This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
Corn, wheat and soybeans all closed lower Monday on positioning ahead of USDA’s November Supply and Demand report, due out today, Tuesday, Nov. 10, at noon. StoneX released its updated yield estimates last week, and they were much higher than many were expecting. StoneX estimated corn yield at 183.1 bushels per acre, which is almost 2 bushels higher than USDA’s last estimate of 181.2. StoneX’s soybean yield estimate of 53.1 was also almost 2 bushels higher than USDA’s last estimate. The market was surprised by the yield increase in the last USDA report but has now priced in a much bigger crop.
For today’s USDA report, the average market estimate is 180.4 bushels per acre, which is a decrease from the last estimate. StoneX’s estimate of 183.1 is the outlier and the highest in the range. For soybeans, the average estimate of USDA’s yield is 53.5 bushels per acre, which is an increase of almost half a bushel from its last estimate. Once again, StoneX’s estimate is the highest in the range of estimates. It is clear the market has a bigger crop priced in for both corn and beans. I am doubtful that it has crops as big as StoneX’s estimates priced in, though. Most people agree the bean crop is bigger, as yields across the country have been coming in at or above expectations. There is more skepticism about the corn yield, though. There are some really good areas, but also some bad ones coming in well below last year’s monster yield. However, with USDA, you never know what you are going to get. To soothe everyone’s fears, USDA announced Monday it would be using AI to check its mathematics so there would not be an error like the one it claimed to have made on the September report. Never mind that everyone else thought it was the number on the October report that was wrong. The agency was clear to say that AI would not be modeling the yield, just checking the calculations. So there is that.
Funds have sold a tremendous number of contracts. They went from a record long position in corn to almost even at the last report. They still have a decent long position in beans. With the huge demand we have and so much growing season ahead in South America, I do not see them wanting to press the short side right now, but a big number from USDA this afternoon could bring some selling. The big export sales announced last week on corn show that countries see value at the levels we are currently at. There should be more if we go lower.
The most recent crop progress report showed the bulk of harvest is now behind us. There are still some states lagging in the western belt, and with the recent rain, that will continue for a few more weeks. Basis is starting to strengthen across the whole country already. There is no current weather threat in Brazil, but there is still a long growing season ahead, and world demand shows no sign of slowing.
The USDA report will likely set the tone for a while, but barring a big shock from USDA, the market is trying to make a low and find support. Then we will start trading South American weather and demand after we get this report behind us.