Floor Talk July 12 (Report Day)

[Tony_Dreibus]

 At the close:

At the close, the Sep. corn futures settled 4 cents higher at $3.52, Dec. futures closed 4 3/4¢ higher at $3.60 1/4 per bushel. August soybean futures ended 25 1/4¢ higher at $11.02 1/4, while Nov. soybean futures ended 32¢ higher at $10.87. Sept. wheat futures finished 8¢ higher at $4.38 1/2. August soymeal futures closed $6.10 short ton higher at $378.70. August soyoil futures closed $0.33 higher at 30.81 cents per pound.  In the outside markets, the Brent crude oil market is $2.04 per barrel higher, the U.S. dollar is lower, and the Dow Jones Industrials are 138 points higher.

Mike

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USDA SAYS:

U.S. 2015/16 Ending Stocks:

Corn= 1.701 billion bushels vs. the trade's expectation of 1.805 billion bu. and USDA June 1.708 billion

Soybeans=  350 million bushels vs. the avg. trade estimate of 352 million and USDA June at 370 million bushels.

U.S. 2016/17 Ending Stocks:

Corn=2.08 billion bushels vs. the avg. trade estimate of 2.208 billion bushels and the June USDA 2.008 billion bu.

Soybeans= 290 million bushels vs. the avg. trade estimate of 316 million and USDA June of 260 million.

2015/16 World Crop Production:

Brazil corn= 70.0 mmt vs. USDA June of 77.5 mmt

Argentina corn=    28.0 mmt vs. USDA June of 27.0 mmt

 2015/16 World Ending Stocks

Corn= 206.9 mmt vs. 206.5 in June

Soybeans= 72.2 mmt vs. USDA June 72.3

2016/17 World Ending Stocks

Corn= 208.4 mmt vs. USDA June 205.0 mmt

Soybeans= 67.1 mmt vs. USDA June 66.0 mmt

Wheat= 253.7 mmt vs. USDA June 257.8 mmt

The 2016/17 global wheat number is supporting the market, today. For the first time, a lower number came out of these reports, for wheat, analysts say.

MARKET REACTION: Wheat is up 3-4 cents, Soybeans up a few cents, Corn up 2 cents.

 TRADE REACTION:

--Sal Gilbertie, Teucrium Trading, says that the headline statement in today’s report is that “total wheat usage is growing faster than supplies”.
“That is probably what is giving some support to wheat prices, but incremental global soybean usage seems to be growing at an even faster rate than that of wheat,” Gilbertie says.
“This report confirms three things; that we currently have adequate stocks of all grains, that global demand is immense and growing, and that we are more dependent than ever on record annual crop production to maintain balanced markets,” Gilbertie says.
There were no true surprises in today’s report, but market reaction would suggest some concern over growing global demand for grains of all kinds and the importance of continued record crop production and near perfect weather conditions, Gilbertie says.

--Jason Roose, U.S. Commodities, says that today’s USDA July crop report offered few surprises. “U.S. corn and soybean yield estimates were left unchanged, while Brazil corn crop was lowered 7 mmt,” Roose says. World wheat ending stocks were also lowed. Overall, most of the numbers released were within estimates. The market will be focusing on the weather for the remainder of the month.”

--Jack Scoville, The PRICE Futures Group’s Senior Market Analyst, says that there really is not all that much here in these reports.  
“For me, the biggest surprise is that there was no real surprise at all.  The best number was world wheat ending stocks for next year, well below expectations.”
US Wheat production up, especially HRW, corn and beans up and in-line with acreage changes and trend line yields, Scoville says.  
“The demand saw more export and less feed in-line with the USDA stocks reports from last month.  I think the fact we are higher in corn and wheat, related to the fact that the report is mostly neutral and not bearish.  Even the beans kind of a mixed bag, but not real negative.”
Scoville adds, “The soybean market is trading weather, now, I guess, and maybe some Brazil stuff. But, there is nothing in the data to suggest a moon shot is coming.  All in all, a mostly neutral with a fairly bullish reaction to all of it.”

--Jason Ward, Northstar Commodity Research, says it’s a positive report with an uncertain future.
“As with any positive report, or constructive report, the question is can we maintain the gains. And, right now, if the heat remains in the 6-10 day and 11-15 day forecast, we should hold onto the gains from the report,” Ward says.

USDA lowered feed use by 50 million bushels and lowered corn used for ethanol by 25 million bushels (-75 million bushels in usage), Ward says. “It raised the corn export target by the same 75 million bushels to 1.900 billion bushels, resulting in a net wash in ending stocks.”

Other Ward Comments:

Corn Ending Stocks came down from last month from 1.708 billion bushels to 1.701 billion bushels. This was a FULL 100 million bushels BELOW the trade estimate. USDA lowered FEED USE by 50 million bushels and lowered corn used for ethanol by 25 million bushels (-75 million bushels in usage), then they RAISED the export target by the same 75 million bushels to 1.900 billion bushels, resulting in a NET wash in ending stocks.
 
New crop 2016/2017 Corn Ending Stocks came in at 2.081 billion bushels, up from last month of 2.008 billion bushels, but we digested a higher corn acreage number at 94.1 million acres and yield was left unchanged at 168 bpa. Total usage for 2016/2017 was increased by just 30 million bushels to 14.200 billion, keeping the usage figures for 2016/2017 in line with expectations.
 
A big change in global supply was seen in Brazil as USDA lowered their target from 77.5 MMT to 70 MMT, very much in line with CONAB’s number last week of 69.1 MMT.
 
Soybean ending stocks fell by 20 million bushels to 350 million bushels, down from 370 million bushels last month. Exports were increased by 35 million bushels, and then a reduction in the residual category was the net change of 20 million bushels.
New Crop 2016/2017 ending stocks went up from 260 million bushels to 290 million bushels as a result of more soybean acres being added to the balance sheet, and these numbers were within 10 million bushels of trade expectations. Now it comes down to yield on soybeans, and USDA left it unchanged from last month at 46.7 bu/acre.
 
Wheat stocks in the US were steady on old crop at 981 million bushels, no changes. New crop 2016/2017 wheat stocks 1.105 billion bushels. This new crop target on wheat is up from 1.050 bil/bu last month. Usage on wheat was increased NICELY from last month, we just now have more production to deal with following expectations for good crop in 2016. These numbers on wheat were however in line with expectations, and GLOBAL wheat numbers were supportive," Ward says.

--Dustin Johnson, EHedger LLC grain analyst, says that the USDA Report is not creating much reaction.
“The USDA lowered their feed demand estimate 50 million bushels, but we don't see any reason for that number to be 300 million bushels higher than last year, with current wheat stocks/prices. Carryout surprised simply because the USDA didn't acknowledge a demand change for 2015, even in light of the June 30th stocks surprise.”

What do you think?

Mike

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At mid-session:

At mid-session, the Sep. corn futures are 5 cents lower at $3.43, Dec. futures are 4 1/4¢ lower at $3.51 per bushel. August soybean futures are 14¢ higher at $10.91, while Nov. soybean futures are 16¢ higher at $10.71. Sept. wheat futures are 3 1/2¢ lower at $4.27. August soymeal futures are $3.80 short ton higher at $376.40. July soyoil futures are $0.33 higher at $30.66.  In the outside markets, the Brent crude oil market is $1.90 per barrel higher, the U.S. dollar is lower, and the Dow Jones Industrials are 125 points higher.

Mike

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At the open:

At the open, the Sep. corn futures are 1/4 of a cent lower at $3.48, Dec. futures are 1/4¢ lower at $3.55 per bushel. August soybean futures are 9 1/4¢ higher at $10.86, while Nov. soybean futures are 7 1/2¢ higher at $10.62. Sept. wheat futures are 1 1/4¢ lower at $4.29. August soymeal futures are $1.20 short ton higher at $373.80. July soyoil futures are $0.31 higher at $30.64.  In the outside markets, the Brent crude oil market is $1.21 per barrel higher, the U.S. dollar is lower, and the Dow Jones Industrials are 114 points higher.

Mike

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It seems like the months are flying by now with another WASDE report upon us. The outlook is for higher corn stockpile estimates but lower bean inventory forecasts. Meanwhile, the weather is looking pretty bad in parts of northern Missouri. Photos showed bins blown over and damage to other farm equipment in some areas. Looks like that's continuing at least this morning as a severe thunderstorm warning is in effect for much of the area. 
 

Here's what happened overnight:

Brent Crude Oil = 2.9% higher.

West Texas Intermediate Crude Oil = 2.6% higher.

Dollar = down 0.3%.

Wall Street = U.S. stock futures rise in overnight trading
World Markets = Global stocks higher, following oil prices. 

[Reno31]

You want to know what we think?

Well I think corn should go up.

That's what I think.

Spoiler

[roarintiger1]

I think that the prices for all farm commodities are way undervalued.   The people of the United States are very, very complacent when it comes to their  food supply.