The USDA's November updates for U.S. corn and soybean crops were lower than their previous month's levels, but didn't provide any startling numbers for the trade. Meanwhile, wheat world stocks were revised upward more than many in the trade were expecting on Friday's report.
Even with the tendency of November yields to follow the directional trend of October (lower last month), the latest U.S. Department of Agriculture (USDA) corn yield projection at 153 bu per acre (-1.6 bu) was a bit lower than the trade average estimate. But the coming year's ending stocks projection staying near 1.9 billion bu. didn't inspire much enthusiasm. The USDA reduced its yield expectations the most in the western and northern states (IA - 5, MN - 5, NE - 6, WI - 5, SD - 3, and ND - 3), with some mid-summer heat and dryness in the Western Corn Belt (WCB) possibly having more impact than first thought. Yields in the Southeast, Mid-South and Southwest all rose modestly this month, leaving corn at 13.17 billion bu. The USDA also cut its U.S. 2007/08 feed demand again by 50 million, but it didn't adjust ethanol demand levels as we expected (downward) for old crop. And it left new crop demand unchanged vs. the trade's downward ideas. Exports were also unchanged, despite a strong seasonal pace to date.
In soybeans, the USDA reduced its national yield forecast slightly (41.3 bu., down 0.1 bu.) on Friday's update vs. expectations of a slight rise. A slight increase in the Eastern Corn Belt (0.4 bu) compensated for declines in WCB (0.3 bu.) and the Delta (1.0 bu) this month. The USDA didn't cut harvested acres as we expected, because of late season dryness. But this could still occur when it releases the next update on January 11, 2008. With 2007/08 demand levels unchanged, bean stocks only declined 5 million bu. to 210 million this month. South American crop estimates were also left unchanged this month, but world stocks were shaved 1.4 mmt to 49.3 mmt vs. 2006's 62.1 mmt level.
Without any U.S. wheat crop update this month, trade ideas for change were low. But the USDA did increase world stocks nearly 3 mmt to 109.8 when it raised estimates for Argentina (1.0 mmt) and China (1.0), while cutting Australia by only 0.5 mmt to 13 mmt. The agency's 1.3 mmt rise in beginning stocks (India +1.0) also contributed to this month's stock rise that left wheat prices on the defensive again.
Energy and metals prices, and the value of the U.S. dollar remain supportive to CBOT prices. But producers should still have 65% of corn and 50%-55% of soybeans priced, basis March corn ranges of $4.00-$4.10 and January beans at $10.50-$10.75. For 2008/09 crops, price 25% of those crops with December 2008 corn at $4.30-$4.40 and November 2008 beans at $9.80-$10.00-because of adequate corn supplies and improving Brazilian growing conditions. Wheat producers should also have 50% of 2008 output priced with July 2008 values at $6.75-$7.00.
