Takeaway

The presenter argues that the USDA’s October WASDE report delivered an unexpected bearish shock to the corn market by hiking national corn yields to 181.2 bushels per acre against trade expectations of a cut. This pushed projected U.S. corn ending stocks to 1.849 billion bushels and lifted the stocks-to-use ratio back above 10% to 11.3%, effectively derailing the long-term bull market narrative. The supply cushion also widened slightly across soybeans and wheat, keeping the broader grains complex under pressure.

What the presenter said

• [00:00] The USDA’s October WASDE report delivered a "gut punch" to corn bulls by raising its yield estimate.
• [00:12] The trade had broadly anticipated a slight decrease in corn yields following heavy August and September rainfall.
• [00:28] The USDA shocked the market by lifting national corn yield by 2.7 bushels per acre (bpa) from September to 181.2 bpa, whereas trade expectations looked for a 0.7 bpa reduction.
• [00:40] This revision pushed total corn production up by 234 million bushels to over 16 billion bushels (16.03 billion).
• [01:11] Old-crop carry-in stocks rose by 173 million bushels, which matched market expectations.
• [01:19] Corn demand saw an aggregate 125 million bushel increase across categories: feed and residual (+50 million), exports (+25 million), and food, seed, and industrial (+50 million).
• [01:40] Despite higher demand, U.S. ending stocks rose by 282 million bushels month-over-month to 1.849 billion bushels, expanding the stocks-to-use ratio from 9.7% to 11.3%.
• [01:49] Moving stocks-to-use back above 10% promptly "tanked the corn market" and removed the foundation for an extended bull run.
• [02:14] World corn ending stocks were revised up by 8.3 million metric tons, adding to global balance sheet looseness.
• [02:20] The presenter noted that soybean yields were also increased by 0.3 bpa to 53.1 bpa.
• [02:26] Record rains across the Corn Belt lifted soybean production by 27 million bushels to a record 4.561 billion bushels.
• [02:48] U.S. soybean ending stocks rose modestly by 5 million bushels to 315 million bushels, as a 17 million bushel production increase was partially offset by a 12 million bushel demand increase.
• [03:09] U.S. wheat ending stocks increased by 23 million bushels to 740 million bushels.
• [03:16] Global wheat ending stocks contracted slightly to 276 million metric tons.

Trade ideas

None stated. No actionable trade was put forward by the presenter. The speaker maintains an outright bearish market view on corn in light of unexpected supply expansion and loosening stocks-to-use metrics.

Levels and data cited

• Corn Balance Sheet (USDA October vs. September):
  • Yield: 181.2 bpa vs. 178.5 bpa in September (+2.7 bpa)
  • Production: 16.03 billion bushels vs. 15.80 billion bushels
  • Carry-in stocks: Increased by 173 million bushels
  • Demand revisions: Feed/residual (+50 million bu), exports (+25 million bu), FSI (+50 million bu); total demand up 125 million bu
  • Ending stocks: 1.849 billion bushels vs. 1.567 billion bushels
  • Stocks-to-use ratio: 11.3% vs. 9.7%
  • Global ending stocks: Raised by 8.3 million metric tons
• Soybean Balance Sheet (USDA October vs. September):
  • Yield: 53.1 bpa vs. 52.8 bpa
  • Production: 4.561 billion bushels vs. 4.534 billion bushels (+27 million bu)
  • Production vs. Demand: Production up 17 million bu against demand increase of 12 million bu
  • Ending stocks: 315 million bushels vs. 310 million bushels
• Wheat Balance Sheet (USDA October vs. September):
  • U.S. ending stocks: 740 million bushels vs. 717 million bushels
  • Global ending stocks: 276 million metric tons (contracted slightly)

Risks and what would invalidate this

• The risk of corn yield rising further in the November and subsequent USDA reports.
• Uncertainty around what the USDA will do with soybean yields in the November report.