USDA calls a record crop
Seven of the eleven large Midwest corn producing states are forecasting record corn yields after yesterday’s USDA’s report, catching many traders off-guard. Among many, but particularly the state of Illinois, updated report data showed the state is expected to see a record large yield of 214 bushels per acre, 13 bpa higher than their previous record. According to data from FC Stone, their crop is maturing 27 percent ahead of average for this same week. Their data also shows South Dakota with a new record yield, and 19 percent ahead of average maturity. Strangely, during the second week in May South Dakota was 46 percent behind average planting pace, leaving many questioning the record ear weights published by the USDA.
The USDA has released the methods used to determine how the payments were calculated for the trade relief program. The agency used standard market facilitation models to estimate the impacts of the trade tariffs. The models simulated the expected reduction in US exports due to the tariffs. Their report states that if necessary, in December, a second payment could be issued using the same approach with the market facilitation models.
U.S. and China are planning to meet for another round of trade talks. It’s stated that the talks are going to be held with higher-level officials compared to the attendees in the August meeting. A more optimistic tone is surrounding these meetings. Stock markets have rallied as of recent with hopes that the US-SINO will make progress in the days ahead.
China continues to try and source their soybean needs from other sources than the U.S. According to data from Advance Trading Inc, it was reported that last week, China purchased 10-12 cargoes of October/November soybeans from Brazil, 4 cargoes from Argentina, and 3 from Canada. It has also been reported that China is currently working on a deal to import more soybean meal from India. They are said to be meeting with officials September 19th to see if they can get an agreement in place.
Canada also appears to be ready to offer the U.S. limited access to Canada’s dairy markets in an attempt to secure a NAFTA agreement. Energy markets are weaker as Hurricane Florence has been downgraded to a category 1 with landfall either expected late today or early tomorrow on the coast of the Carolina’s.
Due to technical difficulties the weekly crop progress and condition rating report was released a day later instead of last Monday.Despite trades expectations and seasonal tendencies, corn and soybean condition ratings both increased in the release and both stand at 68 percent good to excellent. The maturity of both the corn and soybean crops remain well above last years crops and the average for this date. This week’s report also showed the first harvest progress for corn at 5 percent that is above the average for this date of 3 percent but equal to last year’s pace.
Corn and soybeans struggled all week with very little fresh news after the USDA released their surprisingly big yield numbers on corn and soybeans yesterday. The USDA reported a private export sale of 142,876 MT of 18/19 corn to Costa Rica this morning. 108,010 MT of soybeans were sold to Mexico for 18/19 and other sales of 40,000 MT for 18/19 and 80,000 MT for 19/20 were sold to an unknown destination.
Meteorologists have predicted that Hurricane Florence to continue its storm surge throughout the weekend and into next week. It is estimated that there are 870,000 corn acres in North Carolina and 310,000 corn acres in South Carolina, representing roughly 150 million bushels of corn. While not a large amount, trade will be monitoring the situation as US corn demand remains solid and further reductions to carryout could warrant fund buying. There are also an estimated 100 million bushels of soybeans grown in that region, ample soybean stocks have traders less concerned about damage to the crop.
Brazilian farmers are seeking support to develop a futures contract to ease deals between Brazil & the top importer of beans China. Many bankers, growers, analyst & economists are saying this would make sense to establish a contract to hedge growing risks due to the price differences between U.S. soybeans and Brazil’s soybeans. A new contract would provide an alternative to the CBOT that dominates the global market of soybean pricing.
For more information, you may contact Brock Beadle at 515-341-7040, or e-mail at email@example.com. The opinions and views expressed in this commentary are solely those of Brock Beadle. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position.
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