Updated: December 14th, 2018
 
 
 
 
Closing Prices:
DEC. 2019 CORN $4.03
NOV. 2019 SOYBEANS $ 9.49
JULY 2019 KC WHEAT $ 5.38
Weekly Change: Corn finished unchanged for the week, Soybeans finished 12 lower, and Wheat finished 6 higher for the week.. 
 
 
 

 

 

 

 

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Do you know of someone looking for a career working with ag producers and a passion for the markets? If so, we’d like to hear from them.  AgWest is currently looking for a few good folks that can help service the growing demands from our farming partners.  Currently we have the below openings:

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December WASDE Highlights 

 

True to form, the December reports provided little change or market excitement. The biggest changes from last month appear to be in the world carryout numbers. Here are the highlights: 

 

 

The USDA’s world soybean increase came mostly from the excellent growing conditions in Brazil and Argentina with both major countries seeing month over month increases. If these new projections are realized for the South American harvest, it would represent a new South American record soybean production at 6.52 billion bushels. As a reference, the U.S. produced right at 4.6 billion bushels of soybeans this growing season. Brazil is nearly matching the U.S. on total soybeans produced and with the addition of Argentina, the U.S. is now a distant second for total soybeans produced.

 

Back here at home (even though there are few acres still to be harvested), the USDA left our corn yield at 178.9 bushels per acre and the soybean yield unchanged at 52.1. The unchanged yield estimates will help add fuel to the fire about the debate for the much anticipated January set of estimates. So, with production left unchanged, the only adjustments came on the usage side. Corn usage for ethanol was cut by 50 million bushels and a slight gain of five million came in via imports, which left a net increase in 2018/2019 corn ending stocks of 1.781 billion bushels (45 million higher than last month).  This slight adjustment let the USDA change the projected farm gate price range of $3.25 to $3.95.  Soybean ending stocks remained unchanged at 955 million bushel so the USDA has no reason to change the expected farm gate price of $8.60. Again the December reports were very boring in terms of changes which leads into more controversy and debate for next month’s January final numbers. The full report table can be found at the bottom.

 

China Soybean Sales

 

Reuters reported on Wednesday that Chinese “state-owned” companies bought at least 500,000 MT of U.S. soybeans. On Thursday, our RJO contacts were saying that their best guess is that China purchased 1.5 to 2.0 MMT.  No matter the size, this is the first of the “immediate” soybean buys China agreed to after the G20 meeting in late November.  Based on the lackluster reaction by the bean market, it appears traders were expecting larger quantities.  Nonetheless, this is a start, and as with all things, the first step is key.  Even though the reporting agencies do not necessarily align with their exact details, it’s definitely a start in the right direction.  More good news also came from China this week with wheat, corn, and large purchase of pork were also on the ship for Chinese destinations.  Again, the quantities may be less than originally desired, but the fact that ships are being loaded from our gulf and the Pacific Northwest is a victory in its own.  This week’s exports and anticipation of future exports needs to build and create some sustainability, however this is a step in the right direction. 

 

The downside of China’s reengagement may be the second round of Market Facilitation Program (MFP) payments not happening. Reuters also reported that the White House Office of Management and Budget (OMB) is delaying the payments until further notice. According to Reuters, OMB is holding up approval of the payments due to concern about the cost of the program and are hopeful that the trade issues with China will be resolved quickly. Time will tell how this plays out, but to be safe, don’t spend your second half “MFP” payment or show it as a receivable on your balance sheet.

 

Did You Know

 

Here are a few random thoughts about the markets and marketing that might be helpful to you leading into the new year: 

 

 

Changing acres in 2019?

 

Every year the acre battle begins earlier and earlier and with so much controversy with prices and trade, it will sure be a hot topic for the marketplace for months and months to come. The official estimates won’t be released by the USDA until late March, then the final in late June, meaning we’ve only got six months to debate this subject for next year’s primary crops. Informa Economics published their early estimates this week which showed a slight increase in corn acres followed by a greater reduction in soybeans and a steady wheat planting regiment for 2019. Although Informa is only one of many analytical folks who will be updating and tweaking these numbers as we move into next spring’s planting window, Informa is one of the most followed and recognized data sources in regards to acreage. 

 

Estimates this week for corn were an increase of 2.8 million acres from last year’s 89.1 million acres planted. If the 91.9 million acres for corn gets planted this spring, it would represent our largest planted corn crop in three years. If, in fact, this does materialize in 2019, corn would reclaim the crown over soybeans for U.S. planted acre dominance. Informa’s estimate for 2019 soybean acres is 85.0 million acres which is right at a four million acre reduction from last year’s 89.1 total. Although the 5% reduction in soybean acres may sound big in terms of year over year changes, planting 85 million soybean acres in 2019 would still be the U.S.’s third largest bean acreage in history. When viewing the U.S. current bean inventory carryout situation of 955 million excess, more reductions in 2019 acres would be welcomed. 

 

Winter wheat estimates show much less of a change from last year’s 32.5 million to an estimated 32.25 in 2019. Again these are all estimates for next year’s crop sizes so with input prices fluctuating and trade wars in the crosshairs, many things could change these early intentions prior to actual planting. There is one very important key point to remember, if you’re one of those thinking of making a crop rotation change based on today’s prices for 2019 crops, and that’s the price needs addressed now as well. Today’s price differences or today’s price advantages from one crop to another may not be there when you’re ready to deliver next year’s crop. Take last year and the soybean market as an example.  Planting more soybeans in early 2018 may have made more economical sense on that day, but when harvest was here, was there that same financial benefit? For many folks it was not. Bottom line is that there are many reasons to change planting rotations or intentions, however if you’re changing acres based on prices, something needs done with those prices now and not later. Give your Broker or Cash Advisor a call to discuss the current corn/soybean ratio and how that applies to your rotation. If enough U.S. farmers start moving acres toward corn, prices may also get weighed on. 

 

  Have a great week!

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