October USDA Report

Market reacted positively to USDA’s updated supply and demand report. USDA dropped corn from their September estimates. This caught the market by surprise as most analysts had expected yield to increase slightly on each report. The market can now turn full focus to poor harvest weather in the Midwest and how it will affect yield further. Keep in mind this is still a large crop, but in the face of declining world corn stocks a big fund short position this should limit downside as we already have the big crop priced in and it is not in the bin yet. Since there are not many beans being exported and the US has the cheapest corn in the world right now, we have additional capacity to export corn as well. 

USDA raised soybean yield from their last report but not quite as much as the market had anticipated. Soybeans tried to borrow some strength from corn to rally throughout the day. Soybean supplies are still at record levels if we are able to harvest our record crop. Market will stay closely tuned to the weather and trade now with USDA behind us. The US announced a meeting of Trump with the Chinese president in November. Any signs of progress on trade will still be bullish. However, world stocks are also seen building so we need to scale into sales above $9. 

USDA was friendly to wheat, but market struggled to hold gains. Announcements from Russian government earlier in the week seem to be overshadowing USDA right now. USDA reduced their Russian production estimates below where Russia announced them this week. With that, USDA trimmed world carryout below where the market had anticipated. Russia’s actions speak louder than their estimates but so far they have not curbed any export activities. If (or when) they do, the market will react very strongly. The weather has not improved for planting in Russia (too dry) or the US and Canada (too wet and cold)