Morning Comments; Friday, November 9th, 2018

Grains are trading lower on the overnight session.

The USDA released the November supply and demand report yesterday. There were little if any surprises as it came in at or below trade guess with the exception of soybean ending stocks, which were higher than expected. Corn yield dropped almost double what the trade expected, dropping 1.8 bushels/acre. Many key corn states saw sizeable decreases such as 6 bu/acre in Iowa and South Dakota, and 7 bu/acre in Minnesota. As for soybean yields, Iowa and Kentucky both dropped 3 bushels, Illinois 2 bushels and Michigan, Nebraska, Missouri, Ohio, South Dakota and Wisconsin all down 1 bushel/acre.

Traders are now scratching their heads as to what yield numbers the final report in January will tell us. History tells us that in most cases, if there is an increase or decrease in yield from October to November, the November to January change will be in the same direction. More so the case for soybeans.

The big adjustment came in the form of world stocks numbers. Earlier this week Chinese officials revised their stocks numbers for the previous ten years, revealing a larger world grain stocks. Many in the trade assumed this from the Chinese government reserve program. Many did not expect the USDA to act as quickly as it did to revise those numbers. With those revisions, the world corn carryout numbers nearly doubled from 159.4 million metric tons to 307.5 million metric tons for the 18/19 marketing year. While the USDA had not recognized the Chinese reserve program, the news hit the corn market relatively softly as corn futures closed up slightly for the day.

Market movers: Trade negotiations and weather forecasts.

For more information, you may contact Adam Suntken at (712)-454-1061, or e-mail at asuntken@maxyieldcooperative.com. The opinions and views expressed in this commentary are solely those of Adam Suntken. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position. Please visit our Risk Disclosure Page for more information on commodity trading.




 

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