On Wednesday, the USDA released the September WASDE report with some very bearish surprises for the corn and soybean markets. Going into the report, the market was already quite bearish on soybeans, expecting to see 2018/19 ending stocks in the US top 800 million bushels and 100 MMT globally.

However, the numbers turned out to be even more bearish than analysts expected. Now only did U.S. stocks hit an astounding 845 million bushels, but global stocks popped another 2.7 million metric tonnes (MMT) to touch just north of 108 MMT. On the domestic front, this is thanks to American farmers producing a record yield of 52.8 bushels per acre, up 1.2 from last month’s report and about 0.5 higher than what the market was expecting. This adds up to a record U.S. soybean crop of 4.693 billion bushels (or 127.73 MMT).

On the corn front, the USDA was even more bearish. Going into the report, the average pre-report guesstimate for US corn production was 14.27 billion bushels off an average yield of 177.7 bushels per acre. However, the USDA is now suggesting that average American corn yields for the 2018/19 crop will be 181.3 bushels per acre. That’s a new record, beating the previous mark – set last year, no less – by nearly 5 bushels per acre! This means 2018/19 corn production should be the second-largest on record at 14.83 billion bushels. That’s also 560 million bushels more than what the market was expecting to see.

Worldwide corn carryout was estimated by the USDA at 157.3 MMT, which is a healthy decline of 19% year-over-year, but the entire decline is basically being attributed to China working through their massive stockpiles. 2018/19 ending stocks for soybeans were raised to a record 108 MMT, up 14% year-over-year.

For canola, the USDA left the Canadian production number unchanged from August’s estimate at 21.1 MMT. Compare this against StatsCan’s August estimate of 19.2 MMT. Next Wednesday, on September 19th, we’ll hear from StatsCan again for their satellite-based crop production estimates. More globally though, the USDA revised total rapeseed production lower, include declines in Europe and China. Strong domestic crush and exports should continue to help Canadian canola prices, but we must keep in mind that canola is very expensive to soybeans right now.

Finally, for hard spring wheat, US 2018/19 carryout was lowered by 10 million bushels from the August estimate, despite production being stayed at 583 million bushels (or 15.9 MMT). Food for thought: US HRS wheat carryout has now being lowered by a combined 31 million bushels in the past two WASDE reports.

Despite the bearish nature of the USDA’s WASDE report this month, we’re seeing a lot of social media posts of the negative weather (read: snow) impacting Harvest 2018 in Western Canada. This obviously brings back the memories of the battle of Harvest 2016. From a price direction, something to keep in mind here is that back in the 2016/17 crop year, grain prices didn’t rally as much as everyone was hoping, meaning we should keep our expectations in check. Second, it became really important to get your grain tested and know your quality. We’ve built a simple tool called GrainTests.com to help you do just that.

To growth,

Brennan Turner is the President & CEO of FarmLead.com, North America’s Grain Marketplace. He holds a degree in economics from Yale University and spent time on Wall Street in commodity trade and analysis before starting FarmLead. In 2017, Turner was named to Fast Company’s List of Most Creative People in Business. He is originally from Foam Lake, Sask. where his family started farming land nearly 100 years ago (and still do to this day).