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3 Big Things Today, November 10, 2021

Corn Futures Higher Overnight; WASDE Surprised Twice, Commerzbank Says.

1. Corn Futures Rise in Overnight Trading

Corn futures were higher in overnight trading after yesterday’s monthly report from the U.S. Department of Agriculture show ending stockpiles down month-to-month while soybeans were down modestly after surging on Tuesday.

The USDA in its World Agricultural Supply and Demand Estimates (WASDE) report lowered its outlook for corn inventories to 1.493 billion bushels from the month-earlier outlook for 1.5 million. Increased domestic use – including the amount used to make ethanol and food – was revised higher from the October forecast, accounting for the decrease in stockpiles.

Soybeans surged yesterday after the USDA unexpectedly lowered its outlook for production forecast by 23 million bushels to 4.425 billion. Futures ended up 23¢ on the day.

Grains analyst Darin Newsom said market-watchers should question why the USDA lowered its forecast.

“Everyone knows (the agency) overstated 2020-2021 ending stocks by at least 100 million bushels,” he said in an e-mail. “I told folks we would start to see mysterious reductions in supplies, and here we are.”

U.S. soybean stockpiles at the end of the last marketing year were forecast by the USDA at 256 million bushels.

Price gains didn’t follow through in the overnight session as some speculative investors who were long the market, or had bet on higher prices, sold their contracts and booked profits after yesterday’s surge.

Corn futures for December delivery were up 2¾¢ at $5.57½ a bushel overnight on the Chicago Board of Trade.

Soybean futures for November delivery fell 2¼¢ to $12.09¾ a bushel. Soymeal lost $1.70 to $340.80 a short ton, while soy oil gained 0.7¢ to 59.17¢ a pound.

Wheat futures for December delivery gained ¾¢ to $7.79¼ a bushel, while Kansas City futures fell 1¢ to $7.92½ a bushel.

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2. WASDE Report Surprises on Two Fronts, Commerzbank Says

The USDA’s unexpected move to lower its soybean production forecast wasn’t the only surprise in the monthly WASDE report, Commerzbank said in a note to clients this morning.

Soybean production in the 2021-2022 marketing year that started on Sept. 1 is now forecast at 4.425 billion bushels, down from the month-earlier outlook for 4.448 billion bushels.

Analysts had been expecting a higher carryout of about 4.48 billion bushels, Commerzbank’s Carsten Fritsch said.

But that wasn’t the only shocker in the report, Fritsch said.

Corn production is now projected at 15.06 billion bushels, up from the October forecast for 15.02 billion bushels, the government said. Yields are now seen at 177 bushels an acre, up from the prior outlook for 176.5 bushels.

Still, the USDA’s forecast for inventories at the end of the marketing year actually declined to 1.493 billion bushels from 1.5 billion last month.

“This is because domestic demand was adjusted somewhat upwards at the same time,” Fritsch said.

Indeed, the agency’s export outlook was steady at 2.5 billion bushels but its outlook for domestic use was raised to 12.33 billion bushels from 12.28 billion.

The result was a sharp increase in prices, which backed off as the session wore on, but still finished the session higher.


3. Winter Storm Expected to Bring Wind, Snow to South Dakota

A winter storm watch has been issued for parts of eastern South Dakota starting tomorrow and lasting through Friday, according to the National Weather Service.

From 2 to 4 inches of snow is expected with the storm, and wind gusts could reach as high as 50 mph, the NWS said in a report early this morning.

“Strong winds from the northwest are expected to develop on Thursday and continue into Friday morning,” the agency said. “Areas of light snow are expected to move in Thursday afternoon and night with accumulations of an inch or less with patchy blowing snow.”

In the Southern Plains, meanwhile, temperatures are expected to drop heading into the weekend to below freezing in some parts of the Texas Panhandle, the NWS said.

Freeze watches and warnings may be issued if temperatures drop below freezing, the agency said.

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