Grain/Feed Buyers Update October 29, 2019
The November WASDE (World Ag Supply & Demand Estimates) report will be released next Friday, November 8th. This report often contains very little by way of changes as harvest is generally far enough along in September/October in order to get a strong sense of yield. Additionally, there are very few changes put forward on the demand side of the balance sheet. This November likely remains the same, but for different reasons.
As we compare harvest progress, corn now stands at 41% vs. the five year average of 61%. Soybeans advanced to 62% harvested vs the five year average pace of 78%. The slow pace of harvest will shorten the USDA's access to enough data to feel comfortable making any major changes to yield at this point. The two exceptions may be soybeans and wheat. The pace, stand, and yield were all compromised for these two crops in the northern rim of states west of the Mississippi river when the first big blast of winter left up to two feet of snow in some areas. This may have a dramatic effect on yields for these regions and ultimately the national estimates. The USDA has advised that they will update numbers based on calculated damage.
Demand is often not touched much in this report, but the ongoing discussions with China may force USDA economists to start making some carve outs for growing export demand. This conversation would again favor soybeans. Further shrink in soybean balance sheets would add to the building optimism that has defined that market in recent weeks. See Table above. Mentally, the soybean market has moved from a near 1 Billion bushel ending stocks figure to a shortened 640 million bushel estimate in September to a 460 million bushel estimate in October.
Effectively inventory has been cut in half in less than a two month time window. Further additions to demand in combination with any cuts in yield will further fuel concern over soybeans and soybean meal in the coming months. Feed buyers are advised to act on current levels. Contact us to sort through strategies appropriate for your operation.