The action is still tentative however, akin to equities between the 1980 and 1982 recessions:
Wall Street on the Fed: "Nervous, Jittery, Out of Sorts"
Sept 12 – Grain Markets Anticipate September WASDE
Grain markets are mixed this morning ahead of the September WASDE report coming out from the USDA at 12PM EST.
Wheat prices continue to price in a smaller crop in Australia and the potential negative effects of cooler, wintry weather in parts of Western Canada on the wheat crop there.
Garrett mentioned in the Grain Markets Today column yesterday how soybean prices fell as grain markets are anticipating a 2018/19 US soybean ending stocks number above 800 million bushels. That’s nearly double what 2017/18 carryout is supposed to be, but I guess that’s what you get when China stops buying American (for now) and you have another record crop.
Yesterday, we all also got delayed USDA crop progress report, which showed the US crop continues to be in pretty good health.
Specifically, soybeans rated good-to-excellent (G/E) were raised by 2 points week-over-week to 68%. That’s also 5 points ahead of the 5-year average.
For corn, G/E ratings were also 68% G/E, up 1 point week-over-week and 2 points ahead of the 5-year average. In terms of dent and mature, the US corn crop continues to be well ahead of its 5-year average.
Also, 5% of the 2019/20 US winter wheat crop has been planted.
Other than today’s September WASDE, grain markets are also trying to figure out what sort of damage Hurricane Florence might have on US crops that are nearly ready to be combined.
Record Low Soybean Carryout in Brazil
Ahead of the September WASDE, the Brazilian crop agency, CONAB, came out with its own estimates of Brazilian agricultural production and ending stocks. [1] And they didn’t disappoint.
CONAB raised Brazilian soybean exports by 2 million metric tonnes (MMT) in 2017/18 to a record of 76 MMT. This would put the country’s ending stocks at the lowest on record at just 434,000 MT. This means that the country is likely to run out of soybeans before their 2018/19 harvest starts coming off in January 2019. This is mainly because domestic soybean prices in Brazil continue to sit at record levels, thanks to their weak currency and strong Chinese demand.And we'll be back with more after the report
Put simply, this means that China will have to buy American at some point to meet their needs. Also, Brazil may need to import some soybeans for their processing industry, something we discussed in detail at the beginning of September for our GrainCents soybean readers.
For other crops, CONAB cut 2017/18 Brazilian corn exports by 1.5 MMT to 25.5 MMT because of strong domestic demand a smaller harvest. CONAB also raised the wheat harvest by 100,000 MT to 5.24 MMT. While that still won’t meet total domestic demand in Brazil, there’s potentially a large wheat crop coming off next door in Argentina.
September WASDE Pre-Report EstimatesBack in the August WASDE report, the USDA estimated the 2018/19 Argentine wheat crop at a record 19 MMT. Reports from the Buenos Aires Grain Exchange has rated 81% of Argentina’s wheat crop in normal to excellent condition, but this was down 4 points week-over-week. Perhaps we’ll see the USDA drop its Argentine wheat production number as a result? Other than Canada, it’s really the only other country in the world that doesn’t have a wheat quality or production issue.
Coming back to the stars of the September WASDE, Karen Braun from Reuters recently pointed out some fun ag trivia about this month’s report from the USDA.[2]
First, corn yields, compared to the August WASDE, have been smaller in the 6 out of the last 10 years and in all 6 of those years, that was the correct call. Conversely, soybean yields were larger 7 out of the last 10 September WASDE reports, when compared to August’s numbers. And in 5 of those years, those bigger yields did hold up....MORE
