Well, here we are again with the WASDE report.
The October WASDE report is certain to be another heartbreaker. Perhaps that’s why we saw some people argue that traders should look beyond soybeans, corn, and wheat… and instead focus on the orange crop.
Never mind all that.
Today, we’re keeping our eyes out on the October WASDE report to get a better sense of corn and soybean yields, U.S. stock levels, and — of course — expectations for Russian, South American, and Canadian harvests.
Fifteen minutes before the 11 CST hour, prices on the Chicago Board of Trade were expecting very bearish news.
- SRW Wheat Contracts for December and March were off 3.75 cents.
- HWR Contracts for December and March in Kansas City were off 4.25 cents.
- Spring wheat MGEX contracts for the same months were off 5.5 cents.
- CBOT corn contracts for December and March were off 2 cents and 1.75 cents, respectively.
- The lone bright spot? Soybean prices. November and January contracts were up 1.5 cents on the big board.
Naturally, everyone was expecting a lot of changes… whether they are warranted or not. Average analyst consensus called for a rise in corn yields and soybean yields.
And then… 11 a.m. CST came.
October 2017 WASDE Report Breakdown
Since there was a gentleman’s bet today in our office on whether the soybean yield would come in above or below 50.0 bushels per acre, we’re going to start there.
After lots of speculation on where the USDA would come in on the soybean yield, the agency dropped the number to the markets’ surprise.
Average analyst estimates called for 50.0 bushels per acre.
The yield figure came in at 49.5 bushels per acre.
That was a 0.4 bushel decline from the September report.
Total production remained unchanged at 4.431 billion bushels from the September estimate. Another bullish number was the total end stocks figure.
The October report indicated that the USDA revised its September end stocks number down from 475 million to 430 million bushels.
Average analyst expectations came with a stocks estimate of 447 million. Once again, the market was over.
The USDA reported that global soybean stocks would come in at 96.05 million metric tonnes. That was a decrease of 1.48 million metric tonnes from the September estimate.
Analyst expectations were slightly higher, with an average of 96.48 million.
Finally, soybean acreage increased from an estimated 89.1 million to 98.5 million acres.
At CBOT, the news fueled a sharp uptick in prices. At 11 a.m. CST, the November contract jumped 15 cents and hit $9.8025 per bushel. The January contract added 14.5 cents. The March contract slingshot above $10.00 per bushel.
But 25 minutes after the announcement, all three contracts were up 30 cents.
The January contract roared above $10.00.
The November contract is flirting…
WASDE Report: Corn Yields Higher
While soybean yields fell, the October yield figure came in higher than the September estimate. The USDA said that the average corn yield was 171.8 bushels per acre, a 1.9 bushel increase from last month.
This was higher than the average analyst expectation of 170.1, and even higher than the numbers that Doug Kirk and I had projected this week.
In Chicago, corn prices reacted, but not the way you’d expect. Fifteen minutes after the report, December contracts hit $3.50 thanks to a 4-cent gain. The March contract was up 4.25 cents and flirted with $3.64.
Why the uptick? Global stocks fell more than analysts expected.
The USDA said that world ending stocks sat at 200.96 million metric tonnes. That figure was below the 201.91 expected by analysts and 1.51 million metric tonnes lower than last month’s report.
If you think about it, corn prices were really just recovering their gains from this morning’s downturn and a lot of the bearish sentiment that we’ve seen ahead of this report.
U.S. Ending stocks barely moved from last month’s report, gaining five million bushels to hit 2.34 billion bushels. In addition, total production was revised upward to 14.28 billion bushels.
That figure was a little higher than the 14.204 billion expected by traders this month.
The agency also said that total harvested acreage fell from 83.5 million acres to 83.1 million acres.
Not everyone was convinced though…
Corn prices still remain frustratingly low, but prices were rising in the first hour after the report. News about a smaller Brazil yield is another reason to be bullish. But the U.S. harvest and yield numbers are still massive by historical standards.
Wheat Prices Follow WASDE Rally
Wheat prices didn’t quite react too well to the initial announcement from the USDA. While soybeans and corn ticked higher, wheat remained in the red…
But the downturn didn’t last too long as prices would inch higher on the broader commodity rally.
Wheat production estimates increased (barely) from 1.739 billion bushels to 1.741 billion bushels. That was just a two million bushel increase.
Meanwhile, U.S. stocks increased more than analysts had expected. The USDA said that production jumped from 933 million bushels to 960 million. Average expectations called for the agency to report 946 million bushels.
The really bearish news — fueled in part by Russia – is the expectation for higher ending stocks around the globe. The USDA projected an extra 4.99 million more metric tonnes for ending stocks than previous estimates.
Ending stocks came in at 263.14 bushels in the September WASDE report.
The October WASDE report projects 268.13 billion bushels.
In Chicago and Kansas City, wheat contracts are holding just a few cents higher than this morning’s opening prices. MGEX spring wheat prices are off slightly.
What Comes Next?
This afternoon, we’re going to dive deeper into the results this October WASDE report. Check back in Grain Markets Today.