Soybean crop seen growing
Soybean production estimates for the USDA October Report came in at 37.8 bushels per acre, much above the September estimate of 35.3 bushels per acre, and it is indicative of a much larger soybean crop than expected just a month ago.
That production estimate is likely to rise even further in the November report, as crop sizes that get larger in October tend to see another rise in November.
This was a large revision higher, too, upping the U.S. soybean crop 9% from last month, a huge jump in just a short period of time. USDA also hiked demand considerably including exports by a whopping 20% (or 210 mb) and crush by 40 mb. The export sales and shipments numbers from soybeans continue strong, so these numbers may be somewhat accurate. Still, they garnered a lot of attention when it was all done in one report!
Pro Ag final yield models for soybeans indicate a 39 bushel-per-acre crop, so it's likely that USDA will hike the production number again in the November report, this time to near the Pro Ag yield number at 39 bushels per acre. That will ease the ending stocks number a bit, as the tight 130-mb ending stocks number in October is still a bit concerning to the soybean market.
Pro Ag still projects harvest lows for corn and soybeans to be near $6.75 December corn and $14 November soybeans. But we now need to start to pay attention to South American (SAM) weather forecasts, as there are still lingering areas of dryness in SAM that will take some rainfall to get over. Germinating the crop and providing the needed growing season rainfall are critical to the SAM crop, and the market will be sensitive to the growing season weather forecasts in this region.
For now, the two-week forecast has more rainfall than in previous weeks, but still there are areas in central Brazil that are still short in moisture, and the forecast continues dry in these areas. It will take a good soaking rain to turn the market's attention away from this region.