WASDE report: The USDA released its latest WASDE report yesterday, and it continues to be relatively optimistic on US corn yields for 19/20, despite the crop not being in such great condition to date. The USDA revised lower its corn yield estimates from 169.5bu/acre to 168.2bu/acre for 2019/20, although this is still significantly higher than market expectations of around 166.5bu/acre. As a result, US corn output estimates are revised down to 13,799m bushels compared to an earlier estimate of 13,901m bushels. For soybeans, yields were revised down from 48.5bu/acre to 47.9bu/acre, which resulted in production estimates being revised down from 3,680m bushels to 3,633m bushels – the market was expecting production to be revised down towards 3,580m bushels.
Globally, the USDA lowered its corn ending stock estimates from 307.7mt to 306.3mt, however this is still higher than the 302mt that the market was expecting. Soybean ending stock estimates for 2019/20 were also revised down from 101.7mt to 99.2mt mainly due to revisions lower in beginning stocks for the marketing year.
Sugar expiry: The no.5 Oct-19 whites contract expires today, and there has been plenty of action in the lead up to the expiry. The Oct/Dec spread has strengthened significantly in recent days, flipping from a contango of around $10/t at the start of September to a backwardation of $9/t as of yesterday. This suggests that there is a strong receiver for sugar off the tape. Open interest in the Oct-19 contract stood at over 357kt as of Wednesday, and so it could shape up to be a fairly large delivery. The strength in the front end of the whites market has also seen the Oct-19 whites premium rally from below $60/t at the start of September to almost $80/t currently, which would be welcomed by refiners. While there are concerns over the EU crop for the upcoming season once again, significant Indian stocks will remain a threat for the world market.