CBOT Closing Comments
Corn
December corn futures settled at $3.62 ¼, down 1 ¾ cents. The USDA forecast the US 2009 corn crop at the second highest in history at 13.018 billion bushels with an average yield of 164.2 bu/acre. That was higher than the average trade guess of 12.99 billion and 162.7 bu/acre. Corn 2009/10 ending stocks were in line with expectations at 1.672 billion bushels. Chinese production was lowered 5 MMT to 155 MMT, dropping global ending stocks almost 3 MMT to 136.3 MMT. Snow and freeing temperatures are in the forecast for the weekend, which will further hinder harvesting efforts.
Soybeans
November soybean futures finished at $9.64, up 28 cents, October soymeal futures finished at $310.30, up $7.60, October soy oil finished at 34.91 cents, up 63 points. It seems strange that the highest crop production estimate in history was bullish, but that's the way the trade seems to be reading it. The soybean numbers from the USDA were a little below pre-report estimates at 3.25 billion bushels, with a yield of 42.4 bu/acre. The average trade guess was 3.291 and 42.9 bu/acre. Ending stocks were reported at 230 million bushels, also lower than the average trade estimate. A higher US dollar index pressured futures, but higher crude oil and freeing weekend weather forecasts lent support.
Wheat
December wheat futures closed at $4.68, down 6 cents. Wheat ending stocks at 864 million bushels were well above the average trade estimate of 802 million. Global production was raised almost 5 MMT to 668.15 MMT, although an increase in consumption only saw world ending stocks increased slightly to 186.73 MMT, from 186.61 MMT last month. Production increases came from Canada (2 MMT), Russia and the US (1 MMT each), and the EU-27, Kazakhstan and Australia all raised by around half a million each.
EU Wheat Ends Unchanged To Lower After USDA Numbers
EU wheat futures closed flat to slightly lower Friday in the aftermath to the USDA's October Supply & Demand and stocks reports.
Paris November milling wheat futures closed down EUR1.25 at EUR126.00/tonne, and London November feed wheat was unchanged at GBP101.00/tonne.
The USDA report was bearish for wheat and corn, pegging US 2009/10 wheat ending stocks significantly higher than expected at 864 million bushels against trade estimates of 802 million.
Australian wheat output was raised half a million to 23.5 MMT, EU-27 production was seen up over half a million to 139.08 MMT, Canadian output up 2 MMT to 24.5 MMT, Kazakhstan was upped by half a million to 15 MMT and Russian production increased by a million to 57.5 MMT.
None of those increases however were particularly shocking, as this really just brought the USDA's figures into line with other existing trade estimates. Indeed, the most surprising thing is the Russian estimate is still almost certainly too low, and well below that from SovEcon of 60-61 MMT. History would seem to indicate that SovEcon have a much better track record at what is going on in their own backyard than the USDA.
Despite those increases however, global 2009/10 ending stocks were only increased slightly to 186.73 MMT, from 186.61 MMT last month, with global consumption increasing by 2 MMT to 648.15 MMT.
On the domestic market, futures prices have now clawed their way back above the GBP100/tonne mark, with the November close today exactly GBP10/tonne, or almost 11%, above the recent September 9th low.
Back then however the pound was worth USD1.6550 and EUR1.14, so at least some of this gain can be attributed to currency movements. With sterling having subsequently fallen around 4% against the dollar and 6% against the euro since then.
In the same time frame Paris November wheat has risen by a more modest 6%.
Meanwhile, the USDA forecast the US 2009 corn crop at 13.018 billion bushels with an average yield of 164.2 bu/acre. That was higher than the average trade guess of 12.99 billion and 162.7 bu/acre.
US Weekend Weather: 28F Or Lower
With the USDA report quickly being assigned to the History folder, what the weekend weather has in store might become the dominant issue soon after the opening of CBOT this afternoon.
Half of the corn and soybean crop will experience a hard freeze over the next few days as temperatures drop to 28F or lower from the Dakotas to Missouri, says Allen Motew of QT Weather. Readings will be an unseasonable -35 degrees F below normal over the High Plains and -16 to -24 F below in the Western Corn Belt luckily never reaching these critically cold levels in the Eastern Corn Belt, he says.
Sunday looks like being a pivotal day with sows of up to four inches possible over large parts of South Dakota, edging into northern Kansas. Meanwhile flood concerns are expanding eastward with Flood Watch in effect for SE Illinois and S Indiana, with 6-inch rain totals possible in parts of the Central Corn Belt, he adds.
CBOT Early Calls, USDA Report Reaction
The corn production and yield numbers from the USDA came in above the average guesses. They didn't issue anything outrageous for corn and the figures were within the range of analysts estimates, but maybe not as typically cautious as the USDA normally are.
Harvested acres were reduced for corn, which tempered the increased yield estimate of 164.2 bu/acre.
Harvested area was also cut for soybeans, and yields weren't increased by very much at all, just 0.1 bu/acre to 42.4. Production therefore came in lower than expected at 3.25 billion bushels, although that is still a record.
Chinese output of beans was cut by half a million tonnes to 14.5 MMT and imports raised by a million to 39.5 MMT. Argy production was upped 1.5 MMT to 52.5 MMT.
On the wheat front global production increases were seen for the EU-27, Australia, Russia and Canada. Whilst global ending stocks rose by less than expected, US carryout was much higher than anticipated at 864 million bushels.
I'd say that the numbers are bearish wheat and corn, and slightly friendly for beans.
As often happens with these reports, they are quickly forgotten after the first half hour of trade when the trade gets back to looking at the latest weather forecasts and what the dollar is up to.
Early call: wheat down 5-10 cents, corn down 6-8 cents, beans mixed.
USDA Global Production Highlights
In it's WASDE report there were several significant changes:
Wheat
Australian output was raised half a million to 23.5 MMT, EU-27 production was seen up over half a million to 139.08 MMT, Canadian output up 2 MMT to 24.5 MMT and Russian production up by a million to a still rather low looking 57.5 MMT.
They resisted the temptation to drop Argy production, leaving it unchanged at 8 MMT and Ukraine output was also left unchanged at 20 MMT.
Soybeans
Brazilian production was left steady at 62 MMT and Argy output raise from 51 MMT to 52.5 MMT.
Corn
Chinese production was lowered 5 MMT to 155 MMT.
Global Ending Stocks
Wheat was raised only slightly to 186.73 MMT, from 186.61 MMT last month. Corn was dropped almost 3 MMT to 136.3 MMT and beans were increased more than 4 MMT to 54.79 MMT.
USDA US Crop Production Numbers
The USDA are today forecasting the US 2009 corn crop at 13.018 billion bushels with an average yield of 164.2 bu/acre. That is higher than the average trade guess of 12.99 billion and 162.7 bu/acre.
The soybean numbers are a little below pre-report estimates at 3.25 billion bushels, with a yield of 42.4 bu/acre. The average trade guess was 3.291 and 42.9 bu/acre.
On the 2009/10 ending stocks front, the USDA pegged corn at 1.672 billion bushels (average estimate 1.668 billion), soybeans at 230 million (249 million) and wheat at 864 million (802 million).
Sainsbury's And Asda Under Fire From Beef Industry
The National Beef Association are rightly far from happy that a recent survey by the Agricultural and Horticultural Development Board (AHDB) revealed that only 68% of the fresh beef on Sainsbury's shelves in August was British, whilst in Asda it was even lower at just 45%.
The NBA also pointed out that the percentage of British beef on sale at Sainsbury's and Asda was lower than it had been twelve months previously.
They went on however to praise Budgens, the Co-op, Lidl, M&S, Morrisons and Waitrose for stocking only 100% British beef. These supermarkets would struggle however to raise prices faced with stiff discount competition from two of the so-called 'big four' - thereby keeping prices low for all producers, they said.
And if you want to be sure of buying foreign beef, get yourself down to Netto, in August just 5% of the beef on sale there was British.
I'm A Welsh Farmer With Nothing Better To Do So Put Me On The Telly Isn't It
Proof, if it were needed, that TV producers are running out of ideas comes with the news that S4C are to launch a show called Fferm Ffactor.
Ten Welsh farmers with nothing better to do will compete head-to-head for the dubious honour of being crowned the best farmer in the country. Some would say that won't be difficult, but not me.
The show will sort the men (and ladies) from the boyos by setting them a series of tough challenges such as driving a tractor and building a gate for Christ's sake. What's in the final, putting on your wellies the fastest?
Just to make things interesting the show will be dragged out over ten weeks.
Fferm Ffactor begins on Tuesday, 20 October at 8.25pm on S4C. Riveting stuff, I must get the video set for that then.
A better idea might have been to get them to attempt to succesfully run a creamery near Cardiff. They could have called that Brigend Jones's Dairy.
