The USDA released its November WASDE (World Agricultural Supply and Demand Estimates) report Tuesday morning.
Dan Basse is president of AgResource Company in Chicago.
"We had quite a few surprises in the report, all of them bullish, more or less," he commented. "The USDA cut the U.S. soybean yield to 50.7 bushels an acre. That cut 98 million bushels off the U.S. crop. We can't afford to lose that kind of supply with China buying as many U.S. soybeans as they have been. This has pushed the soybean market to new rally highs, in fact, highest prices now going back four and half years."
Basse talked about the U.S. corn yield.
"The USDA cut their corn yield by nearly three bushels an acre, just over 175 bushels an acre, which then caused the loss of nearly 325 million bushels of U.S. corn and took ending stocks on corn down to 1.7 billion bushels. Soybean end stocks were a very tight 190 million bushels. In the vain of the markets, the loss of U.S. corn and the loss of soybeans was seen as bullish. The other big reduction occurred in Ukraine, where they dropped their corn crop from 36.5 million metric tons to 28.5 million metric tons."
He summarized the report in the following manner.
"When we stand back from the report, lots of emphasis to be placed on the upcoming growing season in South America. Chinese demand looks like it stays robust. The USDA did increase Chinese corn imports to 13 million metric tons but there's many people in the commercial trade that still think the USDA is behind the 8 ball and needs to raise that number to at least 20 or 24 million metric tons. Overall, a bullish report. Our focus here in Chicago will be squarely on South American weather and whether La Niña produces any problems."
Basse says they'll have to wait to see what impact the U.S. election results will have on price trends.
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