Morning Comments September 13, 2021

Harvesting Soybeans

After seeing some strength in the Sunday night open, markets are a touch weaker this morning. 

Friday's report didn't come out with any type of bearish surprise that some were fearing could be in the cards ahead of the numbers. In fact, you could say Friday's report was really a non-event as carryout estimates from a domestic standpoint came in relatively close to pre-report expectations as a whole.

Looking at corn, we saw the USDA increase old crop ending stocks by around 70 million bushels from last month's estimate. This increase in old crop carryout came from a 40-million-bushel reduction in corn used for ethanol, as well as a 30-million-bushel cut to corn exports. At 1.187 billion bushels, old crop corn carryout came in 17 million bushels higher than traders were expecting.

The increase in old crop ending stocks carried forward into new crop beginning stocks, giving us a touch more sitting around than we anticipated, though that number will have to be confirmed the end of this month when the USDA releases their quarterly stock figures.

On the new crop side of things, we saw the USDA increase their yield projections slightly, up to 176.3 versus 175.8 expected and 174.6 released last month. This combined with a 600,000 acre increase in harvested area bumped production projections up 246 million bushels from last month. All total we saw overall supply increase by 316 million bushels from August. 

The increase in available supply however spurred the USDA to raise demand by 150 million bushels thanks to expected increases of 75 million bushels for both feed and exports. 

Over in soybeans, we saw the USDA cut old crop crush estimates by 15 million bushels. This adjustment lower went straight to carryout, bumping us to 175 million bushels of old crop ending stocks projected. This was 9 million bushels higher than what traders were expecting, but still well within the range of pre-report estimates. 

Like corn, the increase in old crop stocks carried directly over into beginning stocks for the new crop year. Production-wise the USDA bumped their yield estimate 0.4 bushel per acre from last month but lowered expected harvested acreage giving us an overall production increase of 35 million bushels.

In demand, we saw the USDA make a bit of a surprise adjustment lowering expected crush by 25 million bushels, though they offset all of that and a touch more by lifting exports 35 million bushels. Overall, we saw new crop carryout come in at 185 million bushels, actually slightly below the average pre-report expectation of 190 million bushels. 

Domestic wheat saw little in the way of change to this month's numbers, with carryout coming in 12 million bushels lower than last month, but right in line with pre-report expectations.

Global carryout came in above expectations for everything as the USDA seemingly increased production or beginning stocks for nearly each major supplier to global trade. Corn saw the biggest adjustment higher, coming in nearly 500 million bushels higher than pre-report expectations as China is expected to produce more and use less (don't shoot the messenger).

Overall, as I said, Friday's numbers were a non-event. We sold off a touch at first, breaching important support levels, only to see a strong resurgence in buying push us back up to resistance levels in a relative hurry. Tech traders say Friday's trade would be considered a key reversal, meaning the downtrend should be over and we should see buying return.

However, unfortunately we've had like 7 or 8 key reversals that have meant nothing in the last six months, and history says a strong reaction after the September report is usually tempered and sold off by day 5---with last year of course proving that theory wrong.

Looking ahead, as I mentioned we'll have some conversation about quarterly stocks due out at month end, but we will really start to focus on harvest as it gets rolling across much of the Corn Belt. This year will definitely provide everyone with a wide range of yield results to report considering we saw pockets of very different production years sprinkled throughout the country.

This morning we will get updated export inspection figures. With the Gulf export terminals still being down for much of the week last week, this morning's figures are expected to be very reduced from what we would see in a normal year. We will also get updated crop progress figures this afternoon at 3:00 p.m. Central, though outside of harvest pace they mean very little this time of year as a whole.