The southern cash markets have been improving recently, with premiums for 12 percent wheat rising 9 cents in the last week to $1.75 over December Kansas City futures. Poor basis on the Southern Plains is being attributed to much more lower protein wheat availability. Much more of the 12 percent or higher protein has already been sold. This perceived need for higher protein wheat post-harvest saw Minneapolis contracts making nice gains for the week.
The North Dakota Mill & Elevator currently shows zero basis quoting $6.58 cash off March futures. Protein over 14 is being rewarded 10 cents a fifth while discounts are 5 cents a fifth under 14.
Minneapolis is at the historical high end of the spread range relative to Chicago and Kansas City. In a normal market of the past we would expect Minneapolis to be 40 to 60 cents higher than Chicago/Kansas City. The spread has been anywhere from $1.30 to $2.18 on the front month contract over the last 18 months. Kansas City is at the bottom end of the range and Minneapolis has struggled recently to trade above the $6.50 range, so we would expect the Minneapolis/Kansas City spread to narrow. Kansas City futures have been gaining on Chicago futures recently after trading on par or at a slight discount for the last 18 months. Typically, we would see Kansas City over Chicago by at least a dime due to protein premium.
On Nov. 9, the U.S. Department of Agriculture released its monthly supply and demand report. For 2017-18, ending all U.S. wheat stocks were pegged at 935 million bushels, down from the October estimate of 960 million bushels due to increased exports.
Global wheat stocks for 2017-18 are estimated at 267.5 million metric tons, down from 268.1 million metric tons last month.
Weekly export sales were bearish, totaling 28.7 million bushels, with all for the 2017-18 marketing year. This puts total marketing year sales at 598.6 million bushels, 5 percent below the previous marketing year. Weekly shipments of 10.9 million bushels put the marketing year total at 397.4 million bushels, 6 percent below the previous year.
For the week ending Nov. 9, December contracts for Minneapolis wheat were up 23.25 cents at $6.48, up 3.25 cents at $4.29 for Chicago wheat, and up 2.25 cents at $4.29 for Kansas City wheat.
The corn market finally received news — just not the news we were hoping for. And nobody was expecting the drastic yield number that the USDA estimated. The USDA raised the yield 3.6 bushels per acre from the October report. The 2017 USDA corn yield is estimated to be 175.4 bushels per acre, 0.8 bushels per acre larger than last year's record yield. Pre-report estimates were at 172.4 bushels per acre, with a range of 171.7 to 174 bushels per acre. Production increased 298 million bushels from 14.28 billion bushels in the USDA's October estimates to 14.578 billion bushels in USDA's November numbers. This puts 2017-18 U.S. ending stocks at close to 2.5 billion bushels.
According to USDA state corn numbers, corn production was down in the top six corn producing states versus last year, mainly because of less acres. Going state by state, some of the eastern Corn Belt states and the Delta had a big crop, which the USDA says made up for some of the Midwest's lower production numbers.
Illinois and Nebraska are up 1 bushel per acre versus last year, Indiana is up 8 bushels per acre. On the flip side, Iowa is down 6 bushels per acre, Minnesota is down 3, and South Dakota is down 11. North Dakota is 24 bushels per acre less than last year's record crop and Wisconsin is down 10 bushels per acre. Ohio is up 14 bushels per acre versus last year.
Everyone is asking how this year's U.S. corn crop is a bushel larger than last year's record crop which saw mostly optimal growing conditions. You are going to be hearing a lot about how genetics are playing a larger role in this. The USDA is confirming that genetics and traits are greatly reducing weather risks. But if we can grow this kind of crop on a marginal year, what kind of crop do we have to expect on a near perfect year going forward? It is possible that the USDA is trying to compensate and cover up for underestimating last year's crop by raising this year's crop. It is getting harder to get a feel for the USDA's thought process in these reports.
For the week ending Nov. 9, December corn was down 6.75 cents and March corn was down 7.25 cents.
Ethanol production continues to remain strong, especially with the recent rally in the crude market. Ethanol corn usage has given stability to the corn market, and is one of the big reasons corn has held support so far. Ethanol production for the week ending Nov. 3 was at 1.057 million barrels per day. Weekly ethanol production increased 0.09 percent from last week and is up 5.49 percent from last year. Corn use for ethanol was 109.99 million bushels, ahead of the 104.54 pace needed for USDA's estimates of 5.475 billion bushels.
No news is good news except when you are talking about this month's USDA report on soybeans. The soybean numbers were neutral compared to last month, but considered bearish to trader expectations. Many analysts were expecting the USDA to lower soybean yields, but the USDA stayed put and kept the yields the same as last month. Traders did not take this well as they were buying into this report anticipating friendly news. But when yields were not lowered, the futures sold off. For the week ending Nov. 9, January 2017 soybeans were down 1.75 cents and March soybeans were down 1.25 cents.
The USDA kept the 49.5 bushels per acre number the same versus the average trade estimate of 49.3 bushels per acre. Estimates ranged from 48.9 to 49.9 bushels per acre. U.S. ending stocks came in at 425 million bushels, down 5 million bushels. Pre-report U.S. ending stock estimates were for cuts of 10 million bushels to 420 million bushels versus October USDA estimates of 430 million bushels. Production was lowered slightly to 4.425 billion bushels.
USDA October estimates were at 4.43 billion bushels, and pre-report production estimates were at 4.41 billion bushels. Global stocks were raised to 97.9 million metric tons, mainly due to a 1 million metric ton increase in Brazil production.
Export sales were disappointing at 42.7 million bushels for the 2017-18 marketing year. This puts marketing year sales at 1.157 billion bushels, 15 percent less than the previous marketing year.
For the week ending Nov. 9, January canola futures in Winnipeg traded $2.80 higher at $515.50 Canadian per metric ton. The Canadian dollar traded .0069 higher to .7894. This brings the U.S. price to $18.46 per hundredweight.
• Velva, N.D., $17.84 per hundredweight, December at $17.95.
• Enderlin, N.D., $18.09 per hundredweight, December at $18.27.
• Hallock, Minn., $17.94 per hundredweight, December at $18.12.
• Fargo, N.D., $18.60 per hundredweight, December at $18.50.
Cash feed barley bids in Minneapolis were at $2.40, while malting barley received no quote. Berthold, N.D., bid is $2.25 and CHS Southwest New Salem, N.D., bids were at $2.50.
Cash bids for milling quality durum are $6.25 in Berthold and at $6.25 in Dickinson, N.D.
Cash sunflower bids in Fargo were at $17.40., December at $17.30. For the week ending Nov. 9, soybean oil was 67 cents higher at $35.14 on the December contract.