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MARKET COMMENTARY

Weekly Market Summary September 14, 2018

Friday, September 14, 2018, 2:09 PM
Submitted by: Landus Cooperative


Good afternoon –

 

It was another tough week in the corn and soybean pits. Since last Friday, corn is down 15c and soybeans are down 13c. The biggest contributor to our drop this week was the USDA WASDE report released on Wednesday. The USDA published a record corn yield of 181.3 bu/acre, 1.3 bu higher than the highest of trade estimates (and 2.9 bu/acre higher vs August). September is thought to be “more accurate” as USDA incorporates ear weight into the equation. August numbers include ears/acre, but not ear weights. At any rate, 181.3 bu/acre pushes production to 14.8 bln bu, which is the 2nd largest crop on record. This pushes carryout for 18/19 by 90 mln bu to 1.774 bln bu. Earlier in the week, we learned Australia’s wheat crop was down 10%. However, per USDA’s report Wednesday, that is more than offset by increases in the Black Sea Region (an area once thought to be under significant stress). One interesting development today was from Russia. The Russians are taking steps to ensure compliance with bilateral wheat phyto sanitary agreements. Essentially, this adds time (cost) to the exporting process and will slow exports down. Chicago wheat closed 11c to 12c higher today.

 

It seems like a broken record in the soybean space. While soybeans closed up 8c on the report day, USDA confirmed a looming record soybean crop. USDA increased soybean yield by 1.2 bu/acre from August, pushing 18/19 ending stocks to 845 mln bu (that’s a really big number). The stocks-to-use ratio is pushing 20%. Perhaps a bright spot this week was news of further efforts by the Trump Administration to bring the Chinese to the negotiation table. There is no news to report, but talks are still open.

 

Another story we’ve kept our thumb on is the African Swine Fever outbreak in China. It appears the outbreak is much worse than originally thought and the livestock markets in the U.S. are responding accordingly. Feeder cattle, live cattle, and lean hogs have all seen strength come into their respective markets. The Chinese government has claimed that the population will merely have less protein included in their diets – much easier said than done.

 

All-in-all, this has been a bit of landmark of a week – most of the credit goes to the unprecedented yield numbers USDA printed on Wednesday. Looking forward, we continue watching anecdotal yield reports and harvest weather forecasts. We are keeping a careful watch on the horizon – the South American planting/growing season is quickly approaching.

 

Have a good and safe weekend!

 

 

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