Headlines:

  • Corn futures dive to contract low, after US ups yield estimate to record high
    Corn futures tumbled to a contract low after the US surprised investors by upgrading its estimate for this year’s domestic corn yield to record high, putting stocks on course for a 30-year high. Corn futures for December, which had stood little changed ahead of the US Department of Agriculture estimates, tumbled to $3.40 ¾. a bushel in the aftermath, a low for the contract, before recovering a little ground to end at $3.41 1/2 a bushel, a drop of 1.9% on the day. The slide followed the upgrade by the USDA, in its key month WASDE crop report, to estimates for US corn supplies, with stocks now seen ending 2017-18 at 2.49bn bushels (63.2m tonnes), their highest since 1987-88. The revision was far larger than expected by investors, with some data on soybean and wheat supplies beating expectations too.
  • World stocks cut steadies cotton market, after US yield upgraded to record high
    The US issued a surprise upgrade to its forecast for cotton stocks, but cut its estimate for world inventories nonetheless, limiting the pressure on New York futures in the fiber. The US Department of Agriculture, in its monthly WASDE crop report, raised by 300,000 bales to 6.10m bales its forecast for domestic cotton inventories at the close of 2017-18. The upgrade in the stocks estimate, to a nine-year high, contrasted with investor expectations of a cut to the figure, to 5.6m bales. And it reflected an increased estimate for production, pegged at an 11-year high of 21.38m bales, despite some ideas of crop damage from hurricanes Harvey and Irma. “A smaller crop in the west [of the US cotton belt] is more than offset by gains in the Southwest and other regions,” the USDA said, upgrading its estimate for the average US cotton yield this year by 11 pounds per acre to a record 900 pounds per acre.

Summary:

It appears that the domestic producers have harvested more Corn corps than expected as did Soybean as well. The news from the USDA reports today pushed both Beans and Corn lower. Corn ranged from 5.75 to 6.25 cents in losses while Soybean futures were hit with double digit losses ranging from 12.75 to 13.50 down. In the USDA report today, Corn was pegged at 175.4 bushels per acre edging average trade expectations by about 0.3 bushel per acre and also beyond the USDA October figure of 171.8 bushels per acre. Soybean yields were pegged at 49.5 bushels per acre which was 0.2 bushels per acre more than average trade expectations and matching the prior months estimates.

The market responded bearishly to the reports today and we will be looking to see how much follow-through occurs over the next couple of days. Last month the October report was also received bearishly on the onset but there was little to now follow-through to speak of. Taking assessments from the knee jerk reaction today may not be enough to truly gauges extended market sentiment. Despite there being the impression that there is little to be gleaned upon as bullish, the possibility of a short squeeze induced really is still possible.