks from 885 million to 900 million bushels. Yes, it is still early in 2018-19, but that small increase seems unlikely when total soybean export commitments are down 29% from a year ago and USDA's attache just reduced the estimate of China's soybean imports from 94.0 mmt to 85.0 mmt (3.12 bb) on Monday.

It remains to be seen if Thursday's WASDE report will agree with the attache's assessment -- they don't always. But many have been wondering when USDA might get around to cutting China's imports. At this point, the only thing arguing for the possibility of higher export business ahead is last week's executive tweet, which was a vague statement that may or may not pan out.

Soybeans' world estimates will take their cues from how USDA's U.S. estimates go. If Dow Jones' survey is correct, USDA will increase its estimate of world ending soybean stocks slightly, from 110.0 mmt to 110.8 mmt (4.07 bb). Of course, that is a midseason estimate for Brazil and Argentina. In October, USDA estimated Brazil's actual ending soybean stocks at a meager 1.0 mmt, or 37 million bushels, for their local season, which ends on Jan. 31, 2019.

WHEAT

Unless there's some surprise hiding in USDA's world estimates for wheat, there is probably nothing bullish to anticipate in Thursday's estimates. Dow Jones' survey expects USDA to increase its estimate of U.S. ending wheat stocks from 956 million to 966 million bushels. As with soybeans, if that is the entire increase wheat sees, bulls should be relieved, as exports are not doing well, tracking down 21% in 2018-19 from a year ago.

Thursday's WASDE report won't have anything to say about the new winter wheat crop being planted, but that will be addressed Jan. 11 in USDA's Winter Wheat and Canola Seedings report.

For wheat's world estimates, Dow Jones' survey expects 259.3 mmt (9.53 bb) of ending stocks, down a little from October's 260.2 mmt estimate. While it is getting later in the year, it is still possible for USDA to make a surprise adjustment to crop estimates as late as December, so we will pay attention even though expectations are low.

Stay tuned to DTN on Thursday for a complete reporting off all the most important numbers as they become available after 11 a.m. CST. At noon CST, join DTN's post-report webinar where I will be explaining what the day's numbers mean for grain prices. Sign up for Thursday's webinar at:

https://dtn.webex.com/…

U.S. CROP PRODUCTION (Million Bushels) 2018-2019
Nov Avg High Low Oct 2017-18
Corn 14,711 14,806 14,576 14,778 14,604
Soybeans 4,676 4,706 4,637 4,690 4,411
U.S. AVERAGE YIELD (Bushels Per Acre) 2018-2019
Nov Avg High Low Oct 2017-18
Corn 180.0 181.4 178.2 180.7 176.6
Soybeans 53.0 53.5 52.5 53.1 49.3
U.S. HARVESTED ACRES (Million Acres) 2018-2019
Nov Avg High Low Oct 2017-18
Corn 81.8 81.8 81.5 81.8 82.7
Soybeans 88.3 88.4 87.9 88.3 89.5
U.S. ENDING STOCKS (Million Bushels) 2018-2019
Nov Avg High Low Oct
Corn 1,781 2,105 1,566 1,813
Soybeans 900 984 832 885
Wheat 966 1,025 925 956
WORLD ENDING STOCKS (Million metric tons) 2018-2019
Nov Avg High Low Oct
Corn 158.6 160.2 156.9 159.4
Soybeans 110.8 113.5 107.3 110.0
Wheat 259.3 261.5 257.4 260.2

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

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Todd Hultman