USDA’s next World Agricultural Supply and Demand Estimates (WASDE) report, set for 11 a.m. CDT on Thursday, October 11, is known for providing more accurate corn and soybean crop estimates, but this year, possible changes to USDA’s export estimates may have bigger impacts on ending stocks.
For a crop that had few weather challenges in 2018, harvest has proved more difficult than anticipated, but don’t expect a reduction in USDA’s corn crop estimate, say the analysts in the Dow Jones’ pre-report survey. The survey expects USDA to slightly raise its production estimate from 14.827 billion bushels (bb) in September to 14.851 bb in October. Yield is anticipated at a record high 181.8 bushels an acre (bpa) while harvested acres are expected to slip, from 81.8 to 81.7 million acres (ma).
Even though the analysts Dow Jones’ surveyed don’t expect much change in crop size, they do anticipate a 158 million bushel (mb) increase in USDA’s estimate of U.S. ending stocks, from 1.774 bb in September to 1.932 bb on Thursday. The extra bushels come from the September 28 Grain Stocks report, which showed corn with an extra 138 mb beyond what was expected. The added supplies will increase corn’s ending stocks for both 2017-18 and 2018-19.
Evidently, analysts are not expecting an increase in USDA’s estimate of corn exports. If you haven’t heard lately, U.S. corn shipments are off to a strong start, up 50% in the first month of 2018-19 from a year ago. The 1% reduction in corn exports that USDA estimated in September is due for a raise, but aren’t we all? At 11 a.m. CDT Thursday, we’ll get USDA’s opinion.
For world numbers, Dow Jones’ estimates are consistent, expecting an increase in USDA’s estimate of world ending corn stocks, from 157.0 to 159.2 million metric tons (mmt), or 6.27 bb. Keep in mind, USDA’s ending stocks estimate for 2017-18 was 194.2 mmt (7.65 bb), so the market is still anticipating a significant drop in world ending corn stocks in the new season.
It is still too early to have a good grasp on what U.S. soybean demand will be in 2018-19, but for Thursday’s report, soybean prices are at risk of getting hit with a double bearish whammy of USDA coming through with a higher crop estimate and lower export estimate. As with corn, Dow Jones’ survey expects a slight production increase, from 4.693 bb in September to 4.733 bb in October. The survey also expects a new record high yield of 53.4 bpa and slight reduction in harvested acres, from 88.9 ma to 88.7 ma.
While the analysts expect a 40 mb increase in the crop estimate, they only expect a 15 mb increase in USDA’s estimate of U.S. ending soybean stocks, from 845 mb to 860 mb. That seems odd when you consider 43 mb found in the September 28 Grain Stocks report will be added to both old-crop and new-crop ending stocks. While the crush incentive remains high for soybeans in the U.S., total export commitments remain sluggish, down 13% in 2018-19 from the year ago level.
True to form, Dow Jones’ survey also expects USDA’s snapshot of world soybean stocks to be raised, from 108.3 mmt in September, to 109.4 mmt (4.02 bb) in October. When looking at the world numbers, keep in mind that Argentina will not export much in 2018-19 due to drought earlier this year and a recent hike in export taxes. Also, USDA estimated Brazil’s ending soybeans stocks in September at just 37 mb for Brazil’s local marketing year, which ends January 31, 2019.
Once again, Thursday’s WASDE report probably won’t have any bullish news to offer those hoping for higher wheat prices. Dow Jones’ survey expects U.S. ending wheat stocks to be increased from 935 mb in September to 1.027 bb for October. Part of the increase will come from an extra 29 mb found in USDA’s September Grain Stocks report and part is likely the result of lackluster wheat shipments, down 31% in 2018-19 from a year ago.
If there is a bullish surprise for wheat, it could be hiding in the world estimates where foreign crop estimates are still being adjusted. Dow Jones’s survey, however, sees little hope for that, pegging world ending wheat stocks at 261.1 mmt (9.59 bb), down only slightly from September’s 261.3 mmt.
|U.S. CROP PRODUCTION (Million Bushels) 2018-2019|
|U.S. AVERAGE YIELD (Bushels Per Acre) 2018-2019|
|U.S. HARVESTED ACRES (Million Acres) 2018-2019|
|U.S. ENDING STOCKS (Million Bushels) 2018-2019|
|WORLD ENDING STOCKS (Million metric tons) 2018-2019|