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Tony_Dreibus
Veteran Contributor

Floor Talk May 10 (Report Day)

At the close:

At the close, the July corn futures finished 3/4¢ lower at $4.02. December futures finished even at $4.19. July soybean futures closed 5 1/2¢ higher at $10.21.  November soybean futures settled 6 3/4¢ higher at $10.31. July wheat futures closed 4¢ lower at $5.06. July soy meal futures settled $0.30 per short ton higher at $386.10. July soy oil futures closed 0.10 higher at 31.13¢ per pound.  In the outside markets, the NYMEX crude oil market is $0.26 higher, the U.S. dollar is lower, and the Dow Jones Industrials are 193 points higher.

 

 

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At mid-session:

At mid-session, the July corn futures are 1¢ higher at $4.03. December futures 1¢ higher at $4.20. July soybean futures are 11¢ higher at $10.26.  November soybean futures are 10 1/4¢ higher at $10.34. July wheat futures are 5 3/4¢ lower at $5.04. July soy meal futures are $4.10 per short ton higher at $389.90. July soy oil futures are 0.01 lowser at 31.02¢ per pound.  In the outside markets, the NYMEX crude oil market is $0.14 lower, the U.S. dollar is lower, and the Dow Jones Industrials are 226 points higher.

 

Mike

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At 11am:

 

USDA SAYS:

 

The stockpiles of U.S. corn and soybeans dwindle, due to increased global demand.
As a result, the CME Group’s farm markets jumped. July corn futures moved up 5¢, soybeans 13¢, and wheat 7¢ lower.

U.S. 2017/18 Ending Stocks
In its May Supply/Demand Report Thursday, the USDA pegged the U.S. 2017/18 corn ending stocks at 2.18 billion bushels, compared with the trade’s expectations 2.170 billion bushels and the USDA’s estimate in April of 2.182 billion.

 

For soybeans, the U.S. 2017/18 ending stocks were estimated at 530 million bushels vs. the avg. trade estimate of 544 million and the USDA’s April estimate of 550 million.

 

The USDA pegged the U.S. 2017/18 wheat ending stocks at 1.070 billion bushels vs. the avg. trade estimate of 1.063 billion bushels and the USDA’s April estimate of 1.064 billion.

U.S. 2018/19 Ending Stocks
In its May Supply/Demand Report Thursday, the USDA pegged the U.S. 2018/19 corn ending stocks at 1.682 billion bushels, compared with the trade’s expectations 1.620 billion bushels.

 

For soybeans, the U.S. 2018/19 ending stocks were estimated at 415 million bushels vs. the avg. trade estimate of 529 million.

 

The USDA pegged the U.S. 2018/19 wheat ending stocks at 955 million bushels vs. the avg. trade estimate of 963 million bushels.

World Crop Production
On Thursday, the USDA pegged Brazil’s 2017/18 corn production at  87.0 million metric tons, vs. the avg. trade estimate of 88.2 mmt. and the USDA’s April estimate of 92.0 mmt.

 

For soybeans, Brazil is expected to produce 117.0 mmt. vs. the avg. trade estimate of 116.5 mmt. and the USDA’s April estimate of 115.0 mmt.

 

For Argentina, USDA pegged its corn output at 33.0 million mt. vs. the avg. trade estimate of 32.1 mmt. and the USDA’s April estimate of 33.0 mmt.

 

Argentina’s 2017/18 soybean production is pegged at 39.0 mmt. vs. the avg. trade estimate of 38.6 mmt. and the USDA’s April estimate of 40.0 mmt.

 

Trade Response:

 

--Jason Roose, U.S. Commodities says that the market's initial reaction was friendly the soybean market and neutral the corn market after the May crop report, the lower ending stocks for the 18/19 soybean was down 112 mln from last years crop on lower harvested area and lower yield , world corn ending stocks had a large reduction to 159 mln ,which is the lowest since 12/13 crop year on increased global demand .

 

--Brian A. Rydlund, CHS Hedging Market Analyst, says that there are noo big surprises in USDA’s U.S. numbers.
“No surprise at home, carryouts came in near the gues
ses. USDA is using 174 bu./acre corn yield as a trendline. Corn still has a better story than beans do, going into summer. But, the bean story got interesting today,” Rydlund says.
“World carryouts got tighter on corn and soybeans, especially corn. The margin for production error has shrunk. We need a good U.S. crop this summer,” Rydlund says.

 

--Sal Gilbertie, Teucrium Trading owner, says that the report offers a few surprises.
“The surprising almost twenty-two percent drop in new crop soybean ending stocks definitely gave the bean market some legs and probably puts some of the tariff jitters on the sidelines, at least temporarily,” Gilbertie says.
Wheat took an initial price hit, until traders realized ending stocks are actually at a four year low and domestic usage is up in virtually all categories, Gilbertie says.
“New crop corn ending stocks were down almost twenty three percent, but the decline had been widely predicted and thus had little immediate impact on prices, although it will likely provide some price support for corn markets moving forward. All-in-all, this looks like a friendly report to the markets."

 

--Jason Ward, Northstar Commodity Investment Co. LLC, says there is a lot to digest.

 

US Ending Stocks 2017/2018

No change in corn, ending stocks stay at 2.182 billion bushels

Soybean ending stocks declined 20 million bushels to 530 million bushels. An increase of 20 million bushels in the crush category is where the reduction in stocks occurred.

Wheat ending stocks increased by 6 million bushels to 1.070 billion bushels.

 

US Ending Stocks 2018/2019

This is USDA’s first balance sheet with March Planting Intentions and weather adjusted trend line yields for the crop that is being planted now

  • Corn ending stocks came in at 1.682 billion bushels
  • The corn crop is projected at 14 billion bushels, down from last year by 604 million bushels. 88 million acres and a 174 bu/acre trend line yield. This weather adjusted trend line yield assumes normal planting progress and summer growing season weather, and is estimated using the 1988-2017 time period.

Usage of corn was decreased from 2017/2018 in all categories except corn used for ethanol. Feed usage was reduced 125 million bushels to 5.375 billion bushels. Feed/residual usage is projected lower as a result of a small crop, increased use of ethanol by-products, and HIGHER PRICES more than offset growth in grain consuming animal units.

  • Exports are forecast to decline by 125 million bushels in 2018/2019. USDA is expecting increased competition for US corn from the Ukraine and Russia.
  • Soybean ending stocks came in at 415 million bushels well below estimates at 530 million bushels
  • 89 million acres at 48.5 bu/acre is a crop size of 4.280 billion bushels, down from last year’s crop by 112 million bushels. Other adjustments were made to usage with crush higher by 5 million bushels, but the big change for next year is a new ALL-TIME record high export projection of 2.290 billion bushels. This assumes the trade deal with China is solved, and usage soars next year for 2018 soybeans. While we want to believe this to be the case, a lot has to be determined with this trade deal in the coming month before we get too excited about new record exports of soybeans in the next marketing year.
  • Wheat ending stocks fell to 955 million bushels, from current 1.070 billion bushels. The 2018/2019 wheat crop is projected at 1.821 billion bushels, up 5% from last year. Total use for wheat next year is projected up 3% on higher food/feed/residual, and exports were alrady increased by 15 million bushels. Total use was up 66 million bushels. If this ending stock total of 955 million bushels is realized, it would be a 4-yr low.

World Ending Stocks 2017/2018

Corn = 194.9 MMT, down 2.9 MMT from last month. Brazilian production was the big mover and USDA reduced it by 5 MMT to 87 MMT. Total usage was reduced by 1.47 MMT so the net result globally was 2.9 MMT.

Soybeans = 92.2 MMT, an increase from 90.8 MMT last month, +1.4 MMT. Brazil soy production was the big change up 2 MMT from last month, while Argentina was lowered by 1 MMT.

Wheat = 270.5 MMT, a decline of 0.7 MMT from last month

 

World Ending Stocks for 2018/2019

Corn = 159.2 MMT, sharply lower from current estimates of 194.9 MMT. Global corn outlook calls for higher production globablly, increased usage and lower ending stocks. Large increases in production are seen in Brazil, China, Argentina, Ukraine, and Russia. Global corn usage is expected to grow 2% from this year. Global corn imports are expected to be up 5%, with the largest increase being China, but other countries like Vietnam, Bangladesh, Iran, Malaysia, Mexico and Saudi Arabia all are showing increases in corn usage. Total usage for corn next year is forecast up 22.43 MMT or 883 million bushels. China is the large chunk of that making up for 36% of the increase, but nearly every country in the world increases usage of corn next year (except the US, which is actually down 1.47 MMT in today’s forecast).

This would be the tightest world ending stocks (if realized) since 2012 when we were 135.6 MMT. From the peak in World Corn Carryout 2 years we have gone from a 78 day supply to a forecasted 54 day supply in 2018/2019. In billion bushels this is difference of 2.668 billion bushels in 2 yrs.

 

Soybeans = 86.7 MMT, down over 4 MMT from trade estimates, with the large surprise being in the US with a 415 million bushel ending stock forecast. Higher production is forecast, crush, exports and lower ending stocks are foreast for 2018/2019. Global protein meal consumption is projected to increase 4% with China accounting for the largest share of the increase. This type of usage increase is aggressive, and if realized puts the pressure on the US/Brazil/Argentina again in 2018/2019 to produce big soybean crops.

Argentina is expected to recover back to 56 MMT from this year’s drought ridden crop of 39 MMT, Brazil is forecast again to achieve another record at 117 MMT, equal to 2017/2018

 

Wheat = 264.3 MMT, down just over 6.1 MMT from current 2017/2018 ending stocks. Most of the year-over-year production declines stems from a 13 MMT reduction for Russia, and global wheat consumption is projected at a record of 753.9 MMT, up 10.1 MMT from 2017/2018. Total use is rising faster than supplies, which resulted in lower global ending stocks for wheat, for the first time since we saw supplies decline from 2011 into 2012, so 6 years ago.

 

Bottom Line

World supplies of all 3 major crops, corn/wheat/soybeans are projected LOWER for 2018/2019. This increase in usage forecast by USDA will keep GREAT importance on the US growing season for us to achieve another trend line or higher crop in 2018. Lower prices will not curtail demand, what will curtail demand is trade wars and falling global economies. The importance for all of us in the production side of agriculture is that we keep open trade with our partners, because if you look at the numbers released today, OUR PARTNERS WANT MORE OF WHAT WE PRODUCE, not less.

It is also important to remember with these 2018/2019 estimates, that this is USDA’s “first crack” at 2018/2019, and many many adjustments will be made going forward.

 

 

What say you?

 

 

Thanks,

 

Mike

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At 10:39am:

If you missed it, the USDA Weekly Export Sales Report showed that sales came in below expectations for all commodities except soybeans. Here is the report:

 

Corn= 785,600 metric tons vs. the trade’s expectations of between 800,000-1,250,000 metric tons.

Soybeans=  632,600 mt. vs. the trade’s expectations of between 400,000-900,000 metric tons.

Wheat=  83,400 mt. vs. the trade’s expectations of between 250,000-700,000 metric tons

Soybean meal= 90,300 mt. vs. the trade’s expectations of between 100,000-400,000 metric tons.

 

What say you?

 

Mike

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At 9:00am:

In early trading, the July corn futures are 1/4¢ lower at $4.02. December futures 1/4¢ lower at $4.19. July soybean futures are 3 3/4¢ higher at $10.19.  November soybean futures are 3¢ higher at $10.27. July wheat futures are 2 1/2¢ lower at $5.08. July soy meal futures are $1.40 per short ton higher at $387.20. July soy oil futures are even at 31.03¢ per pound.  In the outside markets, the NYMEX crude oil market is $0.15 lower, the U.S. dollar is lower, and the Dow Jones Industrials are 95 points higher.

 

Mike

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Soybeans and grains were higher ahead of WASDE as analysts expect a drawdown in ending stocks for 2018-2019 amid lower planted acres, Allendale said. Beans added 4 cents, corn was up about 2 cents and wheat gained 2-4 cents overnight. Ethanol production, meanwhile, rose to the highest level since March while stockpiles declined. In weather news, there's flooding along the Mississippi River from northern Iowa to central Missouri, and more rain is on the way for northeastern Iowa. Get all the details in today's 3 Big Things

 

West Texas Intermediate = up 0.8%.

Brent Crude = up 0.3%

Dollar = down 0.1%.

Wall Street = U.S. stock higher pre-market.

World Markets = Global stocks higher overnight.

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