Sept 11 – Any Surprises in the September WASDE?

Good Morning!

Grain prices this morning are slightly in the green as, with the September WASDE released tomorrow at 12PM EST, traders are jockeying for position. 

“Delusion is not good; better to be realistic and then surprise yourself if you’re lucky.” – Lenny Abrahamson (Irish film director)

GrainCents grain markets analysis

 

Any Surprises in the September WASDE?

Grain prices this morning are mostly mixed as, with the September WASDE released tomorrow at 12PM EST, traders are jockeying for position.

Yesterday we were supposed to see a Crop Progress report from the USDA but it never came. Instead, grain markets got a simple announcement that the update would be released later today at 12PM EST.

While wheat prices are pulling back this morning, Garrett noted the stronger close yesterday, along with canola prices finishing Monday higher in the Grain Markets Today column. The reason for stronger canola prices is because of some weather concerns in Western Canada for later this week and next that could negatively impact the Canadian canola harvest.

Smaller Australian Winter Harvest

Wheat prices were able to close higher yesterday because of ABARES downgrading Australia’s wheat crop to just 19.1 million metric tonnes (MMT). This would be 13% or nearly 3 MMT less than their June estimate of 21.9 MMT. It’s also a drop of 10% year-over-year. Basically, the size of the wheat crop continues to decline: back in March, ABARES estimated the crop at 23.7 MMT.

Digging deeper, Aussie barley production is forecasted at 8.3 MMT (-7% YoY) and the oats harvest is estimated at 1 MMT (-6% YoY). The largest declines will be seen in canola, chickpeas, and lentils, all of which we’ll be digging into for our GrainCents readers this week.

September WASDE Pre-Report Expectations

Tomorrow, on Wednesday, the USDA will release its September WASDE report. This month, traders are putting a lot of focus on U.S. ending stocks and American exports.

Two weeks ago, the ProFarmer Crop Tour put national corn yields at 177.3 bushels per acre (bpa) and total production of 14.501 billion bushels (bbu). For soybeans, they estimated record average American yields of 53 bpa. Compare this to the UDSA’s estimates from the August WASDE of 178.4 bpa for corn and 51.6 bpa for soybeans.

Going into tomorrow’s September WASDE report, analysts surveyed by Bloomberg project that soybean yields will increase from the August projection to 52.3 bpa. This yield would put total production at 4.643 billion bushels, 77 million bushels higher than the August estimate of 4.586 billion bushels.

For corn yields, the average analyst surveyed by Bloomberg had a guesstimate for the September WASDE of 177.6 bpa. That would put U.S. production at 14.516 Billion bushels. This would represent a 164 million bushel decline from the August projection.

For purposes of data reference only, Reuters’ survey of analysts is suggesting average soybean yields of 52.2 bpa, while the corn yield guesstimate is at 177.8.

The high end of corn yield estimates is 180 bpa by analysts at Lakefront. The low-end estimate of 174 comes from MaxYield Comparative. For soybeans, the highest projection comes from INTL FCStone, which projects yields of 53.8 bpa. Futures International offers the low end projection with yields at 50.9 bpa.

In tomorrow’s FarmLead Breakfast Brief, we’ll provide a table of all the pre-report estimates. Make sure to follow our live recap as Garrett digs into the September WASDE and instant reactions to it on the FarmLead Insights page.

GrainCents Grain Sales Recommendations

One thing that we’ve prided ourselves in building FarmLead has been transparency.

Some people don’t like that word but with it comes things like “character” and “integrity”, two virtues that both Alain and I were instilled with at an early age.

That being said, almost 9 months ago, we launched GrainCents, our crop-specific analysis and grain sales recommendations tool. It helps make more sense of the markets for specific crops including corn, soybeans, canola, flax, winter wheat, spring wheat, durum, barley, oats, peas, chickpeas, and lentils.

For all our calls, we timestamp them for our users all the way back to the beginning of 2016. Today, we’re updating that list to include our grain sales recommendations through the first half of 2018. Our benchmark for success is if the price of the crop increases no more than 4% within 60 days of making the grain sales recommendation. You can read up on our GrainCents grain sales recommendation methodology here.

Given some of the intense volatility of grain markets since 2018 started, it’s been a bit of a wild ride, especially considering the geopolitical risk that’s entered the markets thanks to trade wars.

That being said, we made 32 grain sales recommendations in the first half of 2018, 26 which turned out to be right. This puts our accuracy at 81% so far in 2018. This means that, aggregately, over the past 2.5 years, our accuracy has slid from 93% to 88.5%.

Headed into tomorrow’s September WASDE report,

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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