Contributed Content from Brennan Turner, President & CEO of FarmLead: Divergent Crop Progress, T

Grain markets are slightly in the red as the complex pulls back from the big gains made yesterday on slower crop progress and a new NAFTA being signed.

On Sunday night (September 30), a new era of free trade in North America was announced in the form of the USMCA (AKA the United States-Mexico-Canada Agreement). [1] After 14 months of re-negotiations, this new agreement will effectively replace NAFTA.

The new deal doesn’t account for the current tariffs on Canadian steel and aluminum, but it does remove Class 7 pricing from the Canadian milk industry (Canada gave up similar concessions to join the Trans-Pacific Partnership free trade deal amongst Pacific Rim countries).

Amongst the agricultural industry in all three countries, the deal getting signed was welcomed, as preserves open trade in the largest tri-lateral economy in the world. [2]

While it’s healthy to see a trade war between Canada and the U.S. averted, grain markets are starting to also price-in the lack of crop progress in North America.

USDA’s Crop Progress

Yesterday afternoon (October 1), grain markets digested the weekly crop progress report, which showed that the U.S. corn harvest advanced by 10 points from last week to 26 percent complete.

As it relates to other factors in the crop progress report, we saw corn and soybean good-to-excellent (G/E) ratings stay flat at 69 percent and 68 percent, respectively.

Also, 23 percent of the U.S. soybean crop has been harvested, up nine points week-over-week and three points ahead of the five-year average. Rounding out the USDA’s crop progress report was that 43 percent of the U.S. winter wheat crop had been seeded, up 15 points week-over-week, and also three points ahead of the five-year average. Switching USDA reports, over the weekend for our GrainCents readers, we dug into the Quarterly Stocks report released on Friday, September 28.

The agency said that all wheat stocks came in 2.38 billion bushels for September 1. That figure is up 5 percent from one year ago when all-wheat stocks sat at 2.27 billion bushels. From a quarter-over-quarter perspective, total U.S. wheat stocks decreased 605 million bushels from the 1.1 billion bushels reported for June 1. That disappearance is an 8 percent decline from last year. The USDA said that U.S. corn stocks came in at 2.14 billion bushels on September 1. That figure is down 7 percent year-over-year from September 1, 2017.

The agency said that soybean stocks came in 438 million bushels, up 45 percent from one year ago when soybean stocks sat at 301 million bushels. This also meant that, for the quarter, total U.S. soybean inventories decreased 781 million bushels from the 1.22 billion bushels reported for June 1. That total disappearance is an 18 percent increase from the same period last year.