Wheat
The October World Agricultural Supply and Demand Estimates report found more wheat in the U.S. and in the world.
U.S. carryover stocks are estimated to be 1.043 billion bushels versus. pre-report estimates of 1.015 billion bushels. The primary drivers of this were a 30 million bushel cut in feed wheat usage and a 25 million bushel cut in exports for 2019-20. There was also a 6 million bushel cut in feed usage for 2018-19 that carried in as additional stocks in 2019-20.
World stocks are estimated at 287.8 million metric tons versus pre-report estimates of 285.17 million metric tons. Notable world revisions were a 1 million metric tons gain in European Union production and a 1 million metric tons cut to Australian wheat production. France slightly increased their wheat crop estimate from 39.45 million metric tons to 39.75 million metric tons. The United Kingdom estimates this year's wheat crop at 16.3 million metric tons versus 13.6 million metric tons last year. The Russian Grain Union estimates 2019 wheat production at 75.8 million metric tons. This compares to IKAR at 75.4 million metric tons and the U.S. Department of Agriculture at 72.5 million metric tons.
Australian weather reports show rain chances for 10% of the wheat area. Two-thirds of the wheat area is expected to lose yield potential during the fill period in the next two weeks. Three-fourths of the Argentina wheat area is dry. Rain is anticipated through the weekend to lower the dry area to half of the production area. Longer term forecasts show the area of dry risk could be reduced to one-third of the wheat belt.
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Spring wheat harvest only gained 1% in the past week with all the moisture. Spring wheat is at 91% harvested compared to 99% average. Winter wheat planted is at 52% versus 53% average. Winter wheat emerged is right at the five-year average of 26%.
Weekly Canadian crop progress reports still show struggles with harvest. Manitoba spring wheat harvest is 91% complete versus 95% average. Saskatchewan spring wheat harvest is 44% versus 75% weighted major crop index average. Alberta is 34.7% harvested versus a combined major harvest index average of 54%.
Weekly export sales were in line with expectations at 522,000 metric tons (19.2 million bushels). Commitments totaling 493 million bushels are running 16% ahead of last year.
Current support for Minneapolis December is $5.27 with resistance at $5.485. For the week ending Oct. 10, December contracts for Minneapolis wheat were down 0.75 cents at $5.3525, up 2.5 cents at $4.93 for Chicago wheat, and down 0.75 cents at $4.0325 for Kansas City wheat.
Corn
The evil emperor strikes again! The USDA somehow raised the corn yield 0.2 bushels to 168.4 bushels per acre in a surprise move almost nobody saw coming. (But I guess we shouldn't be surprised anymore).
Average pre-report estimates were for a 0.7 bushels per acre decrease. The USDA only lowered harvest acres by 0.2 million acres and only lowered production 20 million bushels. The markets did not take this news kindly and sold off as future prices went back down to lows we haven't seen since before the Sept. 30 quarterly stocks report.
Ending stocks were only lowered 261 million bushels despite the USDA lowering beginning stocks 331 million bushels just two weeks ago in their quarterly stocks report. It is hard to trust the USDA after proving time and time again that they just do what they want, despite an educated guess of 98% of the ag community saying something different.
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The USDA once again had to correct their books from last year, this time on feed usage. They lowered feed usage 800 million bushels from their beginning estimates as the 2018-19 marketing year went along, all the while hog and cattle production was at near record highs. There was a thought that wheat used for feed would get increased due to corn used for feed being lowered, but feed wheat usage was also lowered by the USDA during the same time period - another head scratcher. The USDA admitted they cut usage too much and added 125 million bushels of feed use back in this report. Somehow the farmers are always the ones to get hurt due to the USDA's slow to correct policy and aren't helped at all by the corrections that come a year too late.
From the WASDE summary page ...
This month's 2019-20 U.S. corn outlook is for slightly lower production, reduced exports and corn used for ethanol, greater feed and residual use, and lower ending stocks. Corn production is forecast at 13.779 billion bushels, down 20 million as a decline in harvested area more than offsets an increased yield forecast. Corn supplies are forecast down sharply from last month on a reduced crop and lower beginning stocks based on the Sept. 30 Grain Stocks report. Exports are reduced 150 million bushels reflecting smaller supplies and U.S. price competitiveness. Corn used for ethanol is down 50 million bushels based on weekly production data as reported by the Energy Information Administration during September. Projected feed and residual use is up 125 million bushels based on indicated disappearance during 2018-19. Corn ending stocks for 2019-20 are lowered 261 million bushels.
Corn yields came in 0.9 bushels higher than the pre-report estimates of 167.5 bushels per acre. USDA September was at 168.2 bushels per acre. Corn harvest acres at 81.8 million acres, down from 82 million in the September report. Production came in slightly lower at 13.779 billion bushels versus 13.799 billion bushels in September, but well above trade expectations of 13.610 billion bushels.
U.S. ending stocks for 2019-20 came well above trade estimates at 1.929 versus USDA's September U.S. ending stocks of 2.19 billion bushels. The average estimate for ending stocks was 1.684 billion bushels. 2019-20 world ending stocks came in at 302.6 million metric tons versus pre-report estimates at 296.1 million metric tons but below USDA's Sept number of 306.3 million metric tons.
Resistance for the December contract is the recent 2.5 month high of $3.9725 set on Oct. 9 and then the 100-day moving average of $4.10. Major resistance will be in the $4.20 to $4.25 area.
December support is the 50-day moving average around $3.80. Support is then the December contract low of $3.5225 set on Sept. 9. Major support will be the December 2018 futures contract low of $3.425 that was set on Sept. 18, 2018.
Soybeans
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The USDA took a completely different course of action with soybeans than it did with the corn crop. The USDA lowered yields, production and ending stocks below trade estimates but soybean prices were not able to take off because of heavy losses in the corn and wheat complexes.
Weather concerns are starting to mount again as cool and some freezing weather is hitting the Midwest. Cold freezing temps and rain/snow are hitting the Midwest and could really put a damper on an already nonexistent harvest in the northwest part of the Midwest. Any kind of moisture this time of year is not needed and cool temperatures for next week will make drying out the saturated ground almost nonexistent.
USDA soybean yields were lowered 1 bushel to 46.9 bushels per acre versus September at 47.9 bushels per acre and pre-report trade estimates of 47.3 bushels per acre. Informa has their forecasts at 46.5 bushels per acre. The USDA lowered production to 3.55 billion bushels versus pre-report trade estimates at 3.583 billion bushels and the USDA's 3.633 billion bushels in September.
U.S. ending stocks for 2019-20 are at 460 million bushels versus pre-report trade estimates of 521 million bushels and USDA's September U.S. ending stocks of 640 million bushels. This was on the low end of the estimates ranging from 433 million bushels to 582 million bushels. World ending stocks for 2019-20 came in at 95.2 million metric tons versus pre-report trade estimates of 96.46 million metric tons and USDA's September number of 99.2 million metric tons. Estimates ranged from 95 million metric tons to 99 million metric tons.
The other big news for the week is planned meetings for U.S.-China trade talks. Vice Premier Liu He, China's top trade negotiator, was still scheduled as of Oct. 10 to travel to Washington for meetings on Oct. 11 depending how talks went earlier in the week. Trade negotiations started off on the wrong foot earlier in the week as the U.S. Commerce Department widened its trade blacklist to include 20 Chinese public security bureaus and eight companies. Predictably, China did not take this news well and there is uncertainty how this will affect trade talks.
The latest proposal is that China will offer to boost annual purchases of U.S. soybeans to 30 million metric tons from 20 million metric tons currently. This increase will be equivalent to about $3.25 billion in additional orders. China bought a record 36 million metric tons of soybeans from the U.S. for the 2016-17 marketing year. So China is basically just promising to buy soybeans that they most likely need anyway, for a price that is typically less than Brazilian prices. What a deal!
November soybeans major resistance is at $9.3125 on the weekly chart. On the daily charts, resistance is $9.365 and then the five-month high of $9.48 for new crop soybeans that was set June 18.
Support is $8.525 that was the recent low set on Aug. 28. The November contract low of $8.155 set May 13 recovery is major support after this.
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Canola
For the week ending Oct. 10, November canola was down $1.20 at $459.50 Canadian per metric ton. The Canadian dollar was up .0024 at 0.7526. This brings the U.S. price to $15.69 per hundredweight.
• Velva, N.D., $14.55 per hundredweight, November at $14.75.
• Enderlin, N.D., no bid.
• Hallock, Minn., $14.67 per hundredweight, November at $15.18.
• Fargo, N.D., $14.90 per hundredweight, November at $14.90.
Canola futures had a downside reversal in Oct. 9 trade.
Barley
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Cash feed barley bids in Minneapolis were at $2.50, while malting barley received no quote. Berthold, N.D., bid is $2.75 and CHS Southwest New Salem, N.D., bid is $3.
Durum
Cash bids for milling quality durum are $6 in Berthold and at $6.25 in Dickinson.
Sunflower
Cash sunflower bids in Fargo were at $18.45, with November bids at $17.40.
For the week ending Oct. 10, soybean oil was down 9 cents at $29.70 on the October contract.
