In the November U.S. Department of Agriculture World Agricultural Supply and Demand Estimates Report, the market usually has a pretty good idea of crop sizes. Wheat is long done, and later-harvested crops like corn and soybeans have had plenty of time for estimates from the USDA to get closer to actual (from initial estimates in August).
Going into the Nov. 9 WASDE Report, the market was expecting a small soybean yield decrease and a modest corn yield increase. For some background, the October WASDE estimate for corn yield was 171.8 bushels per acre. This would have been the second best yield year in history, falling behind last year's remarkable 174.6 bushels per acre. But the USDA actually took yields to 175.4 bushels per acre! This was above even the highest analyst estimate prior to the report's release. As a result, corn fell to new contract-lows.
In other agriculture news, it appears that support for President Donald Trump's trade plan is waning among many in the farming community. Those from rural areas and many involved with agriculture have been some of Trump's most loyal supporters throughout the campaign and first year of the presidency. One of the key positions of the president was to renegotiate the North American Free Trade Agreement. This deal with Canada and Mexico allows for free trade across borders for many goods (including, but not exclusively, agricultural goods).
Though negotiations were not going particularly well, up until this week the general belief was that negotiations were centered around manufactured goods, while agricultural products and trade were secure. This may be changing as the U.S. could withdraw from NAFTA, jeopardizing billions of dollars of agricultural trade and the livelihood of many farmers. This is resulting in some shift in support away from the already polarizing Trump.
Wheat prices are off lows but continue to have trouble finding any significant support. The WASDE report from the USDA showed very little change to the U.S. balance sheet, as new crop ending stocks were reduced a modest 25 million bushels (on an increase in export demand). Supplies are still very large domestically. Total global stocks of wheat were reduced modestly, even with increases in production (revised figures following harvest activity) for the European Union and Russia totaling 1.5 million metric tons. Global consumption was higher, leading to ending stocks dipping by 0.6 million metric tons (yet stocks remain record large).
Durum markets have been flat for the last several weeks. After finding huge support over the summer on hot and dry conditions in the plains of the U.S. and Canada, and then dropping back down as the crop was completed, there has not been a huge amount of excitement. The supply is known and markets are quiet. The USDA did not make any big adjustments in the WASDE report.
Canola prices have been firmer this week. Strong demand for seed and oil are keeping the market supported. Strength in soybean oil is pulling up the canola market as well. Look for the strong demand and rising biodiesel mandates to be key factors in supporting the market into 2018.
Peas and lentils
With the growing season and harvest done in the U.S. and Canada, focus for pulses has been shifting to demand (primarily out of India). The Indian government is looking to support local farmers, but pricing has been incredibly low on large global supplies. This is leading to import duties being placed on imported pulses, which is happening in phases. Some have already been put in place, and on Nov. 9, another duty was placed on green and yellow peas. The duty went from zero to 50 percent.
Pea shipments from Canada to India had already been slowing due to the requirement to have all imported peas fumigated with ethyl bromide that has been in place since the end of September. Look for ongoing trade issues with India for pulses as the government moves away from imports to local farmers' support.
There is little excitement for mustard seed markets. Export demand is about on pace with a year ago, just two months into the marketing year.
Barley stocks were tightened by the USDA in the Nov. 9 WASDE report. Production was unchanged, but an increase of 9 million bushels for food, seed and industrial demand led to ending stocks being reduced by the same amount to 61 million bushels. This is well below 2016-17's ending stocks of 106 million bushels.