New figures, same outlook

It’s official: winter is here. Snow is starting to fall across most areas around and above the 49th parallel, which will limit the ability


It’s official: winter is here. Snow is starting to fall across most areas around and above the 49th parallel, which will limit the ability to take off the remaining U.S. corn and soybean fields (might have to wait until spring!) The cold could also have a negative effect on the winter wheat which has not yet entered a dormancy phase. The market really continues to be pushed higher by the soy complex despite a W.A.S.D.E. report from the U.S.D.A. on Monday, November 11th that was not all that bullish for the oilseed. Comparisons to the 2009/10 marketing year when farmers slowed their soymeal exports are being made as this year, farmer selling of the oilseed is slow/behind the average. Add this in with a strong cash soymeal market, poor rail performance, and some technical pointing higher, we see soymeal up above $400/short ton (was at $500 in May/June though). All in all, despite a strong marketing year start for soybeans with regards to demand, a bigger crop will offset it and while the corn crop isn’t as big as once thought, it’s still huge.

The report showed corn yields dropping from October’s estimates to 173.4 bushels per acre, a stark contrast to the upgrade to 175.2 the market was expecting. Nonetheless, a record U.S. corn crop of 14.4 Billion bushels is still coming off and although domestic demand was increased, 2014/15 ending stocks are seen at two billion bushels! As for soybeans, yields were raised by 0.4 from October’s estimate to 47.5 bushels per acre, a new record (but slightly below analysts pre-report expectations). While output figures were raised to a record 3.96 billion bushel crop, increased domestic and export demand kept the 2014/15 carryout at 450 million bushels. Finally, for wheat, production was relatively unchanged with ending stocks dropping slightly to 644 million bushels and on the global level, only Australia saw a notable downgrade (now estimating a 24 million-tonne crop but we think it’ll be closer to 22.5 million). From a global carryout perspective, corn stocks are seen building 11 per cent year-over-year to 191.5 million tonnes and soybean inventories are ballooning a significant 35 percent from the end of 2013/14 to the end of 2014/15.

So what does it all mean?! There doesn’t seem to be any significant bullish fundamentals affecting the corn market right now whatsoever. As for the oilseed market, the 2014 crop year has been brought to you by the word “record” – as in record U.S. soybean production, record South American output, and a record E.U. rapeseed crop. Given the reality that crush margins remain quite strong for both canola and soybeans, we may see some increased demand domestically. The only other catalysts that could (read: not for sure) help prices move higher is the relatively slow start to a Brazilian soybean planting season leading to a below-forecasted output there and the pesticide ban in E.U. affecting crop quality and output. As for wheat, the dry seedbed that Russian planters drilled into could lead to lower production there but a 12 per cent increase in acres could easily offset any losses. As mentioned, the Australian wheat harvest may get further downgrades but record global production this year is tough to justify higher prices just yet. Overall, this report seemed to act like a commercial and we’ll likely get back to our regular programming with the January W.A.S.D.E., where we can expect final revisions to the production numbers.

To growth,

Brennan Turner


Brennan Turner is originally from Foam Lake, SK, where his family started farming the land in the 1920s. After completing his degree in economics from Yale University and then playing some pro hockey, Mr. Turner spent some time working in finance before starting, a risk-free, transparent online and mobile grain marketplace (app available for iOS and Android). His weekly column is a summary of his free, daily market note, the FarmLead Breakfast Brief. He can be reached via email ( or phone (1-855-332-7653).