Update for November 7th, 2019
Social unrest within the country of Chili forced the cancelation of the APEC summit that was set to begin there next week. This caused much concern initially as to when or if President Trump and Chinese President Xi Jinping would actually meet to sign Phase 1 of the trade agreement. Progress on the final draft continues as U.S. and Chinese trade representatives have been working around the clock on a document both leaders will approve. The latest development announced today by Reuter’s says that both countries have now agreed to simultaneously cancel tariffs in phases as a part of the Phase 1 agreement, this is a huge step forward. President Trump has stated that he would like to schedule the signing ceremony in Iowa to “show his dedication to the agricultural industry and the impact the agreement would have to farmers. In addition several international locations are also being considered for the early December meeting, the latest rumored site is London.
The USDA will give us their official November WASDE data tomorrow but in the meantime both INTL FCStone and IEG Vantage have released their latest crop estimates. Increases in the 2019 corn yield are expected by both INTL FCStone and IEG Vantage according to their estimates released last Friday. Historically both firms tend to overestimate their November crop assessments but in the meantime it has added pressure to prices. INTL FCStone increased their previous corn yield estimate from 169.3 bushels per acre up to 170.00 while IEG bumped their estimate of 167.5 bushels per acre up to 168.6. Soybean yield estimates were mixed with IEG looking for an increase in yield from 46.5 bushels per acre in September to 47.0 bushels per acre in November while INTL FCStone estimates an average yield of 47.5 bushels per acre vs their September projection of 48.1. Trade estimates for Friday’s report are shown in the graph below. Overall the trade looks for the USDA to make small reductions in acres, yield, production and carryout for both corn and soybeans.
The USDA has released their initial projections for the 2020 planting season. Currently the agency looks for producers to plant 94.5 million corn acres totaling 15.545 billion bushels of production and ending stocks of 2.754 million bushels. 84.0 million soybean acres are forecast for the next growing season with total production of 4.2 billion bushels and a carryout of 518 million bushels.
Weekly crop ratings show the U.S. corn crop is 96% mature, 4% behind the 5 year average. 11% of the crop was harvested last week bringing the total to only 52% with many of our largest corn producing states running well behind their normal pace.
North Dakota has only harvested10% of the corn crop vs 60%
Wisconsin sits at 21% complete vs 51%
South Dakota 27% harvested vs 66%
Iowa has 43% of the corn crop harvested vs 72%
Minnesota 43% vs 72%
Ohio 49% vs 69%
Indiana has 57% of the crop harvested vs 77%
Illinois 58% vs 88%
Minnesota 43% vs 72%
Soybean harvest across the U.S. a week ago now sits at 75%, up 13% from the prior week. There are several states with 40% of the soybeans still unharvested and weather is going to be a larger obstacle for the remainder of the unharvested crop as we work further into the month of November. Current estimates indicate that here is +300 million bushels yet to harvest between the states of Iowa, Illinois and Missouri. In the states of Michigan, Minnesota, Wisconsin and the Dakota’s an additional 300 million bushels of soybeans also remain in the field.
As we look at the outlook for the upcoming week there is no relief in sight. Extremely cold temperatures for November will continue and will test the record lows especially where there is snow on the ground. Notice the ridiculous wind chill temperatures for Monday morning in the first map, the second map indicates actual air temperatures expected for Tuesday morning, some are predicted to fall below zero! These unusually cold temps for the first week in November appear to be the 4th coldest on record. If the forecasted temps are correct over the next 10 days we may set the all-time coldest record for the first half of November…Not a record we wanted to break!
65% of the time a cold November is followed by a mild December and typically occur during an El Niño weather pattern. This year we are in a neutral or Enso pattern which unfortunately gives us a higher probability of some of the cold lasting into December.