In this file:
· Weekly Outlook: Corn Supply A Burden To Prices
· Are soybeans entering a bear market?
· Farmers still have a sixth of corn to harvest
Weekly Outlook: Corn Supply A Burden To Prices
Todd Hubbs, Department of Agricultural and Consumer Economics, University of Illinois
farmdoc daily - November 13, 2017
The USDA's Crop Production report released on November 9 reported an unexpectedly large corn yield increase for the 2017 crop. Corn prices suffered a moderate decline following the report release considering the magnitude of the yield increase. Corn prices will struggle to find support due to the ample supply available during the 2017-18 marketing year.
The United States corn production forecast increased to 14.6 billion bushels, up almost 300 million bushels over the October forecast. At 175.4 bushels per acre, the yield increase of 3.6 bushels came in well above pre-report estimates and set a new yield record. An increase in yield close to this magnitude between the October and November production reports last occurred in 1996 (3.5 bushels) and 1992 (5.5 bushels). In each of those instances, the final yield estimate increased from the November forecast which does not bode well for current supply scenarios. Yield increases were particularly strong through the heart of the Corn Belt. Iowa and Illinois corn yield projections were increased by three bushels per acre and Indiana projections up by eight bushels per acre. North Dakota also saw an eight bushel per acre increase in projected yield. In total, the yield increases in the four states over the October projections increased corn production by 211 million bushels. Despite the increase in corn consumption by 150 million bushels to 14.4 billion bushels, the 2017 corn crop pushed projected ending stocks for the 2017-18 marketing year to 2.487 billion bushels, an ending stocks level not seen since the 1987-88 marketing year. A closer consideration of corn consumption may help in clarifying the prospective uses for this crop and the price implications moving forward.
The November WASDE report projects 2017-18 marketing year corn exports at 1,925 million bushels, compared to 2,293 million bushels last marketing year. The current export projection is increased 75 million bushels from the October projection on the expectation of increased Mexican demand and U.S. competitiveness in global markets. Thus far, no indication of strengthening export levels have materialized this marketing year. Census Bureau estimates of corn exports for September were 139 million bushels, 45 percent lower than last year's export total during September. Weekly export inspections have lagged last year's pace as well. During the first nine weeks of the marketing year, export inspections totaled 218 million bushels, 182 million bushels less than the same time last year. To reach the USDA's current projection, export inspections need to increase from the 24 million bushels per week thus far this marketing year to 36 million bushels.
In the November WASDE report, the 2017-18 marketing year corn use for ethanol was projected at 5,475 million bushels. The projection is 36 million bushels larger than last year. The U.S. Energy Information Administration (EIA) weekly estimates indicate September production was up around three percent year-over-year. The USDA's Grain Crushing and Co-Products Production report also showed that three percent more corn was used for ethanol production in September relative to last year. Weekly EIA estimates of ethanol production in October indicated a 3.4 percent increase over last year. The pace of ethanol production currently is running slightly ahead of USDA projections. Ethanol production during the rest of the marketing year will be influenced by numerous factors. These include the pace of gasoline consumption and ethanol exports.
Weekly gasoline demand thus far in the marketing year averaged 1.6 percent higher than last year through November 3. After a slow start in early September, gasoline demand picked up through October and into early November. Recent increases in gasoline prices and seasonal factors may place a damper on gasoline usage in the coming weeks. Ethanol exports were down 16 percent in September from August levels and down 12 percent year over year. Lower Brazilian exports contributed tremendously to the drop-off and bring into question the ability of ethanol exports to repeat the impressive performance seen the 2016-17 marketing year.
USDA projects feed and residual use of corn during this marketing year to be 5,575 million bushels, up 75 million bushels from the October and 112 million bushels over last marketing year. The change in feed and residual usage is a two percent increase over the previous marketing year. While livestock inventory numbers strengthened in 2017, little direct information is available to assess the pace of feed and residual consumption. New information will arrive with the Grain Stocks report to be released during the second week of January.
The current pace of corn consumption suggests the December WASDE report will not contain significant changes to use projections to lower the current 2.487 billion bushel ending stocks total for 2017-18. Barring a surprise for the 2017 corn production estimate or December 1 corn stocks estimate to be released in January, low prices look to continue into the spring when weather and acreage become significant elements in corn price movements.
Are soybeans entering a bear market?
Blue Line Futures
via AgWeb - Nov 14, 2017
Yesterday’s Close: January soybeans closed 11 ¾ cents lower yesterday, trading in a range of 16 ½ cents. Funds were estimated to have been sellers of 9,500 contracts on the day.
Fundamentals: Yesterdays export inspections came in at 2,087 metric tons, this was in the range of expectations from 1,700-2,400 metric tons but was lower than last week’s 2,493 metric tons. Although this number was in line with expectations, it is still nearly 12% behind where we were last year at this time. Yesterday’s crop progress report showed that beans are 93% harvested, the average analyst estimate was for 95% which would have been in line with the five-year average. We also received the weekly commitment of traders report yesterday, this showed that funds had a net long (futures and options) position of 45,053 this was an increase of 6,037 from the previous week. Keep in mind that this data is collected in the first half of the week and does not include Thursdays USDA report. As of Friday, Brazilian beans were said to be 56.2% planted, this is nearly 10% behind last years near record pace.
Technicals: As mentioned in yesterday’s report, there was technical damage done last week when prices broke down and closed below trendline support that has held for two months. Prices stabilized on Friday at the 50% retracement from the June lows to the July highs but sliced through that along with the 50, 100, and 200 day moving average yesterday which led to some accelerated selling via long liquidation. Yesterday’s price action marked the lowest close since October 4th. This technical damage neutralizes our bias. The next line in the sand for support comes in at 968 ¼, a break and close below that could lead to additional pressure in the market. On the flipside, previous support now becomes resistance, that comes in from 980-984 ½.
Yesterdays Close: December corn futures closed 1 ¼ cents lower yesterday, trading in a range of 2 ½ cents. Funds were estimated sellers of 7,000 contracts on the day.
Fundamentals: Corn futures have started the week reverting to its old ways, trading in a tight and narrow range. Export inspections yesterday morning came in at 376 metric tons, this was below the expected range from 500-700 metric tons and below last week’s read of 456 mt. Yesterday’s harvest progress report showed that corn is 83% harvested, this was in line with analyst expectations but still behind the five-year average of 90%. We also got yesterdays updated commitment of trader’s report which showed funds are net short (futures and options) 202,456 contracts, this was an increase of 3,321. Keep in mind that this data is compiled through in the first half of the week and does not include Thursdays USDA report. Weather in South America looks to be mixed and unthreatening over the next week and a half.
Technicals: corn futures are continuing to drift lower and are just a few ticks away from posting new contract lows. The bears remain in control as we have been continuing to post lower highs and lower lows over the past two and a half months. The next technical support pocket comes in to 334-335 ½. On the resistance side of things, the bulls have a lot of work to do. 345 ¼ is the first line in the sand but the more significant levels are above that. The 50-day moving average is something we have been referencing for the past month, this is drifting lower and comes in at 350 ¼ this morning. We have not seen the market close above this indicator since July; if the bulls could achieve that we could see short covering from the funds.
WHEAT (December) ...
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Farmers still have a sixth of corn to harvest
Nov 13, 2017
Farmers harvested another 13 percent of corn acres in the 18 major corn-growing states last week, but as of Nov. 12 they were still behind average progress.
In 2012-16, farmers had harvested an average 91 percent of their corn by now. Yesterday they had brought in 83 percent of the crop, according to USDA’s weekly Crop Progress report.
That 83 percent completion matched the average estimate in a Reuters survey of analysts, whose estimates ranged from 80 percent to 85 percent complete.
“With 17 percent still left in the field, we’re talking about 14.1 million harvested acres or 2.478 billion bushels,” noted Mike Zuzolo, president of Global Commodity Analytics & Consulting.
Iowa harvest reached 85 percent complete, 7 points off the average pace. Illinois reached 90 percent complete, 6 points behind average.
However, several states still were more than 10 points behind average:
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