September 30, 2016

Quarterly Stocks Report Holds Few Surprises for Corn and Soybeans

In a year where USDA reports have served to surprise the trade more often than not, and not necessarily in a bullish way, farmers got a bit of a break in the September 30 Quarterly Grain Stocks report.  While there weren’t any bullish surprise for corn, soybeans or wheat, bearish ones were kept to the winter wheat market.  The release of the report will now allow traders to focus ahead to the October release of Crop Production and WASDE numbers.

Friday’s grain stock numbers will serve as the official year end carryout for the 2015 crop with corn coming in at 1.738 billion bushels and soybeans at 197 million bushels.  Both were very close to the trade pre-report estimate of 1.754 bbu and 201 mbu, respectively.  Wheat bushels in storage totaled 2.53 bbu, well above the average trade guess of 2.31 bbu.  The number represents a 21% increase from just one year ago while usage through the first quarter was up just 6% on the year.

Offsetting some of the pain, at least for spring wheat producers, USDA also released its annual Small Grain Summary report.  Those numbers continued to show large production but most of it was in the winter wheat classes.  All winter wheat production for 2016 totaled 1.67 billion bushels, up 22% from the prior year while spring wheat production totaled just 534 mbu, down 11% on the year.  Durum wheat production came to 104 mbu, up 24% from the prior year.

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House Passes Its Version Of The Water Resource Development Act

PNWOn Wednesday night, the U.S. House passed its version of the Water Resource Development Act on an overwhelming vote of 399-25.  The bill provides authorization for various U.S. Army Corp of Engineers projects, specifically inland waterways and ports which have been a major concern for those in agriculture.

The Senate already passed their version and the two chambers will now conference in an order to resolve the differences.  Passage by both chambers is expected sometime after the November elections.

Following passage, Rep. Bill Schuster, Chair of the Transportation and Infrastructure Committee had this to say:

“This bill is fundamental to America’s competitiveness, and gets Congress back to the regular business of addressing some of our most pressing infrastructure needs.  An efficient maritime and waterways transportation system is fundamental to the country’s economy”

 

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WTO Warn Global Trade Growth At Slowest Levels Since 2009

A recent report by the World Trade Organization is warning that global trade is expected to grow by just 1.7% in 2016, well below earlier projected levels of 2.8%.  It was just a year ago the organization had projected as much as a 3.9% rate of growth in 2016.  If realized, this would be the slowest global trade growth since the financial crisis of 2009.  The Organization also projected global GDP growth of 2.2%.

The Organization attributed the decline to a few different factors, including the now infamous Brexit vote in June and slowing growth of areas like Brazil and China.  They also voiced concern that growing anti-trade rhetoric and increasingly volatile monetary policy will make recoveries difficult.

WTO Director General Roberto Azevedo said the report should serve as a wake up call to international communities who have seen increasing calls for protectionist measures.

“The dramatic slowing of trade growth is serious and should serve as a wake-up call.  It is particularly concerning in the context of growing anti-globalization sentiment.  We need to make sure that this does not translate into misguided policies that could make the situation much worse, not only from the perspective of trade but also for job creation and economic growth and development which are so closely linked to an open trading system”

The 1.7% trade growth would be the first time in 15 years that international trade growth has lagged the growth of the world economy as a whole.  The areas seeing the strongest revisions lower compared to the last WTO report in April were Asia, now projected at just 0.3% growth compared to 3.4% in April, and North America revised down to 0.7% compared 3.1% previously

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