Ag Market Commentary

Corn futures are trading UNCH to 1/2 cent lower after falling 5 to 6 3/4 cents following the bearish November USDA update yesterday. The big story on Thursday was the USDA raising their 17/18 US corn yield projection 3.6 bpa to an all time record to 175.4 bpa. That change bumped the 2017 US production total 298 mbu to 14.578 bbu. US ending stocks were hiked but the increase was limited by larger exports and feed and residual, up 75 mbu each. The world ending stocks number was updated to 203.86 MMT, up 2.9 MMT. Thursday morning’s Export Sales report showed weekly shipments of just 489,835 MT, well short of this time last year. China announced that they would remove their 11% value added tax on imports of DDGS, but will leave the 53.7% anti-dumping tariff against US firms in place.

Soybean futures are currently hovering either side of UNCH after ending Thursday with 12 to 13 1/2 cents losses in the front months. Pressure came from subpar export sales and higher world ending stocks. December meal was down $3.40/ton, with nearby bean oil 23 points in the red. The mid-morning WASDE report showed most US numbers UNCH from October. The 17/18 US ending stocks were reduced 5 mbu to 425 mbu. The USDA raised the average farm price for soybeans 10 cents to $8.45 - $10.15, with the midpoint @ $9.30. World ending stocks for 17/18 were raised 1.85 MMT to 97.9 MMT, as Brazil’s expected production was upped 1 MMT to 108 MMT. Carryover from 16/17 was also increased 1.42 MMT. The USDA reported 2.52 MMT of soybean exports during the week of 11/2. That was 6.2% lower than last week and down 14.1% from this week a year ago.

Wheat futures are trading 1 to 2 cents lower in all three markets this morning. They finished the Thursday session 1-2 1/4 cents higher in most nearby KC and CBT contracts, while back months were lower. MPLS was steady to 4 1/2 cents higher on a tighter ending stocks forecast. The weekly USDA Export Sales report showed sales well above expectations at 781,739 MT. That was a jump of 124.8% over last week, but just 1.6% larger than a year ago. The main WASDE adjustment on Thursday came in the form of a larger US export projection, 25 mbu higher at 1 bbu. That lowered US ending stocks 25 mbu To 935 mbu. Russia’s production was increased 1 MMT to 83 MMT, as smaller carryin and larger exports drove the world ending stocks lower. On Thursday, Japan purchased 132,390 MT of wheat from Australia, Canada, and the US, with 57,995 MT of US origin.

Live cattle futures settled Thursday mixed, with nearby Dec down 45 cents. Feeder cattle futures were mostly 35 cents to $1.15 higher due to cheaper corn prices. The CME feeder cattle index was 3 cents lower at $158.98 on November 8. Wholesale beef prices were lower on Thursday afternoon. Choice was down 39 cents at $212.74, with select boxes 59 cents lower at $198.30. Estimated weekly FI cattle slaughter through Thursday was 464,000 head, 3,000 fewer than the previous week and 2,000 head above the same week last year. The FAS reported export sales of 16,773 MT for 2017 during the week of 11/2, down 14.1% from last year. The USDA trimmed fourth quarter 2017 beef production 150 million pounds to 6.965 billion pounds. The 2018 beef production estimate was raised 325 million pounds to 27.6620 billion pounds.

Lean hog futures ended the Thursday session mixed, as Dec was 37.5 cents lower and back months were higher. The CME Lean Hog Index for 11/7 was down 31 cents to $68.35. The USDA pork carcass cutout value was up 65 cents in the Thursday afternoon report. The butt, rib, and ham were reported lower. The national base hog average was down 58 cents at $59.90 this afternoon. Week to date FI hog slaughter was estimated at 1,846,000 head through Thursday. That is 15,000 head larger than the previous week and 71,000 head above the same week in 2016. Pork export sales for 2017 fell sharply from last week to just 7,788 MT, a marketing year low. Mexico had a net reduction of 139 MT. Estimated pork production for the fourth quarter of 2017 was trimmed 80 million pounds in the WASDE report, with 2018 production increasing 70 million pounds from the October estimate to 26.925 billion pounds.

Cotton futures are currently 23 to 29 points higher after they posted losses of 32 to 49 points on Thursday. All upland cotton 17/18 export sales for the week of November 2 came in at 205,297 RB, which was slightly lower than last week but 21.61% larger than a year ago. Sales of 18/19 upland cotton totaled 31,155 RB. The USDA reduced the 17/18 world ending stocks number for cotton by 1.5 million bales to 90.88 million bales. They also added 0.26 million bales to the 2017 US production number to 21.38 million bales. The Cotton Ginnings report showed that the US had ginned 4.964 million RB as of November 1, 1.02% fewer than last year. Of that total 2.133 million RB were reported from TX. The USDA average world price (AWP) was updated to 61.38 cents/lb, 33 points higher than the previous week.

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