Even though the November World Agricultural Supply and Demand Estimates (WASDE) report featured a tighter U.S. and world balance sheet on corn, poor demand may be too much to overcome. Unless the U.S. can garner some much-needed new business, plentiful supplies will continue to hang over corn. The outlook for the coming year also suggests that 4.5 million to 5 million additional corn acres will be brought back into production.
Soybeans were little changed with the focus clearly on China.
For wheat, record supplies and fierce major exporter competition will continue.
Keep reading for a deeper look at some of the changes in both U.S. and world numbers from the Nov. 8 USDA WASDE and Crop Production reports.
The Nov. 8 report showed a drop in corn yield to 167 bushels per acre (bpa) from 168.4 bpa in October, but slightly lower than the 167.3 bpa from the average pre-report estimate. Production, however, was revealed at 13.661 billion bushels (bb) -- a decline of 118 million bushels (mb), but 59 mb higher than pre-report estimates. Harvested acreage was left unchanged at 81.8 million acres (ma), even as the survey suggested a drop of 500,000 acres. Corn plant population in the 10 major states fell modestly to 28,450 per acre versus 28,500 per acre in October. The number of ears per acre in those 10 states was unchanged at 28,200. It's important to keep in mind that the U.S. corn crop was roughly 50% harvested at the time of this latest crop production estimate, suggesting that we could see more dramatic changes in January.
On the demand side of the ledger, USDA dropped U.S. corn exports by 50 mb, corn used for ethanol by 25 mb, and feed and residual by 25 mb. Therefore, while U.S. corn supply tightened, the drop in demand made up for it.
The net effect is a U.S. ending stocks number of 1.910 bb -- just 19 mb below October's number. However, it is very possible that the negative yield and quality impacts of early snow, high winds, excess water and freeze won't show up until the final January crop report.
On the world front, corn was more bullish. USDA featured revised production and demand numbers for 2018-19, which led to a greater-than-expected fall in world ending stocks. World corn stocks for 2018-19 was revised downward to 320.06 million metric tons (mmt) from 324.03 mmt in October. World ending stocks for 2019-20 fell from 302.55 mmt to just 295.96 mmt (11.65 bb).
While many analysts predicted sharper changes for soybean yield and production, it turns out USDA left both unchanged from October, at 46.9 bpa and 3.550 bb, respectively; the average estimate was 46.6 bpa and 3.513 bb, respectively.
Harvested acres were left unchanged at 75.6 million. Again, it is likely that we'll see some decline in those acres in the January report.
On the demand side in the U.S., crush was lowered by 15 mb to 2.105 bb, resulting in an increase to U.S. ending stocks by 15 mb to 475 mb. This compares to 460 mb in October and pre-report estimates of 429 mb.
Given the above numbers, the report was deemed slightly bearish for U.S. soybeans.
World soybean numbers were changed only modestly, with world ending stocks pegged at 95.42 mmt (3.498 bb), compared to October's 95.2 mmt and the average trade estimate of 95 mmt. China soybean imports were left unchanged at 85 mmt (3.12 bb).
On a lesser note, U.S. soybean oil stocks fell to 1.446 million pounds from 1.525 million in October -- the lowest in the past three years.
This report left little for wheat traders to hang their hats on. Some revisions on U.S. wheat production were made based on the unusual October weather affecting much of the Northern Plains. U.S. wheat production was lowered from 1.962 bb to 1.920 bb, primarily from a decline in both spring wheat and durum production. The only other change in wheat was the drop of 12 mb in food and seed use. The net effect was a minor drop of 29 mb on U.S. ending stocks to a still burdensome 1.014 bb.
The report saw a minor rise in world ending wheat stocks to 288.28 mmt. That is only up less than 500,000 metric tons (mt) from October, but is once again a record-large supply of world wheat.
Argentine wheat was down 500,000 mt and Australian wheat was down 800,000 mt -- both due to drought conditions. On the other side of the coin, Russia, EU and Ukraine all had higher wheat production by 1.5 mmt, 1 mmt and 300,000 mt, respectively.
Dana Mantini can be reached at firstname.lastname@example.org
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