Nov 7 – November WASDE Remains After U.S. Midterm Elections

Good Morning!

Grain markets this morning are mostly in the green ahead of tomorrow’s November WASDE and after last night’s U.S. mid-term elections.

“Become a student of change. It is the only thing that will remain constant.”

– Anthony D’Angelo (American Writer)

 

Test your grain today!

 

November WASDE Remains After U.S. Midterm Elections

Grain markets this morning are mostly in the green ahead of tomorrow’s November WASDE and after last night’s U.S. mid-term elections.

As it relates to said elections, the Republicans increased their majority in the Senate while the Democrats were able to win back the House of Representatives and also gain a few governor seats at the state level. [1]

Now, I’m not expecting you to be an expert on the U.S. executive branches, but what it means at the “House” level is that the Democrats will likely be able to put more pressure on U.S. President Trump and how he does things. As the House Democratic leader, Nancy Pelosi promised, they’ll “restore checks and balances” to the Trump administration. [2] Some of the major issues likely to be tackled first by Pelosi are expected to include immigration and healthcare.

As it relates to agriculture, a new Farm Journal pulse survey of 1,500 people polled showed 55% of respondents had a favorable view of President Trump, up 4 points from the same survey in August. [3]

November WASDE Expectations

Tomorrow, we’ll get the USDA’s November WASDE report, which is expected to show slight bumps in U.S. and global carryout of all the three major crops (corn, soybeans, and wheat).

 

November WASDE pre-report estimates

On the production front, average U.S. corn yields are expected to come in at 180 bushels per acre (BPA), down slightly from last month’s 180.7. Informa recently lowered its estimate of average U.S. corn yields to 179.7 BPA, down from the previous estimate of 182.1.

Harvested corn acreage is expected to stay flat at 81.8 million acres. The crop progress report showed that the U.S. corn harvest is caught up with 76% of the crop cut.

For soybeans, average yields have a pre-report guesstimate of 53 BPA, down slightly from last month’s 53.1 BPA. Informa is again, slightly lower at 52.6 BPA, down from their previous estimate of 53 BPA last month. Similar to corn, harvested acreage is expected to stay the same at 88.3 million acres, but the U.S. soybean harvest is tracking a bit behind the 5-year average as of Sunday.

US Soybean Harvest 2018 Sits at 83% Through November 4

On the wheat front, it’s widely expected that Argentine and Australian wheat harvests will come in smaller than initially expected. Most notably, ABARES downgraded the Aussie wheat crop to 16.53 MMT last week. Other than the wheat production in the southern hemisphere, we’ll be watching for wheat exports numbers out of Canada, Russia, and Ukraine.

Soybeans Closely Watched in November WASDE

While the trade war persists, most of the eyes in the grain markets will be on the soybean numbers.

This week, we saw the USDA attache in Beijing drop its estimate of 2018/19 Chinese soybean imports by 9.5% to 85 million metric tonnes (MMT). This aligns with Chinese government estimates and potentially foreshadows what the USDA will release tomorrow; in the October WASDE report, the USDA said China would still import 94 MMT of soybeans.

Through Week 8 of the 2018/19 crop year, we know that Chinese imports of U.S. soybeans are down 97% year-over-year. At this time a year ago, over 8.5 MMT of U.S. soybeans had been exported there; this year, just 270,900 MT.

One factor impacting Chinese soybean demand continues to be the outbreak of African Swine Fever. The problem began in August and had spread through the country since then, and while it’s not expected to impact the herd-size of hogs in the short-term, the USDA’s attache in Beijing says it will likely lead to small herds in the long-term.

Overall, in the November WASDE tomorrow, the USDA will likely confirm what we already know: global soybean trade flows have changed.

One Argentine export firm sees 2018/19 U.S. soybean imports a 2 MMT, double the previous expectation. For perspective, through Week 8 of the crop year, Argentina had already been shipped over 508,000 MT of U.S. soybeans. Similarly, Mexico has received 34% more U.S. soybean imports (785,400 MT to date), and the EU has seen its share of U.S. soybean exports increased by 164% year-over-year with over 2 MMT now landed there.

To growth, 

Brennan Turner

CEO
FarmLead
TF: 1-855-332-7653
contact@FarmLead.com
@FarmLead or @GrainCents on Twitter

At 7:20 AM CST in the North American futures markets (*not cash prices*):
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.3077 
CAD, $1 CAD = $0.7647 USD)

Dec Corn: -2.0¢ (-0.53%) to $3.723 USD or $4.869 CAD
Jan Soybeans: 1.5¢ (0.17%) to $8.858 USD or $11.584 CAD
Dec Soybean Meal (per short ton): $1.10 (0.35%) to $314.00 USD or $410.63 CAD

Dec Soybean Oil (cents per lbs): 0.13¢ (0.46%) at 28.23¢ USD or 36.92¢ CAD  
Dec Oats: -3.5¢ (-1.19%) to $2.903 USD or $3.796 CAD
Dec Wheat (Chicago): 1.5¢ (0.20%) to $5.135 USD or $6.715 CAD
Dec Wheat (Kansas City): 0.5¢ (0.56%) to $5.085 USD or $6.650 CAD

Dec Wheat (Minneapolis): 1.0¢ (0.35%) to $5.895 USD or $7.709 CAD
Jan Canola: $1.60 (0.33%) to $10.961/bu / $483.30/MT CAD or $8.382/bu / $369.57/MT USD

COMMODITY TRADING INVOLVES RISK AND MAY NOT BE SUITABLE FOR ALL RECIPIENTS OF THIS POST. Neither the information presented, nor any opinions expressed, constitutes a solicitation for the purchase or sale of any commodities. The thoughts expressed in this email and basic data from which they are derived are believed to be reliable, but cannot be guaranteed due to uncertainty about future events and complexities surrounding commodity markets. Those acting on the information are responsible for their own actions.

About the Author
Brennan Turner

Brennan Turner is the CEO of FarmLead.com, North America’s Grain Marketplace. He holds a degree in economics from Yale University and spent time on Wall Street in commodity trade and analysis before starting FarmLead. In 2017, Brennan was named to Fast Company’s List of Most Creative People in Business and, in 2018, a Henry Crown Fellow. He is originally from Foam Lake, Saskatchewan where his family started farming the land nearly 100 years ago (and still do to this day!). Brennan's unique grain markets analysis can be found in everything from small-town print newspapers to large media outlets such as Bloomberg and Reuters.

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