Last week’s long-awaited November USDA crop report and world supply-and-demand estimates put a dent in the recent rally for corn and soybeans, but didn’t derail what’s been a positive turn for the markets over the course of the record-long federal government shutdown that began at the end of September and ran through Thursday night.
Aside from weekly export inspections and a few other minor data points, market participants have been flying largely blind since the end of September. There was no crop production or world supply and demand report for October. USDA had already announced on Oct. 31 that it would produce those November reports despite the shutdown. The re-opening of the government last week added another twist, with USDA announcing it would also use the occasion to dump six weeks worth of daily export sales data at the same time as the crop and supply/demand figures, while issuing a confounding schedule on weekly export sales data that won’t be fully caught up until the end of the year.
Here are three major takeaways:
Smaller-than-expected cut to corn yield
Market participants were laser-focused on yield estimates. While analyst estimates varied widely, the average expectation was for USDA to lower corn yield to 184 bushels an acre from a September estimate of 186.7 bushels an acre. Instead, USDA trimmed the yield to just 186 bushels an acre. With USDA leaving acres alone, that trimmed the size of the crop to a still record 16.752 billion bushels from the September forecast of 16.814 billion bushels.
See: Pro Farmer reaction to the November WASDE
Expectations for USDA to further lower average yield are unlikely to go away given concerns about disease pressure and late-season dryness that have raised doubts that ear weights will prove as robust as the government’s model appears to expect.
Corn enjoyed support through the data near-blackout as basis remained resilient and export demand strong. USDA raised its export estimate by 100 million bushels to a record 3.075 billion bushels – and record exports would be expected given a record crop. USDA left most other demand categories alone. USDA raised carryover by a modest 44 million bushels to 2.154 billion bushels – still above the average estimate of 2.136 billion bushels.
Pro Farmer’s ending stocks forecast stands at 2.100 billion bushels, penciling in lower production than USDA’s current estimate as we maintain our Crop Tour yield estimate of 182.7 bushels per acre.
Read this week’s Pro Farmer newsletter.
Soybeans – where’s China?
USDA cut its soybean yield estimate to 53 bushels an acre from the September estimate of 53.5 bushels an acre, coming in just below the average guess of 53.1 bushels an acre. Carryover dropped to 290 million bushels from 300 million bushels in September, defying forecasts for a rise to 304 million bushels.
On its face, the data was friendly for soybeans, but a rally of more than $1.30 from the Sept. 30 close through Thursday for January soybeans left the market vulnerable to a sell-the-fact reaction.
And then there’s China. Or to be more precise, the lack of any fresh news about Chinese purchases. Anxiety over whether Beijing will follow through on what the Trump administration says is a commitment to buy 12 million metric tons by January and 25 million metric tons annually in the next three years is running high. Those daily flash sales showed only 332,000 metric tons to China, perhaps disappointing bulls looking for more.
Jitters are understandable, particularly with China having recently booked more Brazilian cargoes and U.S. prices looking unfavorable relative to South America. Asked if China would follow through on purchases in a Fox Business interview on Sunday, Treasury Secretary Scott Bessent said soybean prices are “way up” since President Donald Trump and Chinese leader Xi Jinping met on Oct. 30. “I think they will honor this and, again, we have lots of levers, too,” Bessent said.
Lots of wheat
USDA data offered no major surprises on wheat, but affirmed robust production expectations for major producers, including Argentina, Australia and Russia. Projected 2025/26 global ending stocks were raised 7.4 million tons to 271.4 million. USDA said that would be the first year-to-year increase in global wheat stocks since 2019-20.
Friday ended on a decidedly negative note, with December corn falling 11 ¼ cents, January soybeans sliding 22 ½ cents and December SRW wheat down 8 ½ cents. For the week, however, corn saw a gain of 3 cents and soybeans gained 7 ½ cents, while wheat lost ½ cent.
All three were pushing higher in overnight trade ahead of Monday’s opening bell. Staving off follow-through selling is needed to avoid technical damage that could indicate near-term tops are in place.