Pre-October USDA Crop Report - Final 2018/19 Corn & Bean Stocks Have Change Market Dynamics

Market Analysis

Going into the final data update on this year’s old-crop corn and soybeans stocks, talk circulated about an over-estimate of last year’s bean crop because of high residual levels on previous quarterly updates. However, corn’s ending stocks was quite an eye-opener, too. Instead of a minor change, Monday’s final corn supplies were 314 million bu. below the trade’s expectations. Soybean’s 2018/19 final stocks were 69 million bu. below the trade’s average estimate and 92 million lower than September’s projection. These two stock levels have dynamically changed both crops beginning 2019/20 total supply lev-els from excessive to adequate at best.

In corn, this week’s big drop in ending and beginning corn stocks relates to about 4 bu yield reduction in corn’s 2019/20 yield level without changing October’s yield fore-cast on next week’s crop report. As previously noted, Monday’s stock level will primarily be factored into this grain’s feed & residual level since no change in 2018/19 crop size is available. 2019’s record late plantings and erratic weather could slip corn’s harvested acres by 215,000 acres when FSA’s data is normally incorporated this month. This week’s 11% US harvest pace may keep October’s yield change to 1.3 bu. drop (166.9) as farmers and enumerators have limited harvested data to judge.

In soybeans, this week’s smaller old-crop stocks and sharply lower 2019 plantings pulled new crop stocks to 548 million bu, a 45% drop from September’s old-crop level. US soybean harvested area could shrink by 126,000 when the USDA utilizes its FSA’s data this month. Similar to corn, a modest 1.1 bu. lower yield producing an 83 million smaller crop seems the likely output this month. With the USDA probably keeping its demand levels unchanged with the US/China talks resuming next week, 2019/20’s stocks could drop to 465 million, a 54% yearly decline vs. September’s old-crop stocks.

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What’s Ahead

The past month’s 150-600% of normal rainfall from the Great Lakes to the N. Plains while heat & drought (5 to10%) from Indianapolis to the US Gulf suggests corn & beans remain vulnerable to lower yields. Some late-maturing crops could be impacted by freezing temperatures through mid-month. Hold corn & bean sales at 45% & 50%. Look at $4.10-25 Dec & $9.40-50 Nov as next sale levels if Oct’s weather stays bad.