Brooks Schaffer Market Report for Friday November 10

This is the Market Report with Brooks Schaffer of Palmetto Grain. Reach him at [email protected] or 843-540-4540.

Yesterday November 9th USDA gave us updated supply and demand estimates. The November report is a big one because the market is still watching for adjustments to both the supply side from US yields and the demand side. The report overall was on the bearish side compared to expectations. The market had expected a very minor uptick in corn yield and unchanged or possibly slightly lower yield on the bean side. USDA raised both corn and bean yields. 

Corn yield came out at 174.9 bushels per acre compared to 173 last month. This increased production by 170 million bushels. One thing that helped keep corn from more selling pressure was that carryout was not raised by that much. USDA increased ethanol demand by 25 million bushels and feed demand by 50 million bushels. A surprise came when they also raised exports by 50 million bushels even though we are falling behind the previous lower estimate. So with demand up 125 million bushels, carryout was only up 45 million bushels to 2.156 billion bushels from 2.111 billion on the last report. 

For soybeans, USDA raised yield by 0.3 of a bushel from the last report to 49.9 bushels per acre. This increased production by 25 million bushels. They did not make any adjustments on the demand side of the balance sheet so they added all of that to the carryout which is now estimated at 245 million bushels. That is still tight, but adding a little more buffer from the sub 200’s the market had feared earlier. 

For wheat USDA raised carryout to 684 million bushels from the last estimate of 670 million bushels. The biggest increase came from soft red winter wheat which is what trades in Chicago. Wheat gave back some of its gains for the week. 

USDA left South American production unchanged which is not a surprise considering how conservative they have been the last few years in making adjustments to that production. World numbers came out very close to expectations. 

These were very minor adjustments overall but the market was expecting minor adjustments. This did not give us anything to inspire the bull camp. The next supply and demand report will be on December 9th, but they will not make additional adjustments to US crop size until we get “final” crop estimates in early Jan. Until then, we will go back to trading demand and South American weather. 

The bean market had started to put in a pretty decent weather premium. Brazil has now fallen behind the five year average and the debate is how much will have to be replanted. Too much rain in the southern growing regions and not enough in the northern continue to plague producers. They have a long enough growing season that the first crop of soybeans may not be severely affected yet, but will push the crop later and limit how much of a second crop can be planted. This ongoing situation will be what the market is watching very closely going forward. When and if it gets bad enough to make the Chinese nervous enough to start buying from the US will be the bellwether.