Headlines:

  • Corn, soy, wheat prices plunge on buoyant US crop supply hopes
    Corn, soybean and wheat futures tumbled after US officials, in a much-anticipated briefing, pegged domestic supplies of all three crops above market expectations – with world wheat supplies supported too by a huge upgrade to Russia’s harvest. Corn futures for December tumbled 4.1% to $3.70 ½ a bushel in late deals in Chicago – their lowest level in 10 months. Soybean futures for November stood down 3.4% at $9.39 ¾ a bushel, their weakest since late June. Winter wheat futures for September slumped 3.8% to $4.42 ¾ a bushel in Chicago, setting a two month low. On the Minneapolis exchange – which trades the spring wheat which has been particularly closely watched by investors thanks to dryness in major growing regions in the US and Canada – best-traded December futures stood down 3.4% at $7.20 ½ a bushel. The declines followed crop estimates in the US Department of Agriculture’s monthly Wasde report on world crop supplies and demand which reversed ideas of a drop in world soybean supplies in 2017-18, and lifted expectations for the rise in wheat inventories. In corn, the estimate for US stocks at the close of 2017-18 was reduced, but by far less than investors had expected.

 

Summary:

According to the USDA WASDE report today, the Soybean crop is growing larger while the Corn crop is trimming. US Soybean yields were pegged at 49.4 bushels per acre (bpa). The average trade estimate was closer to 47.5 bpa. The Corn yield was pegged at 169.5 bpa versus the trade estimate that averaged about 166.2 bpa. The prior month’s estimate was at 170.7. A decline was expected but the USDA figures were above expectations. In response to the USDA reporting the markets took a beating. December Corn fell 3.37% or 13 cents, November Soybean dropped 3.06% or 29.75 cents and December Wheat also fell prey to a 3.49% decline losing 17 cents.

Ending stocks for US Corn was unchanged compared to last month’s 2.37 billion bushels for the 2016-2017 crop. The 2017-2018 Corn crop estimate was at 2.27 billion bushels (about 0.05 billion bushels shy of the July numbers). Ending stocks for the 2016-17 Soybean crop was at 370 million bushels falling below both the July USDA number and average trade expectations. The 2017-18 Soybean ending stocks was at 475 million bushels coming in at 15 million more than the USDA July estimate.

New record inventories for Wheat were also a real surprise for the market which resulted in the action that we witnessed today.