Market Analysis
The USDA stunned the market when they (1) used recently revised Chinese corn crop and stocks numbers (out 11/7) in their world data and (2) dramatically slashed US bean exports by 160 million bu. just 3 weeks ahead of the first US/China trade talks in 6 months at the G-20 meetings on Nov 30. However, lower-than-expected US corn (-96 mil bu.) and bean (-76 mil bu.) crops vs. the trade average estimates helped rebound prices in the final 90 minutes when country selling didn’t materialize.
In corn, this month’s sharp WCB yield cuts (MN -7 bu, IA -6 and SD -6) and 2 bu lower IL and WI yields lead to a 1.8 bu lower US yield of 178.9 bu. vs. last month and a 152 million smaller overall crop. The USDA did slice feed demand (-50 mil) and exports (-25 mil bu.), but Nov’s US ending stocks still declined by 77 million to 1.736 billion bu. The confusing factor was USDA decision to meld the latest higher Chinese corn output and balance sheet data without revising October’s data series. This resulted in a new 307.5 mmt world stocks vs. last month’s 159.4 mmt level in the tables. However, If China is taken out of both world data series, corn’s world ending stocks actually tightened by about 1 mmt this month.
In soybeans, the US average yield dropped by 1.0 bu. to 52.1 bu. This year’s excessive moisture across the W Midwest (IA-3 bu,, NE -1,& SD -1) last spring and again this fall along with lower IL (-2 bu) & WI (-1) yields lead to Nov’s 90 million lower US bean crop. The USDA did up its 2018/19 crush by 10 million but dropped its seed by 7 mil. because of their sharp 6.6 million cut in 2019 Baseline plantings to 82.5 mil. acres. The big surprise was the sharp 160 mil bu. export cut in one month vs. a stair-step decline once more knowledge is known later this month. In wheat, the USDA also upped seed demand by 7 mil to match their Baseline 51.5 million seedings. This cut 2018/19’s stocks by 7 million to 949 million bu.
