November WASDE – U.S Corn Yields Downgraded, Global Ending Stocks Surge

Just a few days after the U.S. midterm elections, the USDA released the November WASDE report which showed bearish revisions to soybean and corn ending stocks.

Despite last week’s update from China regarding lower soybean imports, soybean futures reacted negatively post-WASDE. Corn markets were caught off guard thanks to the USDA’s acceptance of China’s revised domestic corn stocks and production numbers.

On the production front, average U.S. corn yields were expected to come in at 180 bushels per acre (BPA), but the USDA said in the November WASDE that it’s actual 178.9 bushels per acre. This is down slightly from last month’s 180.7.

For perspective, Informa recently lowered its estimate of average U.S. corn yields to 179.7 BPA, down from the previous estimate of 182.1.

For soybeans, average U.S. yields came in at 52.1 bushels per acre. Compare this to the  pre-report guesstimate of 53 BPA, down slightly from last month’s 53.1 BPA. Informa dropped their own estimate from 53 BPA to 52.6 BPA.

Thinking more globally, we recently 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 but is still below the USDA’s estimate of 90 MMT said in their November WASDE report (which was down from the 94 MMT estimated in the October WASDE). In that vein, through Week 9 of the 2018/19 crop, total U.S. soybeans have totalled barely 317 million bushels, down 41% year-over-year.

Today, we know that Chinese imports of U.S. soybeans are down 96% year-over-year. At this time a year ago, over 378 million bushels of U.S. soybeans had been exported there; this year, just 15 million bushels of U.S. soybeans have been shipped to China.

Conversely, US corn exports program has been strong! Through Week 9 of the 2018/19 crop year, actual exports of U.S. corn are tracking 85% higher than the same time in 2017/18 with over 417 million bushels now shipped out.

In their November WASDE report, the USDA surprised the market by dropping their full 2018/19 crop-year guidance for U.S. corn exports to 2.450 billion bushels. This is down 25 million bushels from the October estimate of 2.475 billion bushels. It’s also just marginally higher than 2017/18’s exports of 2.438 billion bushels. As mentioned above though, corn exports so far are tracking way ahead of that.

Will the USDA have to update their corn exports guidance yet again?

The answer is likely yes, but even if it doesn’t, corn markets have some domestic demand to rely on.

This is because feed and ethanol use has also been strong so far in 2018/19. This, combined with the fast start for exports, has created one of the strongest demand functions for corn markets in a very long time.

On the wheat front, the notables were in the Southern Hemisphere. 2018/19 Australian wheat production was dropped to 17.5 MMT, which is above the local estimate from ABARES of 16.53 MMT. For Argentina, the USDA said wheat production will come in at 19.5 MMT.

For our GrainCents readers, we’ll be digging into all the major changes to the production and exports numbers in this weekend’s Digest. To start receiving this in-depth weekly briefs on the global happenings on specific crops, please register here!

About the Author
Victor Han

Victor Han is an Ottawa native with a passion for data analysis. After obtaining a degree from the University of Ottawa in Biomedical Science and Business, Victor worked in the food industry as a market analyst. Since switching his attention to agriculture, Victor applies his passion for science and the natural world to grain marketing.

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