9/12/2023

The USDA WASDE report shocked the market today. Analysts had been expecting yield cuts and they were not disappointed there but the USDA surprised by adding 800,000 corn acres and 100,000 acres of soybeans. It's not uncommon to have acres increase in this report since the USDA finally includes some of this year's FSA data but 800k acres is a huge increase. This puts to bed any arguments on poor corn yields (for now). Overall, soybeans have very little room for error in terms of yield. The 2023/24 ending stocks were lowered from 245 mln bu to 220 mln bu at 50.1 yield. The USDA also lowered demand numbers for this year's soybean crop, reflective of raising the average farm price to $12.90. Not much changed on the old crop balance sheets, just some small changes in use trickling down into small cuts in the 22/23 ending stocks. I'm not big on selling today with what we know. With the insurance prices we have this year, it feels like the USDA may get its arm twisted when it prints the quarterly stocks at the end of this month.

Chart performance was ugly following the report…

Corn: December corn matched 2 ½ year lows for the contract month which brought in some protective buying and a small bounce going into the close. I still expect some further downside down to the 440-450 area over the next 4 weeks and view this as a spot where funds and specs will build some length to take into 2024 and the final production numbers in January.

Soybeans: A very poor performance for soybeans following some very friendly numbers in the WASDE. November broke a major uptrend support line instantaneously at 11:00 this morning. The situation overall feels friendly for soybeans once harvest is in the rear view. Closest support levels are at the 200-day moving average (1331’0) and then at the 100-day moving average (1301’4).