- Ag markets are trading moderately higher, led by wheat, amid a sharp 4 million mt cut to France’s crop. Black Sea wheat futures have been stable. Following reduced French wheat production, the trade will begin questioning the EU crop as a whole amid less than ideal weather in Germany and Poland (among others). Markets have fallen from session highs as NASS Stocks and Seedings data leans a bit bearish, fundamentally. Stocks were slightly higher than expected across the board, and some 2.5 million acres of major crop seeding was added from March intentions. June 1 corn stocks totalled 5,306 million bu, 30 million above our estimate in mid-June. Mar-May Feed use is pegged at 957 million bu, vs. 981 million a year ago. Sep-May feed/residual rests at 4,710 million, down 2% from last year. USDA may cut 25-50 million from its annual forecast in the July WASDE. Jun 1 soy stocks totalled a record 1,203 million bu, and 20 million above expectations. Mar-May residual is pegged at -32 million, vs. -35 last year.
- June 1 Stocks
—————— million bu ———-———-
2016 2017 2018
Corn 4,711 5,229 5,306
Soybeans 872 966 1,222
All Wheat 976 1,183 1,100
- USDA in July may cut soybean residual as well, but only slightly. Final 2017/18 wheat end stocks totalled 1,100 million bu, marginally higher than expected, but overall quarterly stocks were not market moving/changing. Pace analysis suggests the USDA’s corn ethanol and export numbers are a bit too low. This will offset any downward revisions to feed use. Corn acres were set at 89.1 million, vs. 88 in March. Bean acres totalled 89.6, vs. 89 million in March. All wheat acres totalled 47.8, up 500,000 from previously via expansion in spring wheat seedings. Winter acres were left unchanged. Durum acres fell slightly.
US Planted Acres
———————-million acres —————————
March June
2016 2017 2018 2018
Corn 94.0 90.2 88.0 89.1
Soybeans 83.4 90.1 89.0 89.6
All wheat 50.1 46.0 47.3 47.8
Cotton 10.1 12.6 13.5 13.5
Sorghum 6.7 5.6 5.9 6.0
Barley 3.1 2.5 2.3 2.5
Total 247.4 247.0 246.0 248.5
- Assuming no changes to yield, new crop corn end stocks will be raised to 1.65-1.7 billion bu, vs. 1.57 in June. New crop wheat stocks will be raised to 965-975 million, vs. 946 in June. New crop soy stocks will be lifted 40-45 million bu to 425-430 million. Balance sheets in Jul will loosen, but even acreage changes are in line with history on an absolute basis.
- The central US midday GFS weather forecast is slightly cooler and wetter in the 11-15 day period, as its committed to shifting the mean position of high pressure aloft westward beyond the next 9-10 days. The EU model this morning kept the ridge a bit more centrally located. This will be a crucial battle between the models, particularly in next week’s runs. Expansive ridging in the near term will limit rainfall to northern and eastern growing areas. High temperatures in the low/mid-90s will be common across the Midwest. Highs in the 100s will impact the S and C Plains throughout the next 10-12 days. Note also that overnight lows next week will range in the low/mid-70s. This will continue to accelerate crop growth. The GFS breaks the ridge pattern with a cool front July 9-11. Near normal temperatures and scattered showers will return by mid-July if correct. It is a pre-USDA positioning day. Our preference is to stay out of the market amid elevated trade and weather risks. Extreme heat in early July and simultaneously the possibility of US tariffs placed on China will boost volatility.
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