September 12: Instant Reaction to the September WASDE Report

It’s the most important WASDE report ever… since last month’s WASDE report, and the July WASDE report before it.

Let’s take a live look at just how seriously Google Images is taking the words “WASDE Report.”

Okay.

Well, at least we’re here today with live coverage of the event as we dig through the numbers.

Fifteen minutes Before the WASDE report, let’s take a look at analysts expectations ahead of today’s report.

september wasde 2018 pre-report estimates

Now let’s take a look at grain prices in Chicago, Kansas City, and Minneapolis

  • December SRW Wheat: +5.25 cents at $5.24.
  • March 2019 SRW Wheat: +5 cents at $5.4275
  • KC HRW December Wheat: +4.5 cents at $5.2725
  • KC HRW March 19 Wheat: +4.25 cents at $5.47
  • December MGEX Spring Wheat: +7.5 cents at $5.8225
  • March 2019 MGEX Spring Wheat: + 7.25 cents at $5.9625
  • December Corn: -1.75 cents at $3.65
  • March 2019 Corn: -1.5 cents at $3.77
  • November Soybeans: -2.25 cents at $8.295
  • January 19 Soybeans: -2.25 cents at $8.4325

 

Let’s Dig into the September WASDE Report.

Here are the key numbers from today’s WASDE report compared to trade estimates and the August report.

U.S. Corn Yields Hit 181.3 Bushels Per Acre

Corn prices took a sharp dive in the opening minutes after the release of the September WASDE report. The key number was the hike in yield expectations from 178.4 bpa to 181.3 bpa.

The new figure was well above the average analyst forecast of 177.8 bpa. That fueled a big uptick in expected U.S. production and fueled an immediate sell-off. A minute after the released of the report, December contracts fell 12.5 cents.

Production was increased for 2018/19 from 14.586 billion bushels to 14.827 billion bushels.

March 2019 contracts dropped 12 cents in the first minute, and we’ll likely see more downward pressure over the duration of the trading session.

Yields in Illinois are sitting at 214 bpa, while Iowa yields hit 206 bpa.

The United States has gotten really good at growing corn.

As a result, U.S. stocks are now pegged at 1.774 billion bushels. That figure is up 90 million bushels from last month’s estimate. And the figure was well above the average estimate of 1.639 billion bushels before the release of the report.

It’s worth noting that the agency did cut old crop stocks from 2.027 billion bushels to 2.002 billion bushels.

However, global ending stocks for corn in 2018/19 were increased from 155.49 MMT to 157.03 MMT.

Overall… it is a bearish report for corn.

A Record Soybean Crop is Inevitable After WASDE Report

Soybean prices were off immediately after the release of the September WASDE report. November and January’s contracts were both off 7 cents just minutes after the release.

The key number: U.S. soybean stocks.

The agency raised its inventory estimate from 785 million bushels in August to 845 million bushels. The latter figure was 15 million more bushels than the average trade estimate before the WASDE report.

But the market quickly rebounded after the report. A combination of rumors about China and the U.S. discussing trade meshed with technical support. Fifteen minutes after the report, those same contracts were both up 4.5 cents.

The USDA did hike its soybean estimate to 52.8 bpa, up from the 51.6 bpa forecasted in August. Pre-report estimates put soybean yields at a range between 50.9 bpa and 53.8 bpa.

While the USDA did cut 2017/18 ending stocks from 430 million bushels to 395 million bushels, the focus is naturally on production in the year ahead.

The U.S. is now expected to produce 4.693 billion bushels of soybeans. That figure represents a 107 million bushel increase from the August WASDE report.

The other key number: Soybean imports to China.

Wheat Production Flat, But Global Stocks Rise

Despite concerns about the Black Sea, and dryness across Europe, the world is still awash in wheat. Global stocks increased in this report by 2.33 MMT to 261.29 MMT.

U.S. production went unchanged at 1.877 billion bushels (51.08 MMT). That figure was slightly higher than the 1.858 billion bushels projected before the report.

U.S. ending stocks were also unchanged at 935 MMT.

Global production, however, increased from 729.63 MM to 733 MMT.

Those increases were primarily driven by India and Russia. The latter saw an uptick in production from 68 MMT to 71 MMT. Russian exports, however, remained unchanged at 35 MMT.

Regardless, wheat prices are taking a beating across the board. In Chicago, December SRHW contracts are flirting with the $5.00 level after falling 16.5 cents in the first hour after the report’s release.

HRW contracts for December were off 18.5 cents and sitting just above $5.04 per bushel.

Get More With GrainCents

This afternoon, we are breaking down the impact of the WASDE report across all 12 crops we cover in our GrainCents subscription service. We’ll tell you what the market is thinking, and where we expect prices to go after this report.

Sign up for a free three-week trial, right here. 

About the Author
Garrett Baldwin

Garrett Baldwin is a content strategist and editor at FarmLead. He covers the global grain markets and public policy issues related to the agricultural industry. He is a graduate of the Medill School of Journalism at Northwestern University. He also holds a Master’s Degree in Economic Policy from The Johns Hopkins University, an MS in Agricultural Economics from Purdue University, and an MBA in Finance from Indiana University.

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