- The USDA May crop report was viewed as bearish amid large US corn, soybean and wheat stocks. WASDE pegged 2019/20 US wheat stocks at 1,141 million bu, US corn stocks at 2,485 million bu and soybean stocks at 970 million bu. All combined, 2019/20 US corn/soybean/wheat stocks amount to 4,596 million bu (up 379 million bu from the current crop year). Although such stocks are not all that much larger, the impact on price via an ongoing trade war with China, has added to the downside price potential in the marketplace.
- World 2019/20 wheat/corn/soybean stocks were pegged at 720 million mt, up 8 million from last year with world wheat stocks up 19 million mt, while corn was down 11 million mt while soybeans held steady. The world stocks reflect a starting point for the 2019/20 crop year assuming trendline yield and normal forward weather.
- The 2019 US all wheat crop was forecast by NASS at 1,897 million bu, up 13 million with US winter wheat crop at 1,270 million bu with a yield of 50.3 bushels/acre. The KS wheat yield was pegged at 49 bushels/acre, up 11 bushels/acre from last year. The OK wheat yield was 35 bushels/acre, up 7 bushels/acre, while the TX yield was 33 bushels/acre, up 1 bushels/acre. The big gains in the SRW crop was KY at 75 bushels/acre, up 9 bushels/acre. Other states were close to 2018.
- US 2019/20 wheat stocks were forecast at 1,141 million bu, up 14 million from the old crop year. WASDE estimated 2019/20 US wheat exports at a meager 900 million bu. US wheat feed/residual was estimated at 90 million bu, up 40 million from last year amid the prospect of feed wheat production amid all of the rain. The average US farmgate price was put at $4.70/bu, down $0.50 from 2018.
- WASDE pegged 2019/20 US corn end stocks at a hefty 2,485 million bu assuming trendline yield of 176.0 bushels/acre. WASDE did not use their yield model based on weather conditions to date. US total corn supplies at 17,160 million bu are record large with a 2019 crop just over 15 billion bu. WASDE pegged US corn feed/residual at 5,450 million bu with exports at 2,275 million bu. Total demand was placed at 14,675 million bu which is up 175 million bu from last year. The average US farmgate price was forecast at $3.30/bu.
- US 2019/20 soybean stocks were forecast at 970 million bu based on planted area of 84.6 million acres and trend yield of 49.5 bushels/acre. Such stocks are down slightly from the current crop year. US 2019/20 soybean total supplies were forecast at a record large 5,165 million bu. WASDE forecast total use of 4,195 million bu with exports of 1,950 million bu and crush of 2,115 million bu. WASDE cut their 2018/19 soybean export estimate to 1,775 million bu amid the tepid US export pace. Key will be how many soybeans China ships out of its 7.4 million mt of purchases on the books. The average cash price is forecast at $8.10/bu which is down $0.45 from last year. US soyoil stocks are forecast to tighten to 1,450 million pounds which will likely underpin soyoil values at current prices (and oil/meal spreads).
- In world production and trade estimates; WASDE pegged the 2019 Russian wheat crop at 77 million mt, Australia wheat at 22.S million mt, and EU wheat at 153.8 million mt. Russia was forecast to export 36.0 million mt of wheat in 2019/20, down 1.0 million mt.
- In corn, WASDE raised their Brazilian corn crop estimate to 100.0 million mt with Argentina at 49.0 million mt. USDA is well above the CONAB corn estimate of 95 million mt released yesterday. China was forecast to import 7 million mt of corn in 2019/20, the largest in years. We would argue that the China corn imports maybe WTO TRQ related, but China was only to import 3.5 million mt of wheat. If China was to follow the WTO agreement, they would take 9.7 million mt of world wheat annually.
- WASDE forecast that China would import 86 million mt of world soybeans in 2018/19 and 87 million mt in 2019/20 million mt. African Swine Fever is keeping any growth of China soybean imports at bay. WASDE is forecasting that Brazil will produce 123 million mt and Argentina at 53.0 million mt of soy next winter. China has booked a huge amount of Brazil beans in the past 48 hours with some saying 50 cargoes.
- The May USDA report offered a starting point for analysts heading into the heart of the growing season. In US corn, we would argue for 2 million acres less seeding and a drop of 5 bushels/acre in yield via excessive rainfall which would trim production some 700-750 million bu, thereby pulling US 2019/20 corn stocks closer to 2,050 million bu.
- In soybeans the world holds an abundance of supply, but $8.00 spot futures digests much of that news. And the world wheat market has an important 6-8 weeks ahead with the heart of the growing season ahead. The market will now totally focus on US/world weather and the dynamics of a US/China trade deal.
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