Oct 15 – Grain Markets Move on From the October WASDE

Good Morning!

Grain markets this morning are slightly in the red as the complex continues to work through the October WASDE numbers and into Harvest 2018 delays.

“To help yourself, you must be yourself. Be the best that you can be. When you make a mistake, learn from it, pick yourself up and move on.” – Dave Pelzer (American Author)

 

Test your grain today!

 

Grain Markets Move on From the October WASDE  

Grain markets this morning are slightly in the red as the complex continues to work through the October WASDE numbers and into Harvest 2018 delays.  

Many traders are trying to figure out the potential impact on yield and production with rain and snow again falling this past weekend in many states and provinces across North America. Thus, the crop progress report out today at 4 PM EST will be closely scrutinized.  

Another report that we get today is the September 2018 NOPA crush report for at 12 PM EST. The pre-report average guesstimate from analysts is for 157.4 million bushels, which would be a record for September (similar to many other months so far in 2018). 

October WASDE Highlights 

On Thursday, the USDA gave us their updated crop production expectations in the October WASDE. Going into the report, the market was fairly bearish, but the complex did get some bullish news in the corn sector.  

Specifically, the USDA lowered average U.S. corn yields to 180.7 bushels per acre, which is still a new record, but down 0.6 BPA from the September estimate. For U.S. soybeans, average yields were raised by 0.3 to 53.1 BPA. 

However, global ending stocks for corn, soybeans, and wheat did increase from the September estimate. 

October WASDE showed bigger global carryout

 

For our GrainCents readers, we dug into a lot of the details on Thursday afternoon, but also in the weekly Digest emails, sent out at 8 AM yesterday (Sunday) morning. Here’s a look at some of the key findings of the lesser-monitored crops in the October WASDE:  

With the October WASDE out of the way, we also updated our sales position for a few crops as we re-weighed the bullish and bearish risks in the market. One of them is undoubtedly the delay of Harvest 2018.  

Harvest 2018 Delays Continue  

Parts of the U.S. Northern Plains and western Corn Belt received snow over the weekend, effectively stalling any combine activity. This is especially notable for the likes of Iowa, South Dakota, and Nebraska, since, as of last Monday, 82%, 72%, and 64% of the soybean crop in these states had yet to be harvested. 

In last week’s October WASDE report, the USDA had suggested that these three states would see an average soybean yield of 61, 50, and 62 bushels per acre respectively. Further, the USDA estimated that these three states would harvest a combined 1.24 billion bushels (or 33.67 million metric tonnes if converting bushels into tonnes). To put that in perspective, that’s a little more than 26% of the total 2018 soybean production estimate of 4.69 billion bushels! 

In Western Canada, we did see an improvement last week in some of the progress, but there’s still a lot of grain left to be combined. Using last week’s provincial crop reports, this is what we estimate is still not yet in the bin:  

  • Canola: 8.9 MMT or 42% of the estimated 2018 crop, as per StatsCan’s September forecast; 
  • Spring Wheat: 7.25 MMT or 32%;  
  • Barley: 2.53 MMT or 31%; 
  • Durum: 1.05 MMT, or 18.5% 
  • Oats: 962,000 MT or 28%;  
  • Flax: 317,200 MT or 62%; and 
  • Chickpeas: 52,000 MT or 18.5%  

The questions we and most of the market are asking is how will the rain/snow potentially affect quality, and in turn, how might it impact final yield and production numbers? We’ve seen oats prices improve a bit as concerns of supplies for decent milling quality start to mount. [1 

 

There is a similar dynamic being seen in flax and malt barley. [2] 

We’ve seen some heavy selling on the FarmLead Marketplace for oats, flax, and both feed and malt barley. If your crop is off, and you have leftover 2017/18 supplies, we strongly suggest you get this grain posted on the Marketplace today. If your crop is still out in the field, we recommend proactively ordering your grain tests here, so that, as soon as it’s coming off the combine, it’s heading into the lab.  

Regardless if your grain meets milling or malting spec or not, we’ve seen every credit-verified buyer ask additional quality questions in their negotiations on the FarmLead Marketplace the last two weeks. 

To growth,

Brennan Turner

President | 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 = $1.3050 
CAD, $1 CAD = $0.7678 USD)

Dec Corn: unchanged to $3.730 USD or $4.858 CAD
Nov Soybeans: 0.3¢ (0.03%) to $8.673 USD or $11.296 CAD
Dec Soybean Meal (per short ton): -$1.10 (-0.35%) to $315.80 USD or $411.29 CAD
Dec Soybean Oil (cents per lbs): 0.6¢ (0.20%) at 29.67¢ USD or 38.64¢ CAD  
Dec Oats: 1.8¢ (0.63%) to $2.893 USD or $3.768 CAD
Dec Wheat (Chicago): 0.3¢ (0.25%) to $5.188 USD or $6.757 CAD
Dec Wheat (Kansas City): 0.5¢ (0.35%) to $5.258 USD or $6.848 CAD
Dec Wheat (Minneapolis): -0.5¢ (-0.51%) to $5.953 USD or $7.753 CAD
Nov Canola: $0.30 (0.06%) to $11.226/bu / $495.00/MT CAD or $8.620/bu / $380.07/MT USD

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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