Oct 16 – Crop Progress Report Shows Little Progress

Good Morning!

Grain markets this morning are mostly in the red as the complex weighs slow crop progress in North America, but a fast pace in South America.

“How easily some light report is set about, but how difficult to bear.”

– Hesiod (Ancient Greek Poet)

 

Test your grain today!

 

Crop Progress Report Shows Little Progress

Grain markets this morning are mostly in the red as the complex weighs slow crop progress in North America, but a fast pace in South America.

Contributing to soybean prices being in the red this morning is AgRural telling the world that Brazilian farmers are planting soybeans at a record pace. [1] 20% of their 2018/19 soybean crop was in the ground as of last Thursday, double the average crop progress over the last 5 years and 2 points better than the previous record set two years ago in 2016.

Staying with Brazil’s crop progress, the first crop corn seeding – which accounts for about 1/3 of total corn production in Brazil – is now 44% seeded. The five-year average is 38% and last year’s pace was 37% by now.

Domestic currency issues in Brazil and the trade war between the U.S. and China have helped elevate soybean prices to some of the best levels ever. Thus, early planting potentially means an early soybean harvest for Brazil, which has basically run out of soybeans when China is trying to buy from anywhere but America.

That being said, two ships of American soybeans are headed to China as we speak, a 25% tariff price included and all. [2] This might suggest that Chinese buyers are indeed stumped in looking for protein alternatives.

Conversely, domestic soybean demand continues to be strong as the NOPA crush report released yesterday showed 160.78 million bushels used (or 4.376 MMT if converting bushels into tonnes). This beat pre-report expectations by more than 3 million bushels, helping soybean prices grain ground yesterday. It is also 1.2% better than August’s 158.89 million bushels used and up nearly 18% over last September’s 136.42 million bushels processed.

Crop Progress Idled in Many Parts

While domestic soybean demand is cruising, crop progress is not. More specifically, snow and rain have stalled Harvest 2018 in many parts of the Northern Plains and western Corn Belt (cue the farmers in Alberta and Saskatchewan saying, “welcome to the club; we’ve been here for nearly 6 weeks”).

The U.S. soybean harvest advanced 3 points or less for the week in Kansas, Nebraska, Iowa, Minnesota, South Dakota, and North Dakota.

The Oct 15, 2018 crop progress report shows harvest has slowed

Those six same states also saw the good-to-excellent ratings of their soybean crop all fall week-over-week. Collectively, they account for nearly 37% of the USDA’s most recent estimate in the October WASDE for American soybean production.

The USDA's crop progress report showed declining soybean conditions

Similarly, the USDA’s crop progress report yesterday showed a slow corn harvest. Food for thought: corn can be harvested much later in the year without quality being impacted too much. Soybeans cannot.

The Oct 15, 2018 crop progress report shows harvest has slowed

On the winter wheat side of things, 65% of the U.S. 2019/20 crop has been planted, slightly behind the 5-year average of 67%. Meanwhile, 44% of the crop has emerged, slightly above the 41% we usually see by this time in October.

Corn Prices, Soybeans Prices, & Wheat Prices

From a forecasting standpoint, FocusEconomics updated the aggregate outlooks of corn prices, soybean prices, and Chicago soft red winter wheat prices this week. [3] For corn prices, the average forecast across analysts for 4Q2018 is for $3.91 USD per bushel, with $3.94 estimated for 4Q2019. -Comparably, this morning, the December 2018 contract is trading just under $3.80 while the December 2019 contract is sitting a little under $4.10. If you haven’t looked yet, read up on FarmLead expectations for corn prices headed into 4Q2018.

Our own expectations for soybean prices in 4Q2018 are seeing some higher values. Comparably, the November 2018 contract is currently sitting at $8.85 while the average 4Q2018 forecasted price is for $8.82. Thinking about next year’s crop, 4Q2019 average soybean prices are estimated at $9.73, whereas the current December 2019 soybean contract in Chicago is trading just below $9.50 this morning.

Finally, for Chicago SRW wheat prices, FocusEconomics’s average analyst guesstimate is for $5.15 USD/bushel in 4Q2018 and $4.94 in 4Q2019. Comparably, peek at how Chicago SRW wheat prices perform in the fourth quarter from our September monthly recap. Also, right now, December 2018 Chicago wheat prices are sitting at nearly $5.25, while the December 2019 is sitting a little above $5.85.

To growth,

Brennan Turner

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

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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