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USDA Worksheet, Average Freeze Dates and Weather Outlook

Update for October 2nd, 2019

USDA released the Quarterly Grain Stocks Report on Monday. Corn stocks were lowered by 331 million bushels to 2.114 billion bushels. This surprised the trade which had expected to see a much smaller reduction, closer to 20 million bushels. According to USDA data, 753 billion bushels of the stock are stored at on-farm locations, an increase of 22% from a year ago. The remaining 1.36 billion bushels are being stored at off-farm locations, an increase of 10% from last year. Considering the strong basis coupled with lack of movement there are many that question the accuracy of the large USDA’s on-farm bushels. We have seen a spike in the corn prices since the report but keep in mind that the DEC19 contract will begin running into much heavier technical resistance on the charts between $3.90 and $4.05 per bushel. If prices continue to rise and we can close above that level the next major resistance falls between $4.20 and $4.40, but reaching this will likely require a lower U.S. yield.

Old crop soybean supplies were reduced by 92 million bushels to 913 million bushels. Keep in mind that while this reduction in ending stocks was significant, 913 million bushels of ending stock still sets a record by a wide margin. The USDA’s on-farm stored bushels totaled 265 million, a 162% increase from last year. Off-farm bushels totaled 648 million, up 92% from a year ago. Soybean production from 2018 received a substantial reduction, down 116 million bushels to 4.428 billion bushels. The trade had expected a cut closer to 16 million bushels. Planted and harvested acres were lowered and the yield fell by 1 bushel to 50.6 bushels per acre. The NOV19 soybean contract has remained in a rather narrow trading range from $8.80 to $9.05 for the past few weeks with support at the $8.40 to $8.50 level. Longer-term technical resistance on the chart is found between $9.25 and $9.50. Prices fell below the downward support for a short time in mid-May while the long-term resistance to the upside has been broken through intermittently between December, 2018 and March, 2019 other than those few occasions trade has remained somewhere in the $8.50 and $9.50 range for the NOV19 contract.

The charts below show the market reaction following the release of the September Grain Stocks report for the past 17 years. Notice that only 3-4 of those years saw significant price movement and in most years price movement was lower.

A new report out is indicating that around 60,000 MT’s of corn out of Brazil has been shipped to the U.S. Why? Some speculate that this is a result of the lack of farmer selling and the belief many have that the 2019 U.S. crop will be much smaller than previous seasons. For inventory needs in the southeastern portion of the country Brazilian imports may also be a less expensive option. Regardless it is frustrating for this to occur when we are currently swimming in over 2 billion bushels of the product.

Corn export inspections improved this week but totals are disappointing, we are already running two-thirds behind this same period a year ago. Our largest corn buyer continues to be Mexico which currently accounts for 58% of our corn inspections. This week’s corn condition report left the GD/EX rating unchanged at 57% and increased the Poor to Very Poor rating by 1% to 14%. Corn rated as fully mature now has reached 43% vs the 5 year average of 73%. Harvest progress advanced by 4% last week to 11% complete, 8% below the 5 year average.

Weekly soybean crop condition GD/EX ratings received a 1% increase to 55%. Soybeans dropping leaves increased this week to 55% but is 22% behind the 5 year average. Soybean harvest began this week and sits at 7% complete, the 5 year average is 20% by this date.


Source USDA/NASS U.S. USUAL Planting and Harvesting Dates Report Sept, 2019


Source USDA/NASS U.S. USUAL Planting and Harvesting Dates Report Sept, 2019

The average freeze dates for a large portion of the U.S. is quickly approaching and as of September 29th less than ½ of the U.S. corn and soybean crops have reached maturity according to the latest numbers from the USDA.

Proposals regarding the biofuels boost package are on the desk of White House Economic Advisor Larry Kudlow. Once he signs off, the proposals will then likely return to President Trump for his final approval. Once this process is completed a decision regarding where and when it will be revealed will be determined.

The Golden Week celebration of the Chinese National Holiday began this week. No big ag news related to China is expected to develop this week due to the celebration. Round 14 of the U.S./China trade talks are set to begin next week in Washington D.C. with China’s top trade negotiator Vice Premier, Liu He leading the Chinese delegation.

Work continues on the USMCA agreement. Members of the House and the Trump administration are working together in hopes of reaching a deal yet this year. Currently there are 4 main areas where House Democrats are seeking stronger language: Labor, Enforcement, Environment and Access to Medicines. Despite several weeks of work a large portion of House members are still unsatisfied with the current version and Pelosi has indicated she will not call the deal up for vote without a large majority on board. This may be difficult to attain as additional Democrats and those from trade-dependent districts have begun to voice support for the current agreement. The Senate wants the long delay in the House to end. Senate Majority Leader Mitch McConnell told Democrats that “the time for excuses is over”. He has accused the House of “heel dragging” and siting the ongoing delay is directly related to the House’s impeachment inquiry and investigations. He stated, “Canada, Mexico and millions of Americans are waiting for Speaker Pelosi to remember that serving the public interest requires more than just picking fights with the president. It actually entails addressing the people’s business.”

Rainfall amounts of 1 to 3 inches and below normal temps are expected across the central Corn Belt this week.

Next week temps are expected to become more moderate next week with a continued chance of above normal rainfall across the eastern 2/3rds of the country.

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