Hi Prognosis is one's best judgement as to what is going to happen in the future. The futures market is just that-common knowledge will lose you a lot of money.
As for corn-thinking that about two million acres will not be planted to corn from the USDA estimate. There is just too much wet ground and getting too late. I think there was about 11million unplanted corn acres from the last crop progress report and a lot of places didn't get help from Mother Nature the last 7 days-even if it is all planted, some yield is shaved off the top. The USDA will have to raise exports about 150 to 200 million bu(maybe not June Wasde). SA keeps losing Safrina corn and, while they may not import from US, we may be covering some of their exports. Bottom line-thinking about 400 to 500 million bu will have to disappear from our projected 2017 carryout, without any weather related yield reduction this summer forward. As for China, they seem to be having problems selling their stored corn domestically, so don't think they will export. The corn market can't afford much production loss esp with a record crop already dialed into the numbers.
Just a short note on wheat-with a 45cent to 65 cent spread between wheat and corn and availability of wheat in certain areas of the country, am thinking more wheat will be fed. That would, of course, lower the wheat carryout and raise the corn-will have to wait for the USDA to sort it out. However, India is a lurking surprise as some of their wheat crop estimates are coming out as low as 82mmt. They consume 92mmt. Present 17 wheat carryout is put to 11mmt with 16 carryout at 14mmt, with an import projection of 1 to 1.5mmt? They must be extremely efficient at allocating ending stocks so no spot shortages show up, even if the monsoons aren't as good as they think they will. I think India may or will be a big surprise along with the feed numbers in wheat. The USDA will need to look at these items.
As for soybeans, don't have a good feel. Soybeans may have gained 2+ million acres, which they needed. China bothers me as importing 80mmt of beans while storing corn and wheat-feel the production changes going there are being understated. They have a huge incentive for expanding the soy production. Thats why I'm sicking with long wheat and corn.
it will take a nearly perfect growing season to get back to burdensome
corn supplies, given the acres reduction, the frost stand reductions, and
now the flooding and replanting.
Throw in a couple droughty months, and it could be off to the races again.
The money buying futures right now is not stupid money, and they may
make some good coin off the move.
I appreciate your numbers and you have given this some thought. Good fundamental information that everyone should know if they care about markets.
Yes India is an issue. I think they will import more than 1.5 MMT. Probably a lot more. Second, they are NOT good at spot shortages because their infrastructure is insufficient. Particularly the railroads even though it is a massive enterprise and the core of the 2 meter rail system is in very good shape. Their main import volumes tend to be in the south of the country because it is the most difficult to reach in a timely manner as the main production is in the north.
I also agree that it is unlikely to export large quantities of corn. They have their inventories for very good reasons though limiting it is a hard decision. At one time they stored over a years supply of wheat as a strategic reserve (that's saying something as they are the #1 producer in the world). That policy has been modified but a good share of that wheat was used even while they imported certain high quality wheat for higher end consumer products.
China has indicated a shift to more soy but it will be inconsequential to their overall consumption. As much as anything they need cooking oil. They have at times crushed for domestic oil and exported the meal to other Asian countries. China's great limitation regarding soy is available water supplies for irrigation. They long ago made a strategic decision to import soy after SA proved it was a growing and reliable supplier.
I look forward to more of your information.