Thursday, November 10, 2016

Corn, Wheat Clawing Back Yesterday's Losses

Corn    345'0  +4'2  
Wheat  411'4  +4'6
From Agrimoney, Nov. 9 20:54 GMT:
In day when everyone was talking about politics and investor sentiment, there was a stark reminder that supply and demand still rules the commodity markets. 

Grain markets that seemed ready to shrug off the surprise outcome of the US election turned sharply down after a big upgrade to US crops. 

The response to the news that Donald Trump will be the next US president can be classified as a short-lived panic.

Most commentators dismissed the likelihood of a Republican win, but 2016 continues to deliver surprises.

Pundits were similarly certain that the UK would reject Brexit, and that Colombian voters would back a peace treaty with the Farc, and were just as wrong. 

And the second piece of received wisdom, that a Trump presidency would prove bearish across all markets except gold and similar safe havens, proved similarly unfounded.

True, markets were sharply down overnight, but day bought waves of buying which saw the dollar, and US equities, up on the day by the lunchtime. 

And early losses in US grains were similarly short lived, with the main Chicago grains up on the day going into the monthly Wasde report. 

Wasde tanks corn markets
But while the effects of the election fizzled in the grain markets, the Wasde hit with a bang, upgrading US production and world stocks for corn and soybeans.

"The USDA hit the corn and soybean markets with a dose of reality this morning," said Darrell Holaday, at Country Futures. 

And Richard Feltes, at RJ O'Brien, struck a bearish note for demand.
"Know that we're in the best US demand period for corn and bean exports which are likely to drop off markedly late February forward after 2017 South American crops come on-line," he warned. 

Corn gets surprise yield upgrade
The USDA raised its estimate for domestic corn yield by 1.9 bushels per acre to 175.3 bushels per acre, where markets were expecting a downgrade. 

As a result, harvest prospects were upgraded by 168m bushels to 15.226bn bushels, outweigh higher domestic consumption to leave US corn closing stocks for 2016-17 up 2.403bn bushel, up 83m bushels from last week...MORE
From AgNet:

USDA WASDE Report At a Glance
Corn: This month’s 2016/17 U.S. corn outlook is for larger production, increased food, seed and industrial (FSI) use and slightly higher prices. Corn production is forecast at 15.226 billion bushels, up 168 million from last month on a 1.9-bushel per acre increase in yield to 175.3 bushels per acre. Global coarse grain production for 2016/17 is forecast 4.9 million tons higher to 1,319.7 million.

Soybeans: Soybean production is forecast at 4,361 million bushels, up 92 million on higher yields. The soybean yield is projected at a record 52.5 bushels per acre, up 1.1 bushels mainly on production gains for Minnesota, North Dakota, and Kansas. Despite increased supplies, soybean crush is reduced 20 million bushels to 1,930 million mostly due to reduced soybean meal export prospects.

Wheat: Projected 2016/17 U.S. ending stocks are raised 5 million bushels to 1,143 million on a reduction in food use. The food use change reflects the latest NASS Flour Milling Products report and expectations for the remainder of the market year. By class, Hard Red Winter (HRW) use is raised 10 million bushels, Hard Red Spring (HRS) is lowered 10 million, and Durum is lowered 5 million....

Commodities: Ahead of Today's USDA World Agricultural Supply and Demand Estimates Report, Analysts Talk Politics (WASDE)