Update for February 7th, 2019
Corn has been moving around in a very narrow trading range for quite some time partly due to the fact that there have been no exciting headlines to help kick-start the corn market. In fact for the past 3 weeks the MAR19 contract has basically traded in a $0.07 range between $3.75 and $3.82 per bushels. The DEC19 new crop range has been even tighter only moving between $3.99 and $4.04 per bushel. Soybeans have also been range bound for the past 8 months and currently sit near the top of that span. While the progress with Chinese trade negotiations will continue to remain unfinished into tomorrow’s reports, everyone will finally get the USDA year-end report that will help answer many of the questions that have contributed to the limited scope of price movement in the grain market.
· How much of a reduction will be made to the 2018 average corn yield?
· How many acres went unharvested?
· Will there be any adjustment made in the U.S. export numbers?
· How low will the corn used for ethanol number be?
· Will corn used for feed see a reduction?
· Where will the new estimates for South American crop yields come in?
The report will not be able to answer one of the biggest questions on producers minds right now, will China come through soon and purchase U.S. corn, ethanol and DDG’s?
· How much lower will the 2018 average soybean yield be?
· What will be the final harvested acres number?
· How will Chinese demand be interpreted?
· What kind of the yield adjustment will be made to the South American soybean crop?
2018 U.S. Production
Jan. # Avg. Guess Range Nov
Corn Yield: ??? 178.0 176.7 - 179.9 178.9
Corn Production: ??? 14.538 14.343 - 14.800 14.626
Corn Harvested Acres: ??? 81.668 80.850 - 82.100 81.767
Soybean Yield: ??? 51.8 51.5 - 52.4 52.1
Soybean Production: ??? 4.572 4.505 - 4.620 4.600
Soybean Harvested Acres: ??? 88.189 87.364 - 88.509 88.343
Dec. 1 U.S. Grain Stocks
Trade USDA USDA
Jan. # Avg. Guess Range Sep. 1, 2018 Dec. 1, 2017
Corn ??? 12.097 11.975 -12.400 2.140 12.567
Soybeans ??? 3.752 3.414 - 3.872 0.438 3.161
Wheat ??? 1.960 1.900 - 1.985 2.379 1.873
U.S. Winter Wheat Seedings
Jan. # Avg. Guess Range 2018
Total Winter: ??? 32.279 31.513 - 33.300 32.535
Hard Red Winter: ??? 22.727 22.125 - 23.620 22.923
Soft Red Winter: ??? 6.019 5.643 - 6.210 6.076
White Winter: ??? 3.486 3.211 - 3.700 3.536
U.S. Ending Stocks
Jan. # Avg. Guess Range Dec
Corn: ??? 1.694 1.579 - 1.787 1.781
Soybeans: ??? 0.904 0.798 - 0.980 0.955
Wheat: ??? 0.987 0.950 -1.028 0.974
World Ending Stocks
Jan. # Avg. Guess Range Dec
Corn: ??? 307.32 305.50 - 310.00 308.80
Soybeans: ??? 114.36 111.80 - 117.00 115.33
Wheat: ??? 268.22 264.00 - 269.70 268.10
South American Production
Jan. # Avg. Guess Range Dec
Brazil Corn: ??? 94.31 93.50 - 95.50 94.50
Brazil Soybeans: ??? 120.13 116.00 - 122.50 122.00
Argentina Corn: ??? 42.39 41.50 - 43.50 42.50
As we move closer to spring planting season the acreage debate intensifies. Following harvest 2018 it was the assumed that U.S. producers would shift 4 to 5 million acres away from soybeans to other crops. The latest private estimates are indicating a smaller 1 to 2 million acre shift instead. The Chief Commodities Economist with INTL FCStone has been analyzing the numbers and believes that it will take a shift of 10 million acres to rebalance the market. He referred to a similar situation that occurred between the 2006 and 2007 growing season when, “the market needed to force a shift in acreage from soybeans to corn.” He explained that the market was able to achieve this shift, “by pushing the new crop soybean to corn price ratio below 2:1 by depressing soybean prices. That dropped soybean acreage more than 10 million for the 2007 growing season.”
Both President Trump and U.S. Trade Representative Robert Lighthizer report that “substantial progress” was made during the trade talks in Washington last week. It’s now been announced that U.S. Treasury Secretary Steven Mnuchin and a large team of U.S. trade officials, including Lighthizer, will be traveling to China next week to hash out more details for a compromise. Speculations are that President Trump plans to meet with Chinese leader Xi Jinping either before or after his newly scheduled meeting in Vietnam at the end of February with North Korean leader Kim Jong Un. Hopefully the two leaders will finally be able to finalize trade details and reach an official compromise. One interesting and positive note, in transcripts from the White House meetings Chinese Vice Premier Liu was quoted as saying, “Chinese people like U.S. farmers very much” hopefully that relationship can help rebuild our trading partnership.
This past weekend two Chinese grain companies issued statements confirming the purchase of 5 MMT’s of U.S. soybeans for spring 2019 shipment. It’s unclear whether this purchase is in addition to the bushels purchased in December or if they are a part of those bushels. Little if any trade news with China was expected this week as the weeklong Chinese New Year celebration began last Saturday.
A big change has been made to the month-long February outlook from NOAA’S National Weather Service Climate Prediction Center. This map shows the newest temperature outlook for the remainder of the month.
Punxsutawney Phil was unable to see his shadow last weekend, which according to legend means we will see an early arrival to spring. This is only the 19th time out of 123 recorded years that the groundhog was unable to find his shadow! (Unfortunately Phil is not known for being very accurate) WeatherTrends 360’s outlook indicates that the groundhog may be correct this year. They are forecasting 4-5 more weeks of very cold and snowy conditions along with another visit from the Polar Vortex but then improvement is expected during March and April looks appropriately spring-like.
Looking at next week, February 11th-17th the cold temps in the West begin to move into the Great Lakes and Northeast, pushing warmer temps into the Southeast.