On The Money Grain Commentary 10-11-18

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Corn Outlook:

Traders were stunned when the USDA lowered their yield estimate for corn 0.6 bpa to 180.7 bpa in the October Crop Report rather than raising it as everyone had expected. As a result, production was less than expected at 14.778 BB with 2018-19 ending stocks of 1.813 BB versus guesses of 1.932 BB. Meanwhile, global stocks rose 2.4 million tons to 159.4 million. In other developments, harvest is progressing at a rapid pace at 34 percent complete versus 21 percent a year ago and 26 percent for the average. Rains earlier this week will slow progress, but drier weather is in the forecast. Exports are healthy with inspections last week a marketing year high of 53.1 MB. Last week, the funds covered 255 MB of their short position reducing it to 480 MB.

Bean Outlook:

Although the USDA lowered their yield estimate for corn, their yield on soybeans was up 0.3 bpa to 53.1 bpa. However, this was less than expected. Meanwhile, production was down slightly at 4.690 BB with ending stocks for 2018-19 at 885 MB. This was below expectations. World stocks, in the meantime, grew 1.7 million tons to 110.0 million. Looking at harvest, it is 32 percent complete which is 2 points below a year ago and 4 points less than the average. However, drier conditions in the forecast should allow for improvement. Exports last week were disappointing with inspections a marketing year low of 20.9 MB. Shipments have been bound for Argentina the past few weeks, but nothing was shipped last week. Meanwhile, the standoff between the U.S. and China continues and is unlikely to be resolved until after the mid-term elections. Last week, the funds trimmed 70 MB from their short position reducing it to 505 MB.

Wheat Outlook:

USDA’s 2018-19 ending stocks estimate for wheat was less than expected at 956 MB with world stocks down 1.1 million tons to 260.2 million. Australia’s production fell 1.5 million tons while the Black Sea Region was down 2.0 million. In other developments, wheat planting is running ahead of schedule at 57 percent done, 11 points above a year ago and 3 points more than the average. Meanwhile, exports remain a soft spot with inspections last week at 15.5 MB. The funds have added to their shorts the past 4 weeks increasing them 20 MB last week to 210 MB.

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