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Veteran Advisor

Floor Talk, June 11, 2019 (Report Day)

At the close:

At the close, the July corn futures finished 12¢ higher at $4.27 3/4. Dec. corn futures closed 12 1/2¢ higher at $4.47.

July soybean futures settled 3/4¢ higher at $8.59 1/4. November soybean futures settled 1 1/4¢ higher at $8.87.

July wheat futures settled 10 1/2¢ higher at $5.18.



July soymeal futures closed $1.00 per short ton higher at $314.40.

 July soy oil futures ended $0.16 lower at 27.22¢ per pound.



In the outside markets, the NYMEX crude oil market is $0.04 lower, the U.S. dollar is lower, and the Dow Jones Industrials are 27 points lower.

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USDA SAYS:

Corn Estimates

The USDA pegged the U.S. 2019 corn acreage at 89.8 million, compared with the average trade estimate of 86.7 million acres.

The average U.S. corn yield estimate is 166 bushels per acre, according to the USDA. That is higher than the avg. trade estimate of 172.40 bu./acre and below the May estimate of 176 bu./acre.

For corn, the USDA pegged U.S. 2019 production at 13.68 billion bushels vs. the trade’s expectation of 14.2 billion bushels and the USDA previous estimate of 15.03 billion.


Corn Ending Stocks
The government agency sees the U.S. 2018/19 corn ending stocks at 2.195 billion bushels, compared with its May estimate of 2.095 billion bushels.

The USDA sees the U.S. 2019/20 corn ending stocks at 1.675 billion bushels, compared with its May estimate of 2.485 billion bushels and the trade’s estimate of 1.917 billion bushels.

Soybeans
In its June Supply/Demand Report, the USDA pegged the U.S. 2019 soybean acreage at  84.6 million, compared with the average trade estimate of 87.0 million acres.

The average U.S. soybean yield estimate is 49.5 bushels per acre, according to the USDA. That is higher than the avg. trade estimate of 49.00 bu./acre and below the May estimate of 49.5 bu./acre.

For soybeans, the USDA pegged U.S. 2019 production at 4.15 billion bushels vs. the trade’s expectation of 4.12 billion bushels and the USDA previous estimate of 4.15 billion.


Soybean Ending Stocks

The government agency sees the U.S. 2018/19 soybean ending stocks at 1.070 million bushels, compared with its May estimate of 995 million bushels.

The USDA sees the U.S. 2019/20 soybean ending stocks at 970 million bushels, compared with its May estimate of 970 million bushels and the trade’s estimate of 991 million bushels.

"Corn numbers are price supportive, but bearish wheat numbers will keep a cap on corn’s rally,” Al Kluis, Kluis Advisors, says.
“Let’s watch to see what happens at the close of today’s session.”

Wheat

The USDA pegged the U.S. All Wheat 2019 production at 1.903 billion bushels, vs. the trade’s expectations of 1.883 billion and the USDA’s May estimate of 1.897 billion.

The U.S. 2019/20 wheat carryout is estimated at 1.07 billion bushels vs. the average trade estimate of 1.11 billion and the May estimate of 1.14 billion.

World Numbers

In its report, the USDA pegged the 209/20 world corn carryout at 290.5 million metric tons vs. the trade’s expectations of 304.96 mmt. and the May estimate of 314.71.

For soybeans, the 2019/20 world carryout is estimated at 112.7 met. vs. the trade’s estimate of 112.9 and the USDA’s May estimate of 113.09 met.

The world’s wheat carryout for 2019/20 is pegged at 294.3 mmt. vs. the trade’s estimate of 290 met. and the USDA’s previous estimate of 293.01.

 

Trade Response

--Britt O'Connell, Cash Advisor for Commodity Risk Management Group, says that the USDA Report, today, has the corn market higher, wheat higher and soybeans effectively unchanged on the day.

“This month’s U.S. soybean supply and use projections for 2019/20 include higher beginning and ending stocks. Beginning stocks are raised reflecting a 75-million-bushel reduction in projected exports for 2018/19 based on lower-than-expected shipments in May and a lower import forecast for China. Although planting progress has been slow for the soybean crop, no changes were made to either acres of yield as several weeks remain in that planting window,” O’Connell says.

The season average price for soybeans was raised 15 cents reflecting higher corn prices. Global soybean supply was down .3 million tons to 355.4 million.
“Net/net, no major surprises in soybeans and that market will likely continue to hang on the ledge,” O’Connell says.

Corn had significant changes made it to it's balance sheet.

“In a very nontraditional move, the USDA cut planted acres by 3 million and 10 bushels of yield. Taking production down from 1.5 mbu to 1.36 mbu. Changes to the demand side of the balance sheet saw feed and residual lowered 300 mbu and exports lowered 125 mbu. Ending stocks came in at 1.675 down significantly from 2.485 projection in May. The big watch point now will be if and how much they lower planted acres in the June 28th report,” O’Connell says.

--Jason Roose, U.S. Commodities, says that the corn market is well supported.

“The USDA Report, today, sent an aggressive signal today in the June Crop Production Report, lowering corn yields by 10 bushels, making it the largest reduction in history. In addition, in part due to adversity in spring planting, acres were also reduced by 3 million which could be revised on June 28th.

Roose added, “Going forward, the weather will be closely monitored as these numbers today could fluctuate,” Roose says.

--Dustin Johnson, AgYield, says that the market severely underestimated the USDA's ability to lower yield early.
“The USDA did the same in 1995, not surprising to see them lower it based on their methodology in the past. We still think production could come down from 13.680 billion,” Johnson says.
With this report, it would not be surprising to see corn take out the $4.54 high in Dec. futures, according to Johnson.

Johnson added, “Soybean production left unchanged is probably fair, for this time of year, and uncertainty about how many acres of corn could roll into beans. Also they have a tough job on the demand side with such uncertainty about China demand.”

What say you?

 

Mike

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At 8:50am:

 

In early trading, the July corn futures are 5 1/2¢ lower at $4.10. Dec. corn futures are 5 1/2¢ lower at $4.29.

July soybean futures are 4 1/4¢ lower at $8.54 1/4. November soybean futures are 4 1/4¢ lower at $8.81 1/2.

July wheat futures are 3 1/2¢ lower at $5.04.



July soymeal futures are $1.00 per short ton higher at $312.40.

 July soy oil futures are $0.05 lower at 27.33¢ per pound.



In the outside markets, the NYMEX crude oil market is $0.42 higher, the U.S. dollar is lower, and the Dow Jones Industrials are 114 points higher.

Al Kluis, Kluis Advisors, says that investors will be watching for today’s USDA Crop Progress Report and tomorrow’s June Supply/Demand Report.

“The USDA Crop Progress report indicated that the corn ratings were at just 59% good to excellent. That is low number and now it is important to watch the trend in ratings as we get into June and July,” Kluis told customers in a daily note.

Kluis added, “Regarding today’s USDA June Supply/Demand Report, I am watching to see not only the USDA projected corn crop, but what the USDA does with ethanol and exports for the rest of this year and the next marketing year. A smaller crop does not always create a smaller carryout.”

 

 

 

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4 Replies
Esteemed Advisor

Re: Floor Talk, June 11, 2019 (Report Day)

I'd like to see his data to support "a smaller crop does not always create a smaller carryout" comment. Not one of those years comes to mind, but of course, he is the expert.

Senior Contributor

Re: Floor Talk, June 11, 2019 (Report Day)

Congratulations everyone for the new community version!

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Veteran Contributor

Re: Drove by the ethanol plant on Sunday and....

I drove by the ethanol plant on Sunday and there are acres of ground within an easy tractor drive of it,  not planted to anything.  If they couldn't get it planted then something is wrong.  I'm not saying it's like that everywhere because I've got a good bunch of mine planted but, holy cow.

 Patience, we just have to wait and let the USDA and traders come to us this year.

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Senior Contributor

Patience ?

most of the "smart guys" I know have quit selling corn at the current range and are waiting for the $5 to $6 area....are they right? I don't know.

Markets rarely go straight up, and this corn market probably is no exception.

Some of my friends are selling...some are not....I am going to go along with their judgement....lol.

Just don't give your product away on delayed pricing contracts....that has to be one of the most foolish moves any producer ever makes....it's like the foolish girl that thinks the boy will love her as much in the morning as he loves her at midnight.

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