By Doug Tenney, Leist Mercantile
Corn was bearish with the U.S. yield at 181.3. Soybeans were higher in spite of larger than expected yields. China soybean imports are declining less than expected tempering bearish numbers for soybeans. Russia wheat exports are unchanged.
It was surprises across the board for corn, soybeans, and wheat.
A news flash from Reuters News and the WSJ from earlier this morning, said, “U.S. proposing new round of trade talks with China in the near future.” That news moved soybeans 12 cents off the day’s lows. Moments before the report release soybeans were 6 cents above the day’s lows.
Harvest is only underway in limited areas across Ohio. Today’s USDA report has producers across Ohio and the Midwest anxious for even a whisper somewhere of friendly news in the grains complex.
The biggest concern today is the U.S. soybean yield, production, and ending stocks. It seems a forgone conclusion those numbers will increase from August. How much they increase remains the 64 million dollar question. Corn production estimates were mixed. The landfall of Hurricane Florence looming is also on many minds.
USDA put the U.S. soybean yield at 52.8 bushels per acre. Trade estimates place the U.S. soybean yield at 52.2. Last month the USDA US yield was 51.6. The U.S. soybean production was 4.693 billion bushels. The production average estimate is 4.649 billion bushels. August USDA soybean production was 4.586 billion bushels. USDA estimated the U.S. soybean ending stocks at 845 million bushels. Soybean ending stocks average estimate is 830 million bushel while it was 785 million bushels last month.
The U.S. corn yield was 181.3 bushels per acre. The average trade yield estimate was 177.8 bushels per acre. Last month it was 178.4 bpa. Corn production was 14.827 billion bushels. The average production estimate was 14.529 billion bushels. In August it was 14.586 billion bushels. Ending stocks were 1.774 billion bushels. The average ending stocks for corn was 1.639 billion bushels. Last month it was 1.684 billion bushels.
Just minutes before the noon report, corn was down 2 cents, soybeans down 4 cents, while wheat was up 5 cents. Following the report, corn was down 13 cents, soybeans up 4 cents, with wheat down 10 cents.
Weather forecasts for Ohio and the Midwest are for dry conditions this week and next.
Weather concerns from the fast approaching Hurricane Florence into the U.S. southeast have North Carolina at ground zero for landfall. Looming in their minds is the potential of seeing 15 to 25 inches of rain along the coast and inland. Agriculture is a big deal in North Carolina. They are a major producer of U.S. meats, accounting for 12% of hog production, 13% of turkeys, and 9% of chicken.
Hurricane Florence brings back chilling memories for North Carolina residents. Past hurricanes have seen thousands of hogs and millions of poultry birds not surviving the torrential flood waters. Manure holding lagoons are also at risk of overflowing. Those hurricanes include Matthew, 2016; Floyd, 1999; and Fran in 1996. Also, North Carolina has dozens of toxic coal ash lagoons containing millions of tons. The ash is a decades old byproduct from coal used in power plants to generate electricity. Fears of escaping water from those lagoons are rampant as Hurricane Florence makes landfall over the next 48 hours.
Brazil is quickly running out of soybeans with the monstrous export program to China that has been underway the last several months. It comes as a result of the U.S. tariffs implemented upon China earlier this summer. Current Brazil shipping values for September soybeans are $2.47 over November while soybeans from the U.S. Gulf are 15 cents over November. That represents a 27% premium for Brazil soybeans compared to U.S. soybeans, right in line with the 25% tariff.
Ohio fall basis levels for corn and especially soybeans continue to be large. Illinois soybean basis has fallen nearly 20 cents in just two days. The U.S. soybean tariffs on China have resulted in virtually zero soybeans able to move off the U.S. Pacific Northwest. It has been reported that some facilities in North Dakota are not even bidding for fall delivery soybeans.
Reports are wide ranging as to settlement prices today. Soybeans could be down 20 cents to up 10 cents, corn down 5 cents to up 5 cents, and wheat down 20 cents to up 20 cents.
In a surprise, crop ratings this week were up for both corn and soybeans. The trade had expected a small decline. The Monday 4 p.m. weekly report was delayed until yesterday at noon due to a computer glitch.