Waiting for the new commandments

Published on: 08:44AM Aug 12, 2019

Grain and soy markets are sagging just a bit as we begin this new week, which is being attributed to a more favorable weather outlook for the near term.  While that all sound plausible, realistically the only thing that matter today will come at 12:00 EST when the “word of gov” is proclaimed to all once again.  Granted, these “commandments” will not be etched in stone, although sometimes it seems that people believe that they are, but for the time being at least, they will be the law of the land, (no pun intended) from which all other things will be measured.

Before reviewing the trade estimates once again, I wanted to pass along estimates from Indigo Ag of Memphis. Last year Indigo acquired TellusLabs, which itself was a two-year-old satellite imagery company, and have been developing models and forecasts for crop production.  Recognizing that this is an evolving field, (again, no pun intended) but it stands to reason as technology continues to improve, undoubtedly this will eventually become the standard for crop estimate in the years to come.  While this may never become a perfect science, it stands to reason that it should eventually be a significant improvement over field sampling.  All that said, Indigo currently has the planted acreage for corn projected to be 85.4 million, which is over 6 million below the last USDA number is around 2 million below the current trade estimate.  Their yield estimate stands at 154.7 bpa, which would be 11.3 bushels below the July report, resulting in total production of 12 billion bushels, 1.9 billion below the last USDA estimate.  Needless to say, if the USDA made such a cut, it would touch off a panic in the corn market.  Looking at beans, their research has come up with a bean acreage number of 82.9 million, which is 2.9 million above the USDA and 2 million above the trade estimates.  The yield is projected at 45.3 bpa, 3.3 bushels below the USDA, which projects total production of 3.7 billion bushels, which would be down 100 million from last month. While it seems that the USDA is not shy about delivering shocking numbers, I suspect that especially with the corn number, they would not issue that significant of a change even if their numbers were leaning in that direction. That said, this is reflective of just how significant the uncertainty is in this most unusual growing season. 

Once again, here are the average trade estimates; Corn acreage planted is expected to be 87.8 million, which would be down 3.9 million from the currently in use figure.  With an average projected yield of 164.9 bpa, this is expected to produce a crop of 13.170 billion bushels, which would be down 705 million from the last estimate. Backing into the number, this means the trade is expecting a harvested acreage of 79.87 million or 90.9%.  Looking at beans, the expected planted acreage came through at 80.95 million, up just 950,000 from the current estimate. The average yield is expected to be 47.5 bpa, bringing us a crop of 3.793 billion, which would be 52 million bushels lower than the July figure.  This means the average estimate for harvested acreage is 79.85 million, or 98.6%.  The average estimate for All Wheat production is 1.927 billion bushels.  Of this 1.295 billion is winter, 810 million is hard red, 256.5 million soft red, 227.5 million white, 571 million other spring, and 57.5 million durum. As far as domestic ending stocks, the average estimates for 2018/19 have corn at 2.389 billion, beans 1.066 and for the 2019/20 crop year corn is expected to drop to 1.595 billion, beans to 816 million and wheat at 998.5 million. Finally, for the world ending stocks numbers, 2018/19 corn is expected to show 329.84 MMT, beans 113.27 MMT and wheat 275.02 MMT.   Then for 2019/2020 corn at 290.09, beans of 104.77 and wheat at 284.08.

Outside of this, news is rather sparse this morning.  No new threats between China and the US and macro markets as just mixed.  Equities and the dollar are lower, and gold and energies are higher.