Latest / Professional Ag Marketing Podcast / USDA stocks surprise: Corn bearish, soybeans firmer

Transcript

USDA stocks surprise: Corn bearish, soybeans firmer · Professional Ag Marketing Podcast

• 0:03
  SPEAKER_00: You're locked in to the Grain Market Talk Podcast.
• 0:06
  SPEAKER_00: Fast updates, market movers, and the grain news you need right now.
• 0:12
  SPEAKER_00: Trading commodity futures and options involve substantial risk of loss and is not suitable for all investors.
• 0:21
  SPEAKER_02: We are locked in on the grain podcast after a wacky week.
• 0:25
  SPEAKER_02: I've got Jaden here with us.
• 0:26
  SPEAKER_02: How's it going, Jaden?
• 0:27
  SPEAKER_02: It's going good, Mike.
• 0:28
  SPEAKER_02: How about yourself?
• 0:29
  SPEAKER_02: Not too bad.
• 0:30
  SPEAKER_02: We're going to talk about a corn market and soybean market that absolutely got demolished Wednesday on the rest of the week.
• 0:36
  SPEAKER_02: So tell me what in the world happened.
• 0:39
  SPEAKER_01: So, Mike, we had a quarterly grain stocks report there.
• 0:42
  SPEAKER_01: Um, so that is the USTA coming out and saying what stocks they think are sitting around in the countryside as of September 1st.
• 0:50
  SPEAKER_01: And the average trade estimate for corn was about 1.9 billion bushels sitting around.
• 0:56
  SPEAKER_01: And actually the the result was about 200 million higher than that.
• 1:00
  SPEAKER_01: So a pretty bearish surprise there for the corn market.
• 1:03
  SPEAKER_01: So you saw corn are down about 20 cents.
• 1:05
  SPEAKER_01: And actually, on the soybean side of things, a little bit of the opposite.
• 1:08
  SPEAKER_01: There was fewer stocks sitting around uh than anticipated, which on a really tight balance sheet already is is actually pretty friendly.
• 1:15
  SPEAKER_02: Which honestly is kind of surprising since Wednesday there.
• 1:18
  SPEAKER_02: 1311 was our high on Wednesday on no soybeans.
• 1:22
  SPEAKER_02: Today we closed at 1278, had a low of 1273.
• 1:26
  SPEAKER_02: Kind of took a lot off of soybeans the last couple days quietly after they had somewhat of a friendly report.
• 1:32
  SPEAKER_02: Now I must say, uh corn being down uh well most of the week.
• 1:37
  SPEAKER_02: Definitely pulled on the soybean market there as soybeans are already pretty expensive relative to corn there.
• 1:43
  SPEAKER_02: 2.57 today.
• 1:45
  SPEAKER_02: Uh no of 26 soybeans are to uh dece corn.
• 1:49
  SPEAKER_02: So yeah, a little bit of a favor on the the soybeans price right now relative to corn.
• 1:55
  SPEAKER_02: Tell me about what that number translates to on our balance sheet going forward.
• 1:59
  SPEAKER_01: Yeah, if you look at our balance sheet, how it kind of translates to the 2627 marketing year.
• 2:05
  SPEAKER_01: So in the middle column there, you got the latest USDA balance sheet 1.567 uh carry out there 9.7 stocks to use.
• 2:13
  SPEAKER_01: And on the left is if you increase the beginning stocks from the previous marketing year.
• 2:17
  SPEAKER_01: So as you can see there, that kind of really, you know, gives a lot of cushion to this balance sheet, puts us at a 10.8 stocks to use now.
• 2:25
  SPEAKER_01: So if you look way in the right column, even if you drop yield two bushels, I mean we're we're basically at where we were in September.
• 2:32
  SPEAKER_01: So yeah, I guess the story to tell about this increase is it gives the USDA balance sheet a two bushel uh cushion for the USDA to drop yield.
• 2:41
  SPEAKER_02: Historically speaking, this would put March futures right at five bucks with this type of ending stocks to use ratio floating above ten percent stocks to use, if that's where we do come out at the end of already this next week.
• 2:54
  SPEAKER_02: We're only a week away from the next WASD airport, so we'll get to dive in that uh next Friday and what reaction to the October WASD this market will have.
• 3:03
  SPEAKER_02: But this balance sheet really shows what potential outcomes could be going forward and what impact that could have on price as well.
• 3:11
  SPEAKER_02: Today it looks like we're priced uh just fine at this level, maybe even a tad too much uh if uh we get a yield that doesn't drop at all going into this October Wazday.
• 3:22
  SPEAKER_02: And you and I were talking about uh, you know, and soybeans a little bit lower-ending stocks there, not really much of a a change in that situation at all.
• 3:30
  SPEAKER_02: But you and I were talking, well, you asked Mike what did the October Waz Day do last year, Jaden, and tell him what we found out.
• 3:37
  SPEAKER_01: Well, what you found out, Mike, is we actually didn't have an October Wazday last year because the government was close.
• 3:43
  SPEAKER_01: But the difference between the September and the November WASD when we actually had a report was they did shrink uh corn yield and soybean yield.
• 3:50
  SPEAKER_02: Just a little bit, 0.7 or something on the corn, so not a huge decrease, but they they did drop it just a little.
• 3:57
  SPEAKER_02: In between that time frame, remember the funds made a huge change on the soybean market at that time as well.
• 4:04
  SPEAKER_02: That would have been worth knowing when we didn't have any CFTC notices as well.
• 4:09
  SPEAKER_02: At this point, we're record long uh corn and soybean funds uh as of last Tuesday, at least, here before the commitment of traders report comes out this afternoon, likely gonna show a little bit of a decrease, but honestly, Wednesday on this week isn't gonna show up in this afternoon's report at all.
• 4:26
  SPEAKER_02: So uh the significance of uh the sell-off we've had over 50,000 contracts of corn probably uh won't show up until even a week from today's report, Jaden.
• 4:36
  SPEAKER_02: Uh, what else can you tell me just about what we've had go on this week in the corn market?
• 4:40
  SPEAKER_01: Well, looking at the December corn chart, I think that's important to look at.
• 4:43
  SPEAKER_01: So we've kind of built this uptrend uh basically since our low there in June, and we kind of violated it today, you know, tested it the day before, uh the the afternoon of the report, and today we kind of had a close below it.
• 4:56
  SPEAKER_01: So I want to see how on Monday or before the WAS day there, Friday, how we're gonna act around these price areas.
• 5:02
  SPEAKER_01: And I would think the next you know support line would be around that 492 area where we kind of broke out to the upside when we had our our big rally there in August.
• 5:12
  SPEAKER_02: Yeah, that July, uh late July 492 area there, that's gonna be a pretty good support point.
• 5:17
  SPEAKER_02: We're gonna have to try to break through.
• 5:19
  SPEAKER_02: There's a lot of a lot of volume that is built up on a shelf there, volume-wise, kind of between 480, 490, and 5 bucks here.
• 5:27
  SPEAKER_02: It's had a really hard time dropping too much below five bucks here since the report.
• 5:31
  SPEAKER_02: It'll be interesting to see if that data holds.
• 5:33
  SPEAKER_02: But honestly, the October Waz Day coming next Friday is gonna play a huge part on any direction going forward.
• 5:41
  SPEAKER_02: So try not to out guess this one coming up, that's for sure.
• 5:45
  SPEAKER_02: On the weather uh uh front, it's been a very, very wet start to the fall here.
• 5:50
  SPEAKER_02: Uh after not getting much rain in the northwestern corn belt, we've just got pounded with rain, another five or six inches even in Omaha in a couple hours here this week.
• 6:00
  SPEAKER_02: Uh, really putting a damper literally on this uh corn and soybean harvest.
• 6:04
  SPEAKER_02: Folks are just getting started locally here again today, I would argue, on some soybeans.
• 6:09
  SPEAKER_02: They've tried in the meantime.
• 6:11
  SPEAKER_02: Some folks have switched over to corn, uh, but they're not really trying to if they don't have to.
• 6:16
  SPEAKER_02: Somewhere between 25 to 30 percent moisture on corn.
• 6:20
  SPEAKER_02: Seems like we're getting under 14% on the soybeans if you can get in there now.
• 6:24
  SPEAKER_02: Honestly, not that bad of conditions if you head a little bit north here.
• 6:28
  SPEAKER_02: Going up in North Dakota as well on some soybeans, they've got started.
• 6:32
  SPEAKER_02: So at this point, it would appear next week with our very, very open forecast for the Northwest.
• 6:38
  SPEAKER_02: It seemed like it the forecast got really dry up in the north here going forward the next week.
• 6:44
  SPEAKER_02: There should be a ton of harvest progress this next week for the first time in a few weeks, Jaden.
• 6:48
  SPEAKER_01: Right, Mike.
• 6:49
  SPEAKER_01: And if you look over the next week, you know, Iowa really got hit hard the last two weeks, and it looks like the window's wide open.
• 6:56
  SPEAKER_01: They're looking at that map.
• 6:57
  SPEAKER_01: So hopefully we can get some progress done, and now the soybean crushers can, you know, calm down a little bit on their bids.
• 7:04
  SPEAKER_02: Yes, and the Stone X survey came out today as well.
• 7:08
  SPEAKER_02: Uh, we participated in that even uh here for uh for professional egg marketing.
• 7:13
  SPEAKER_02: 182.9 was September's corn yield for the uh Stonex survey.
• 7:18
  SPEAKER_02: 182.1 was the uh results here for the October, down just slightly on corn, but soybeans 54.1 in today's re in uh today's survey.
• 7:31
  SPEAKER_02: That was up from 53.
• 7:32
  SPEAKER_02: So the soybean yields coming in a little pretty hot there versus uh expectations and record.
• 7:37
  SPEAKER_02: Uh that would sure be something.
• 7:39
  SPEAKER_02: So keep an eye on uh those yields, and uh it'll be convenient to have some of those just take a peek on things and how they're trending ahead of the October report here this next week.
• 7:51
  SPEAKER_01: Yeah, Mike, and I would say anyone out there that's starting harvest, let us know how it's going.
• 7:56
  SPEAKER_01: And uh, we'd love to come out in the field and ride in the combine for a f for a few passes with you guys.
• 8:01
  SPEAKER_02: All right.
• 8:01
  SPEAKER_02: Well, thank you, everyone.
• 8:02
  SPEAKER_02: Please hit the subscribe button, please click the link below to access things like our daily market commentary, other cool market research data as well.
• 8:11
  SPEAKER_02: Thank you, Jaden.
• 8:12
  SPEAKER_02: We'll see you next week after the WASD.