From Oct to the Final
The overwhelming opinion of traders is that the Nov end stocks will be substantially lower than the Oct report. Reiterating a bit, 2018 Oct to Nov had a cut in production of 1.3 Mb. In 2011 Oct to Nov cut 300 kb, on the way to final cut of 1.0 Mb from Oct. Those two years saw the largest decreases. In 2019 Oct to final was a cut of 400 kb; 2010 Oct to Nov cut was 500 kb, and to final was a cut of 770 kb. 2009 Oct to Nov was a cut of 500 kb, and to final was a cut of 815 kb. 2008 Oct to Nov dropped 200 kb, and to final was a cut of 885 kb. 2002 Oct to final was a cut of 815 kb. Large production losses occurred in 7 years of the past 2 decades. One year's loss was 500 kb, 4 years had a range of 770 kb to 885 kb, and 2 years saw hits of 1.0 Mb to 1.3 Mb.
Judging market reaction and strength, it is looking for the total crop loss to be at the historical maximum, 1.0 to 1.3 Mb.
After a 15 day run of 13 higher closes and 2 unch, a pause. If we load the balance sheet with market expectations of a crop of 15.8 Mb, then take 60% of total supply to get an export estimate, that figure is 13.83 Mb. A lot of traders would disagree with that figure, as the USDA is currently at 14.6 Mb. Fair enough, but the highest % of total supply in history is 71% (2016/17), and there are 6 years between 62.7% to 65.4%. Call it 64%. A 71% ratio of total supply gets exports of 16.37 Mb, and 64% arrives at 14.75 Mb. So to summarize all of this numbers salad, if one holds crop size to the expectation of the market, begin with total supply of 23.050 Mb. Apply the 3 figures above for exports of 16.37 Mb, 14.75 Mb, and 13.83 Mb. Those arrive at end stocks of 4.18 Mb, 5.80 Mb, and 6.72 Mb. We prefer to use a figure between 14.75 and 13.83, at 14.29 Mb, which gets end stocks of 6.26 Mb. The resultant ratio is 37.3%, as opposed to current of 42%. Table below shows a 15.8 Mb crop, and exports at 62% of supply.
Timing is often a better tool to identify major tops and bottoms than chart patterns. Tue, 10/27, falls on a 144 Fib count from the major low of 5018. That day is also the end date of a positive seasonal. And, next week gets even more loaded with critical timing. Fri, 10/30, marks 147 days from the 4/02 low of 5018. This time period is identical to the number of days from the major low of 9/03/2019, to the 4/02 low. And, 10/30 is end of month, and is associated with the rolls and the beginning of Dec liquidation.