Report Recap:

The October USDA report this morning turned out to be less of a market mover than expected.  Corn yields dropped 0.6 bushels from last month to 171.9 which was just slightly above the trade estimate. The soybean yield was the surprise dropping 0.7 bushels from last month to 49.8 which was below the traders estimate of unchanged.  On the ending stocks side of the balance sheet for 22/23 corn came in 47 million above the estimate, soybeans were 47 million below the estimate, and wheat was 15 million higher. The world ending stocks saw very minor adjustments. 

Below are the snap numbers from the report. Corn saw exports and ethanol usage reduced which offset production losses and the smaller carryover from 21/22 ending stocks. Soybeans saw a reduction in exports also while crush was raised slightly, but not enough to offset the reduced production.

 Closes on the day:

 Dec22 Corn unch at 6.93

Dec23 Corn +1 at 6.32

Corn continues to struggle to push past the $7.00 resistance level with December finishing at $6.93 so, watch that level in the coming days. 

 Nov22 Beans +19 at 13.95

Nov23 Beans -2 at 13.58

Beans are nearing upside resistance at their 20-day moving average at $14.09 and have had a good bounce from their recent low at $13.50.  Seasonally beans tend to make a low in early October and then work higher into January so that may happen in the coming months on a seasonal retracement.  

 Dec22 KC Wheat -18 at 9.72

 Some interesting points from Rich Feltes, Head of Market Insights at RJO:

 Surprisingly, no change in 2022 Russian wheat crop (record 91 mmt vs. 75 mmt LY). Privates think Russian wheat crop is closer to 100 mmt). 2022 Ukraine wheat and corn crops unched also at 20.5 mmt/34.5 mmt respectively vs. 33 mmt/42 mmt LY. Importantly, WASDE upped 22/23 Ukraine corn exports 1.5 mmt to 13.5 mmt vs. 27 mmt LY.  No change in Ukraine wheat exports at 11 mmt vs. 18.4 mmt LY.

Also unexpected, USDA ups 22/23 PRC soy imports 1 mmt vs. Sept to 98 mmt—a hefty 8 mmt increase over LY. 

NASS pegs record corn yields in IL/WI. Soy yields post records in AR/MS/SC. USDA generally lowered CN/BN yields vs. Sept in Plains states while increasing corn yields vs. Sept in MO/IL/IN/OH/NC/OK.  Only states to post Sept to Oct soy yield gains were ND/WI/KY/SC.

Not a good day for demand bulls with WASDE cutting 22/23 CN/BN/WHT demand by 125 mb/80 mb/31 mb respectively.  There is a risk of more demand cuts in upcoming reports if 2023 S American crops are large and strong dollar/recession trims additional cuts in US usage.  Additionally, USDA cut total 22/23 world wheat demand 0.8 mmt vs. Sept, corn demand by nearly 6 mmt and soy demand by 1 mmt.

Bottom line—22/23 global soy stocks up 8 mmt vs. LY while CN/WHT stocks down 10 mmt/6 mmt respectively. Advise selling rallies in soy (USDA’s 98 mmt 22/23 PRC soy import estimate looks high). There is a risk that USDA is still overstating 22/23 US soy exports. Corn and wheat prices will be tied to Ukraine war headlines. We’re not anxious to press either market (US stocks in both are shrinking vs. LY) although bullish war news headlines (like start of this week) should be sold for quick trade.