October 11, 2019 Comments per MIDCO
The commodities are firmer this morning. For the week, corn is unchanged, soybeans are 17 cents firmer, and HRW wheat is up 2. Following yesterday’s report, December corn futures fell to their lowest level since September 30th. Resistance for this contract rests at $3.97 ¼, while support lies at $3.77 ¼ . New resistance for November soybeans is at $9.31 ½ - $9.34. On the downside, the 200-day moving average at $9.10 is support. Thursday’s crop report has come and gone, though traders are still digesting the numbers. Yesterday’s October WASDE report surprised the corn trade with a higher production and ending stocks number than what was expected. The average U.S. corn yield increased slightly to 168.2 bpa, while a reduction had been anticipated. Harvested acres declined but were still enough to give the U.S. 13.8 bln. bu. of expected production. This put ending corn stocks at 1.92 bln. bu, and while lower than the September estimate; it was higher than the 1.68 bln. bu. expected. S & D data was more friendly for beans. The U.S. soybean yield projection decreased 1 bpa for a 46.9 average. The USDA also cut harvested acres by 300,000. This combination is forecast to give the U.S. a 3.55 bln. bu. bean crop compared to last month’s 3.63 bln. bu. estimate and is expected to leave the U.S. with 460 mln. bu. of ending stocks, down from the 640 mln. estimate in September and below the average trade guess. Sizable alterations were also made to the world ending stocks. World corn carryout decreased as did global world soybean reserves. Not only did the USDA update production figures, CONAB did as well. CONAB is predicting a 120.4 MMT Brazilian soybean crop this year, up 4.7% from last year's crop. This number is slightly less than initial estimates but would still be record sized. In regard to corn, CONAB lowered its corn production estimate by 1.7% this year to just 98.4 MMT. Weekly U.S. export inspections yesterday were supportive for soybeans and wheat while negative for corn. Corn sales were less than 1/3rd of the amount needed to reach yearly USDA projections. Soybean sales were three-times the needed amount. For the year, cumulative sales now trail last year by 421 mln. bu. on corn and 153 mln. bu. on beans. In addition on Thursday, USDA announced another bean sale to China, totaling 398,000 metric tons. In trade news, we’re picking up conflicting reports on U.S./China negotiation progress, leaving market participants awaiting any fresh news from today’s talks for direction. Weather also remains a main focus, as traders monitor freezing temperatures, snow maps, and harvest progress. A frost/freeze is expected to impact MN, IA and WI, while the remainder of the states should remain frost free, allowing crops to continue to mature. ND is forecast to receive additional snow accumulations of 4-12 inches through the weekend. Following this, weather maps indicate temperatures should warm up and conditions should be dry over the next 10 days. It’s after that that the EU and GFS models differ, with the EU model showing heavy rains for the Midwest. In South America, Brazil is expected to see some rainfall which should be favorable for their planting and growing conditions.