Ep. 15 USDA’s October WASDE Yields Few Changes, Stable Price Outlook

00;00;08;08 – 00;00;13;11
Riley Smith
So Mr. Scott now that we are settle in, How are you doing?

00;00;13;11 – 00;00;17;09
Scott Stiles
Doing great. Good to be with you again. Riley.

00;00;17;11 – 00;00;20;05
Riley Smith
Yeah. It’s been been, what, a whole two weeks?

00;00;21;10 – 00;00;23;11
Scott Stiles
I think you’re right.

00;00;23;13 – 00;00;39;23
Riley Smith
We, had you on talking about the port strikes. And what’s kind of comical about that is the day that we recorded it. It ended that afternoon. Yeah, we all worried about it getting stretched out. And a little. Did we know that it was going to end that afternoon?

00;00;39;26 – 00;00;40;02
Scott Stiles
Yeah.

00;00;40;04 – 00;00;41;09
Scott Stiles

00;00;41;11 – 00;00;58;27
Riley Smith
Which I which I know is a good thing. I’m happy to see it end. And, they finally come to a conclusion about it. But today we got you in here. Talking about the, WASDE report that got released on October 11th, I believe.

00;00;59;00 – 00;01;01;25
Scott Stiles
Yep. That’s right. Last Friday.

00;01;01;27 – 00;01;23;25
Riley Smith
So with that, we’re gonna get cranked up here. Good morning. Good morning. Welcome to another episode of Morning Coffee and AG Markets with your host, Riley Smith. Last week, I was out and taking care of some personal business. So y’all got to tune in to Hunter and Ryan. As I was in the at this Southern Outlook conference, and I believe you were there, too, weren’t you, Mr. Scott?

00;01;23;25 – 00;01;25;03
Scott Stiles
I was there.

00;01;25;06 – 00;01;28;11
Riley Smith
And what did you give an outlook on anything I did?

00;01;28;11 – 00;01;30;13
Scott Stiles
I talked about the cotton market.

00;01;30;16 – 00;01;34;11
Riley Smith
Talked about the cotton market. What do you think about the cotton market right now?

00;01;34;14 – 00;02;00;28
Scott Stiles
And, I tell you that, like everything, the prices are struggling. They they were up a little bit today, but, December cotton settled at 71, 26. So it’s it’s off the lows that we saw in mid August and we get down to 66, 26 in mid-August. So we’re a little bit off lows maybe five cents.

00;02;00;28 – 00;02;21;09
Scott Stiles
But we have traded a little bit higher and 74 a little above 74 there toward the end of September. So, but anyway, the markets are struggling desperately. Poor demand for export demand right now, in particular.

00;02;21;11 – 00;02;42;12
Riley Smith
Right now, it’s kind of hard to when you’ve got, where kind of what I would call for a cotton. We’re kind of in the middle of it, aren’t we? Middle of harvest. A lot of guys. A lot of guys I’ve seen around the house, they’re, they’re cottons, pretty close to being fully de-foliated. And then some of them are.

00;02;42;14 – 00;02;46;21
Riley Smith
Or completely de-foliated. Getting ready to move the pickers in.

00;02;46;23 – 00;03;11;13
Scott Stiles
I think, we got, you know, new crop progress numbers yesterday from NASS. And I think Arkansas was just just as you said it was right at the halfway mark. It’s, Look at that 50, 52% harvested as of October 13th. So we’re just just over the halfway mark at this point.

00;03;11;15 – 00;03;29;03
Riley Smith
Yeah. What was, what was interesting was just when we were talking about the port strike. I know this is all old news, but, talk talk to a couple of buddies of mine that are producers and growers as well. And and what’s amazing to me is, is that there’s a lot of people that don’t know a whole lot about cotton.

00;03;29;12 – 00;04;06;21
Riley Smith
I mean, I don’t very much either. But it’s, it’s an old crop farmed in our area, but it’s relatively new to, to a lot of growers now. And one thing that they always made, the comment that has been made to me in the last couple weeks and I thought myself was, is how, how much cotton Arkansas really produces that we’re, you know, ranked number third in the, in the US and were the number one, if not number two, ranked exporter of cotton, which was pretty big to a lot of a lot of growers that don’t grow cotton.

00;04;06;21 – 00;04;14;17
Riley Smith
They didn’t realize that. Not in either, which, that’s, that’s a pretty good, pretty good, trophy to have.

00;04;14;24 – 00;04;41;21
Scott Stiles
That’s right. Yeah, I know Arkansas is third behind, Texas and Georgia in production. And, as you said, the U.S. exports are real important to the U.S.. U.S. had been the number one cotton exporter in the world, really, for the last century. And until last year and Brazil has really come on strong in cotton production since the turn of the century.

00;04;41;21 – 00;04;50;25
Scott Stiles
So Brazil passed the U.S last year and cotton production and cotton exports, and looks like they’re on track to do that again this year.

00;04;50;25 – 00;04;51;28
Riley Smith
So it’s right.

00;04;52;04 – 00;05;11;18
Scott Stiles
Much more competitive landscape out there now, with Brazil and cotton and soybeans and corn. So they’re production is really ramped up for them over the last 25 years, in particular.

00;05;11;20 – 00;05;51;13
Riley Smith
Well, that that tickles me right down to the ground. But besides that, we’ll talk about cotton a little bit more. But, main reason we got you on here. Let’s talk about the WASDE report that came out. And, if you want to just give a little bit of a briefing on, for those for those that’s listening, what they, if they don’t know what the WASDE report is, I know USDA releases that, but, just give us a little, little explanation of what it is and what we’re looking at, and then we’ll go into dive into, separate and what they’ve, reported about each individual crop.

00;05;51;15 – 00;06;21;01
Scott Stiles
Okay. Well, WASDE for one, it’s an acronym for, world ag supply demand estimates and, USDA ag outlook board releases. The WASDE each month, around the 10th of the month and and the WASDE includes, what most of us call a balance sheet for each crop and and then it’s a balance sheet of the, total supply for each crop, the demand for each crop.

00;06;21;01 – 00;06;52;23
Scott Stiles
And then, projected carryover stocks that’ll be available at the end of the marketing year. So you have this balance sheet for each, for each one of the crops. And, the other, key report it’s released on the same day is from another agency and the USDA, called NASS and National AG Statistics Service, and they’re, they all release, report call crop production and it all include, state by state, breakdown of planted harvested acres.

00;06;52;23 – 00;07;27;17
Scott Stiles
Acres, yields, an estimated production. And information from that is taken and incorporated into the into the WASDE is the information from crop production used and the WASDE planted/harvested acres yields production and so those two reports are meshed together into the WASDE. So anyway, we got that last Friday and and some updated numbers for each of the commodities.

00;07;27;17 – 00;07;35;06
Scott Stiles
So any one in particular we need to talk about first Riley or just dive in?

00;07;35;08 – 00;07;42;07
Riley Smith
I think we should, number one crop in Arkansas. I think we’ll just dive in the soybeans and start there.

00;07;42;10 – 00;07;42;20
Scott Stiles
Okay.

00;07;43;08 – 00;07;52;23
Riley Smith
I did notice on the report that, the USDA saw a reduced, production in soybean bushels this year.

00;07;52;25 – 00;08;26;21
Scott Stiles
Right? It was a small change. It was, USDA took down the national average yield on one tenth of a bushel down to 53.1, bushels per acre, which is a record, I think the previous record was in 2016, but, this year, we’ll have a, have a new record yield of 53 one. So with a slight reduction in yield, I did take, production down just a little bit for 4 million bushels.

00;08;26;21 – 00;09;06;03
Scott Stiles
So not a not a big change. From from last month at all. In the end, there were just offsetting minor changes in the balance sheet that left, the inning stocks unchanged month on month that had a really heavy, 550 million bushels. So it’s, it’s a that’s a big stocks number. Its most we’ve seen since 2018 and it’s a it’s a big reason behind the the pressure on prices that we’re seeing right now on the soybean market as a, as a large carryover.

00;09;06;06 – 00;09;32;20
Scott Stiles
It’s a big change from last year. Stocks at the end of the 23 market year were 342 million bushels. And, the projected stocks in the 24 marketing year, will be, 550 million. So, a large increase there and, and a huge burden on prices.

00;09;32;22 – 00;09;51;23
Riley Smith
Yeah. I noticed that, the US season average for soybean price is 24, 25 is, still unchanged at 1080 a bushel, which is, I think Arkansas’s. I think that’s Arkansas’s average price to, but that’s down to it looks like $2 since last year.

00;09;51;26 – 00;10;28;08
Scott Stiles
Pretty close. Yeah. It’s, 1240 was the average a year ago. So down, dollar 60, bushel from, from last year. So, and again, as we’re reflective of the, the large build and, and stocks, that we’re seeing from last year, and that’s, you know, we had a big increase in bean acres, about we went from, 83.6 planted, 83.6 million planted acres last year to 87 one this year.

00;10;28;10 – 00;10;40;00
Scott Stiles
And too boot, you know, you got a record yield ago with that acreage bump. and, that’s driven as part of a part of the stocks increase that we’re seeing.

00;10;40;03 – 00;11;02;15
Riley Smith
Well, good deal. Well, let’s, let’s, let’s move over to our, our other big commodity in the state of Arkansas. Let’s talk about Rice a little bit. Okay. Notice that, that we’re still on that four year, high driven acreage, increased acreage that we’re getting.

00;11;02;17 – 00;11;36;20
Scott Stiles
Yeah, we did see acres come out, this year and, and rice and, and I think that’s, yeah, that is, that is the key driver behind the production increase, from, from last year. Last year, just looking at the long grain balance sheet, we’ve produced, 153.9 million cwt last year. This year, USDA has, U.S. long grain production at 166.8.

00;11;36;20 – 00;12;12;07
Scott Stiles
So, and that’s not driven necessarily by a yield that, actually, we may see a little bit lower average yield, this year, but, that’s driven more on acres. So, but, USDA didn’t make any changes this month to the long grain or medium grain balance sheets. They kept production the same. Demand was the same at 198 million cwt, ending stocks at 27, point one.

00;12;12;09 – 00;12;23;24
Scott Stiles
And, their projected price at $14.50 per cwt. I was unchanged, also unchanged from from last month as well. So.

00;12;24;01 – 00;12;47;26
Riley Smith
And yeah. And I noticed, I noticed to, I was just looking at the report a little bit ago, the average marketing price for rice as well on the cwt, I don’t know, the bushels, I know, I know what the what the average, value was for per bushel, this year, but I could I didn’t see what last year was.

00;12;47;26 – 00;12;57;20
Riley Smith
I did see it was 15.90 a cwt, which is a little bit, a little over a dollar less, than what it is right now.

00;12;57;22 – 00;13;12;24
Scott Stiles
Yeah. This year, 14.50 would be 6.53 a bushel, and then, 15.91 cwt is 7.16 a bushel. So thats a difference.

00;13;13;01 – 00;13;13;20
Riley Smith
Of.

00;13;13;23 – 00;13;19;04
Scott Stiles
Yeah, it’s about $0.63 a bushel less for for this year’s crop.

00;13;19;06 – 00;13;33;17
Riley Smith
So I see I’m gonna assume that the most majority of what we’re going to see is a decrease in, decrease in price. And the increase in production yield and acreage a little bit on most of our commodities.

00;13;33;19 – 00;14;17;17
Scott Stiles
Yeah. I mean, it’s really, supply heavy. A balance sheet for, for long grain, and, 4 year high in production. The other thing that that stands out is the, the, record imports of 30, 39 million, most of what makes up the imports, the long grain imports or the aromatic, fragrant rices of the jasmines basmati, from India and Thailand, that makes up the majority of the the imported rice, that we see.

00;14;17;17 – 00;14;53;06
Scott Stiles
And so that that number continues to grow each year, it’s so that the 39 million of of imports is a record. And then you go further down the supply side and, this the total suppliers themselves are record large. But, as kind of a counterweight to that, you’re also seeing, some, record large total demand, India domestic use, 122 million is record large.

00;14;53;25 – 00;15;25;09
Scott Stiles
And exports are not, record high, but the highest we’ve seen since 2016. So, so I, you know, it’s not, it’s not keeping ending stocks from growing. So, but there is, some improvement from last year and, and demand, but, still, it’s just a really it’s a much heavier stock situation where stocks, growing about 40% from last year.

00;15;25;11 – 00;15;32;25
Riley Smith
Right. So good. Well, let’s move on to your bread and butter and, what do you what do you see happening in the cotton?

00;15;32;28 – 00;16;07;07
Scott Stiles
Okay. Well, weather has been a hot topic in the in the cotton market this year. And we saw Hurricane Francine, coming in in early September, and that that, affected the markets, affected production. So, we saw it coming up the Mississippi River and, and come across northeast Arkansas on top of the amounts of rain and, likely, I would say that that was one of the reasons mass reduced the Arkansas cotton deal.

00;16;07;09 – 00;16;30;14
Scott Stiles
So, this month they reduced our state. I was 38 pounds. And I think a lot of that had to do with, we had 40, 50 mile an hour wind gusts that damage from that. And then some areas of the state got ten inches of rain in September. So those were that was one particular event that I think, you know, impacted yield.

00;16;30;21 – 00;17;05;28
Scott Stiles
The thing was, the other key weather event was our Cane Lane. It came in and went into Georgia, the Carolinas. So that was the biggest part of the of the production, cut that the Nass made this month was in the South east. And I think in that that region, I can pull that information. They they’ve reduced the production in the southeast region, 469,000 bales.

00;17;06;01 – 00;17;36;07
Scott Stiles
And in the Mid-South was reduced 91,000 bales. So there were some, you know, pretty substantial, you know, cuts to production this month. And, I guess that was the key, key feature. And, and the balance sheet was, Was 310,000 bale reduction to the size of the crop. So some of those losses in the southeast were offset by a bigger Texas crop.

00;17;36;10 – 00;18;17;23
Scott Stiles
So ultimately we did say 300,000 bale cut in production. But the, the, the offset to that was USDA lowered our export number. And, and Mill use to by 400,000 combined. And so we had a net increase in ending stocks of 100,000 bales and left us at 4.1 million. So, I think part of the reason that they, they, reduced the export number for the U.S is, we’re things that happened on the world balance sheet.

00;18;17;25 – 00;18;53;27
Scott Stiles
They increased China’s production for 400,000 bales and then reduced their imports by half a million. So traditionally, you know, China has been our largest export market. And, it looks like they may, you know, if demand is down quite a bit from their last year, which right now looks like it might be down 6 million bales from a year ago, that, you know, are certainly going to reduce our export numbers here in the US.

00;18;53;27 – 00;19;19;21
Scott Stiles
So, but, anyway, that’s the, kind of the, I think kind of the background story on why we, you know, why we saw low or lower export numbers or just a China’s having a, you know, their having a yield wise their having, having a great crop and, they increased the size of that.

00;19;19;24 – 00;19;58;01
Scott Stiles
And, and they’re just, you know, not going to import as much. Mill use was the other thing I talked about they reduced that 100,000 bales here in the U.S, that is, the 1.8 million in mill use is the lowest, believe it or not, since 1885. So that’s eight. Wow. 1885. So that’s, it’s, anyway, it’s it’s just another reflection of how much mill capacity has moved outside of the United States and into other areas and Central America and Asia.

00;19;58;07 – 00;20;03;25
Scott Stiles
And that’s just a small, a really small part of domestic demand anymore.

00;20;03;27 – 00;20;22;29
Riley Smith
I got you well, good. Real quick lets crunch on corn real quick because I’m running short on time. But, I did see where we had a, the expected increase in yield. I did see that it was, I believe, point two.

00;20;23;04 – 00;20;54;19
Scott Stiles
Right, as a whole and as the small increase, above the U.S. average, up to a record, 183.8. So it’s just really, solid year yield wise in corn. And really, the only part of that story is that the U.S. has produced back to back record, corn yields, which is really surprising. Last year, had a record 177.3, this year, 183.8.

00;20;54;19 – 00;21;22;07
Scott Stiles
So, just had great. Growing season whether and or finishing, with, with great weather too, it’s producers are saved a lot on drying. Weather conditions have been great and, to harvest this, this year crops moving along ahead of normal. So, but, bottom line, USDA didn’t make, any big changes this month.

00;21;22;07 – 00;21;51;13
Scott Stiles
They lowered, carryover 58 million bushels down to 1.99 billion. So, fairly heavy stocks, which should keep prices, right around, USDA’s projects 4.10 a bushel, average season, average price. So, it seems to fit with, with the heavy, stocks outlook, right, It right at 2 billion.

00;21;51;15 – 00;21;57;26
Riley Smith
A good deal. Well, overall, sounds like it was a, pretty good report.

00;21;57;29 – 00;22;19;04
Scott Stiles
Not a lot of changes, really. But it’s, you know, it’s it’s worth, you know, I encourage growers to look at it and and see how the stocks are changing from one year to the next. And that gives you a lot of insight into the price outlook and right now, the stocks were really for every crop or a really heavy.

00;22;19;06 – 00;22;33;15
Scott Stiles
And and really the ending stocks tell the story about why prices are at the levels that they, that they are, which for most things that prices are low as a been since 2020.

00;22;33;18 – 00;22;42;12
Riley Smith
Yeah. Well, Mr. Scott, if you ain’t got anything else to add, I appreciate you jumping on here and giving us an update on the WASDE report.

00;22;42;15 – 00;22;45;03
Scott Stiles
Oh you’re welcome. Glad to talk about it.

00;22;45;06 – 00;23;12;13
Riley Smith
Well, I guess if that’s all, we’ll, we’ll catch, catch you later. And everybody that’s listening, please stay tuned to my market report. We’ll talk to you soon. All right, guys, back with my market report December 24. Corn. Current prices at $4.05 month agos price was at $4.11 per bushel. It’s down $0.06 a year agos price was at $4.89.

00;23;12;13 – 00;23;42;18
Riley Smith
And that’s down $0.84. November 24 rice is at $15.07 per cwt. That month ago price was $15.30 per cwt. That’s down $0.23 a year ago price was at $15.96 per cwt. That’s down $0.79. November 24. Soybeans is at $9.80 per bushel. Month agos, price was at $10.05 per bushel. That’s down $0.25 a year agos price was at $12.97 per bushel.

00;23;42;18 – 00;24;09;13
Riley Smith
That is down $3 and 30 and $0.17 per bushel. July 25 wheat. Is at $6.21 per bushel a month ago, price was at $6.14 per bushel. And that’s up $0.07 a year ago, price was at $6.31 per bushel. That’s down $0.10 December 24. Cotton’s at $0.71 per pound. Month ago, price was at $0.73 per pound. That’s down $0.02.

00;24;09;13 – 00;24;38;17
Riley Smith
A year ago price was at $0.83 per pound. That’s down $0.12 in your weekly U.S average for peanuts is $474 per ton a month ago. Price is at $538 per ton. That’s down $64 in a year ago. Price was at $502 per ton. That’s down $28. That’s your weekly U.S commodity futures. Your weekly state average for your input prices.

00;24;38;17 – 00;25;11;13
Riley Smith
Urea is at $490 per ton, ammonium sulfate at $500 per ton, DAP is at $850 per ton, triple Super phosphate at $630 per ton. Potash is at $455 per ton, pellet lime is at $260 per ton, and you’re off road diesel this week is at $2.49 per gallon. Highway diesel is $3.33 per gallon. Your river level at Mississippi, your Mississippi River level.

00;25;11;13 – 00;25;32;03
Riley Smith
Excuse me, at Memphis this week. Current levels at -7.33ft a year ago was at a -11.94ft. So I want to thank you all again for joining in on another episode of Morning Coffee and AG Markets. We hope you enjoyed it. We hope you enjoyed your morning coffee and have a great rest of your work. We’ll catch you guys on the flip flop.

00;25;32;03 – 00;25;46;21
Riley Smith
Bye bye now.

00;25;46;23 – 00;25;47;04
Riley Smith