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Veteran Advisor

Floor Talk, December 10, 2019 (Report Day)

At the close:

 

At the close, the March corn futures ended 1 1/4¢ higher at $3.77. May corn futures finished 1¢ higher at $3.82.

Jan. soybean futures closed 4¢ higher at $9.01 3/4. March soybean futures finished 3 3/4¢ higher at $9.15 3/4.

March wheat futures closed 1¢ higher at $5.23 1/2.



January soymeal futures finished $0.20 per short ton higher at $298.70.

 January soy oil futures closed 0.09 cents higher at 31.68¢ per pound.



In the outside markets, the NYMEX crude oil market is $0.19 per barrel higher, the U.S. dollar is lower, and the Dow Jones Industrials are 3 points higher.

 

Mike

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At 11:05am:

 

USDA SAYS:

 

U.S. Ending Stocks 2019-20

The U.S. is expected to have 1.910 billion bushels of corn, at the end of August 2020 (the end of the marketing year). That compares with the USDA’s November estimate of 1.9 billion bushels and the trade’s expectations of 1.91 billion.

For soybeans, the ending stocks are pegged at 475 million bushels compared with the trade’s expectations 476 million bushels and the USDA’s November estimate of 475 million.

USDA pegged the U.S. 2019/20 wheat ending stocks at 974 billion bushels vs. the USDA’s previous estimate of 1.014 billion and the trade's expectation of 1.01 billion.

U.S. 2019 Production

In its December Supply/Demand Report, the USDA pegged the U.S. corn crop at 13.661 billion bushels, unchanged from November’s estimate of 13.661 billion bushels and the trade’s expectation of billion.

For yield, the USDA sees it averaging 167.0 bu./acre vs. the government’s November estimate of 167.0.

The U.S. soybean output is pegged at 3.55 billion bushels vs. the avg. trade estimate of 3.550 billion bushels and the USDA’s November estimate of 3.55 billion.

The USDA sees the U.S. soybean yield averaging 46.9 bu./acre vs. the USDA’s November estimate of 46.9.

U.S. Harvested Acres

Also, the USDA estimates the U.S. 2019 corn harvested acres at 81.8 million unchanged from USDA’s November estimate of 81.8  million.

The U.S. 2019 soybean harvested acreage has been printed at 75.6 million vs. the USDA’s November estimate of 75.6 million.

2019/20 World Crop Production

In its report, the USDA pegged Brazil’s corn production at 101.0 million metric tons (mmt.) vs. the trade’s expectations of 100.9 mmt. and its previous estimate of 101.0 mmt.

Brazil’s soybean crop is expected to reach 122.0 mmt. vs. the trade’s expectation of 123.0 mmt. and the USDA’s November estimate of 122.0 mmt.

In Argentina, the USDA sees corn output at 50.0 mmt. vs. the trade’s expectation of 49.8 mmt. and the USDA’s previous estimate of 50.0 mmt.

Argentina’s 2019/20 soybean output is pegged at 53.0 vs. the trade’s expectation of 53.0 mmt. and the USDA’s November estimate of 53.0 mmt.

 

TRADE REACTION

--Response from Greg Lumsden, Product Line Leader, Cargill MarketGuide

 Corn

Entering into the report, corn has been range bound and lacking a strong fundamental story to work prices higher. Most market participants have been pricing in the fact that the USDA would change very little on this report and that is exactly what we saw today. 

The ending carry out figure came in at no change from November estimate at 1.910B vs the average trade guess of 1.919B. Global carryout was higher, coming in at 300.56MMT vs 295.5MMT expected, due to an increase in Chinese stocks from China NBS (National Bureau of Statistics). 

Going forward we still expect prices to slowly work higher based on seasonal demand, and higher usage rates due to lower test weight corn this year. Weather in South America, particularly southern Argentina, bears watching as early planted corn is coming under stress. Lastly, if a phase 1 deal can be reached by US and China, renewed optimism could generate some short covering and in turn cause prices to grind higher.

Beans

As a contrast to corn, beans have been steadily working higher entering into the December report. The last 5 trading sessions have seen beans rally around 30 cents. Most of this was due to improving trade negotiations, some Chinese buying, and dryness in South America. 

 

The report itself today was largely as expected with ending carryout estimates coming in at no change 475M vs average trade guess of 476M. Globally the ending stocks came in at 96.4MMT which was 1MMT higher than expectations. Moving forward the market has the ability to continue to work higher if a phase 1 trade deal secures more business and we still see dryness in Argentina. With the funds positioned short, there is ample firepower for the market to go higher if weather and trade offer a boost. Given China’s reliance on South American beans, the risks are heightened as they enter into their critical growing season. 

Wheat

Similar to corn, wheat headed into the report in cruise control waiting for fresh inputs. Domestic supply and demand have offered little to get excited about but the global picture has been tightening. Record demand alongside production issues in Australia and Argentina are lending support. Heading into today, the trade wasn’t expecting any major moves with an avg trade guess of 1.010B vs USDA actual of 974M. Increases in exports of 25M accounted for the change from November. 

Now that the report is behind us most traders will quickly dismiss the numbers and renew their focus on trade, the January report (winter wheat acres/stocks), and wet forecasts for the UK and France which will limit final seeding," Lumsden says.

---Jason Roose, U.S. Commodities, says that investors will have to wait until the January 10 USDA report to get any new answers to the uncertainties in the grain market.

“All U.S. numbers for corn and soybeans were left unchanged from the November report. This could be viewed as supported for corn, as all eyes were on lower corn exports. The increase in global supplies for corn, beans and wheat was considered larger than expected but well known in current market. The lower U.S. wheat stocks in this report could be setting the stage for a lower production number in January,” Roose says.

-- Sal Gilbertie, Teucrium Trading owner, agrees that today’s report has very little to offer.

“Nothing of significance today, other than that even with an increase in Chinese corn production estimates, the world will still use more corn than it produces this year. That marks the third year in a row of global corn stock declines,” Gilbertie says.

What say you?

 

Mike

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At 8:50am:

In early trading, the March corn futures are 1/2¢ higher at $3.76 1/4. May corn futures are 3/4¢ higher at $3.82.

Jan. soybean futures are 3 1/2¢ higher at $9.00 3/4. March soybean futures are 3 3/4¢ higher at $9.15 3/4.

March wheat futures are 1/4¢ lower at $5.22 1/2.



January soymeal futures are $0.90 per short ton higher at $299.40.

 January soy oil futures are 0.04 cents lower at 31.55¢ per pound.



In the outside markets, the NYMEX crude oil market is $0.02 per barrel higher, the U.S. dollar is lower, and the Dow Jones Industrials are 21 points higher.

Al Kluis, Kluis Advisors, says that today’s USDA Supply/Demand Report is not expected to be a game changer.

“The monthly December USDA report rarely has any news that shocks the market. We are more likely to see some adjustments to WASDE data while the US production information will remain unchanged until the January Final Production report,” Kluis told customers in daily note.”

Kluis added, “After the USDA report this morning at 11:00, all attention will shift back to the trade talks, and what will happen with the new and existing tariffs. With the right headline, can the soybean bulls push prices back over the $9 mark.”

Kluis added, “The USDA released its final Crop Progress report for the year on Monday afternoon. The bottom line is that an estimate 6 million acres of corn is still standing in fields. North Dakota was pegged at 43% harvested while South Dakota came in at 83%, Michigan at 74% and Wisconsin at 74%. Traders will have a difficult time assessing quarterly stocks reports, since these bushels will most likely fall into the “on farm storage” category. ”

 

Mike

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3 Replies
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Frequent Contributor

Re: Floor Talk, December 10, 2019 (Report Day)

Dear usda how long you gonna ignore the PP acres?

Advisor

Re: Floor Talk, December 10, 2019 (Report Day)

They haven’t acknowledged them all year why start now.  I’m loving this unharvested acreage counted as on farm storage.  The house always wins fellas even on an unfair game favored for the players.

Veteran Advisor

Re: Well, one thing for sure, .....

Well, one thing for sure, with ending stocks at 1,910 & 475 million at least they're going in the right direction.  At 13.6 and 3.6 we shaved a billion bushel off both corn & bean production but we had to do it the hard way.

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