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Markets have plenty to consider heading into November report

By Doug Tenney, Leist Mercantile

U.S. corn exports continue an alarming trend for reduction this fall. With two months into the September to August marketing year, weekly export inspections with the Monday 11 a.m. ET USDA report have seen numerous weeks of disappointing numbers. Many of those weeks saw corn exports at or below the low end of trader expectations. Typically, weekly corn export loadings have outpaced those of soybeans. However, this has not been the case for much of the summer and fall. At the end of October, corn exports were running 60% behind compared to USDA projecting an 8% drop for the year. Corn exports for 2019-2020 were lowered 150 million bushels with the October report. Since May, USDA projections for corn exports have dropped 375 million bushels for a 16% decline. Strong export competition and higher production from Brazil and Argentina has played a major role in the corn export decline.

The Nov. 8 WASDE Report is just around the corner. Supply bulls are hoping for reduced corn production, bringing down ending stocks. Some are suggesting the U.S. corn yield would need to decline three to five bushels per acre for December 2019 CBOT corn to climb above the $4 mark. The October WASDE Report pegged the U.S. corn yield at 168.4 — a tiny increase from September. The trade had been expecting a small decline.

Don’t be surprised if this November WASDE Report shows little change in the U.S. corn and soybean yields. While both corn and soybean harvest this fall have lagged behind historical progress, corn especially is behind normal. Maturity levels in the Upper Midwest continue to be behind normal as well. The Dakotas already had a blizzard the second weekend of October. Another snow event the last week of October reached Iowa, Minnesota, and northern Illinois. The Monday 4 p.m. weekly crop progress report for Oct. 28 had the corn harvest at just 41% while the average was 61%. Soybean harvest reached 62% with the average of 78%. Bottom line, many hundreds of millions of bushels of corn and soybean production continue to be at risk with the lagging harvest progress.

If you are tired of hearing about the on again, off again progress of the U.S./China trade talks you’d best grab a snack, pillow, and blanket as they are far from concluded. Much of October was about reaching agreement on Phase 1 of a partial trade deal, which potentially would be signed by the presidents of the U.S. and China in mid-November in Chile. It seems the talks themselves are not the only thread being woven into the blanket called a “trade deal.” Late last month Chile removed itself from hosting the APEC (Asian-Pacific Economic Cooperation) Conference. These meetings were to focus on the digital economy, regional connectivity, and women’s role in economic growth. This summit was cancelled on Oct. 30 due to ongoing protests. With that cancellation. even if a trade deal is reached, the signing could not take place. In the following days, the U.S. offered Iowa as a signing location for Phase 1. Remember that Phase 1 is still incomplete — no deal yet at this writing. In September, China cancelled farm visits to Nebraska and Montana which were meant to be part of a goodwill tour. The Iowa invitation could likely be unacceptable due to China’s concerns of security and other factors.

Look for U.S. yields to still be unclear and up in the air in spite of the Nov. 8 reports. This means 2019 yields will not be finalized until Jan. 10, 2020.

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