USDA Worksheet and An Intensifying La Niña Event
Update for November 5th, 2020
Newly updated November Crop Production and WASDE reports will be released next Tuesday, November 10th. Private firms have begun releasing their updated production estimates ahead of the USDA reports next week, and rumors inside the trade are that yields are getting smaller not larger as more yield results are reported.
StoneX has published their estimates and have slightly lowered the U.S. corn yield from 178.9 bushels per acre from the previous estimate of 179 bushels per acre. This compares to the USDA October yield estimate of 178.4 bushels per acre. For soybeans StoneX is looking for a small reduction as well, lowering the current estimate to 52.1 bushels per acre from 52.4 one month ago. The USDA soybean yield estimate from October was 51.9 bushels per acre.
IHS Markit (Informa) lowered their U.S. yield estimate yesterday from 177.8 bushels per acre down to 175.7. They also lowered their total production estimate by -200 million bushels to 14.502 billion bushels. This has some in the trade thinking we could see an ending stocks number under 1.8 billion which could trigger higher prices.
Overall the average trade estimate is for a 134 million bushel (-6%) reduction in U.S. corn ending stocks and a 55 million bushel (-19%) reduction in soybean ending stocks.
USDA Supply & Demand Estimates
Source: USDA, Reuters, StoneX
The USDA has faced some criticism regarding their low estimate for Chinese corn imports. Last month China already had over 10 MMT of U.S. corn booked but the USDA left their export forecast unchanged at 7 MMT. In a recent meeting Mark Jekanowski chairman of the USDA’s World Agricultural Outlook Board explained, “Keep in mind that export sales…do get canceled at times.” He added that if China decides to raise their low-tariff quota on corn the agency would likely increase their forecast. Rumors indicate that the Chinese are planning to raise the quota but there has been no official action on the matter. In addition, there are rumors circulating around the trade that China is considering the purchase of U.S. ethanol and DDG’s. This is all speculation at this point so there are no specific details regarding amounts or timing but if this occurs it would offer a considerable boost to our struggling ethanol industry.
Planting progress across South America continues to advance with soybean planting at 42% completed, only 2% behind the normal pace. Full season corn planting in Brazil is now 65% to 70% complete. The second crop corn in Brazil will be an important one to watch as delays in soybean planting now will likely push back the planting of Safrinha this season, potentially pushing development back into the hotter portion of their summer. The latest forecasts show a drier outlook for the next few days (shown in top map) but a cool front is expected to arrive in the 7-15 day forecast (shown in the 2nd map) and bring widespread rainfall.
Brazil’s president Jair Bolsonaro announced the countries intention to import soybeans and other food necessities due to a lack of supply within the nation. “We are importing soy now because the price is going up.” Sources are reporting now that U.S. exporters have sold Brazilian buyers 1.4 million bushels of soybeans that will be shipped from a grain terminal in the Gulf. With the soybean harvest in Brazil still a few months away analysts expect the U.S. will see additional soybean exports until February/March, when the Brazilian crop is expected to be ready.
David Widmar an ag economist with Ag Economic Insights told Brownfield that this year the U.S. had the 2nd largest total of prevent plant acres ever recorded with an estimated 10 million acres involved. (2007 saw more) He explained that many U.S. farmers had to rely on crop insurance to meet their financial obligations and “Looking ahead, producers are going to need to think about what are the prevent plant coverage options, how much coverage does that provide and really need to roll up their sleeves and understand that spring-time planting risk and how it impacts their overall farm production when they have to rely on management tools.” Finding the correct level of crop insurance to cover your financial needs is crucial. At Ag Performance we can assist you with any of your crop insurance needs and will help you find the best products available for your business. Nothing in farming is a one-size-fits-all type of solution so contact Ag Performance today at (641)562-2370 so we can help find the right fit for you.
The World Meteorological Organization just released their assessment and have raised the chances of La Niña to 90%. At this time most indications are this weather pattern will develop into a moderately intense to possibly even record La Niña event.
Research has found a correlation between the intensity of the La Niña and the amount of snow and temperatures for the central Midwest during the winter. It’s pretty basic: A Weak Pattern tends to be cold and snowy over the entire upper Midwest but a strong event will reduce precipitation and increase temps.
The precipitation forecast through Tuesday is shown in the first map below – note the precipitation is expected to move across the Corn Belt starting on Sunday.
Until then get out and enjoy the unseasonably warm temps because those will be leaving as the precipitation arrives.
Looking ahead the 6-10 day forecasts-November 10th through the 14th
This is the latest U.S. Drought Monitor released today. Note the intensifying drought conditions across the entire western half of the country and keep in mind also the strengthening La Niña pattern that will be present through winter and possibly into the spring 2021.