- Today is USDA Report Day!
- 2018/19 world corn, soybean and wheat stocks are projected to decline nearly 48 million mt (from 2017/18) with the biggest individual crop decline occurring in corn at 36 million mt. The projected world wheat stock fall was forecast at 6 million mt with soybeans at 5.5 million. World corn stocks are getting closer to their heydays of five years ago amid growing demand. However, in a general sense there remains an abundance of wheat/soybeans with adverse weather needed to sustain rallies amid growing US trade tensions with NAFTA and China. We expect that corn will be the stalwart of Chicago with corn gaining on soybeans, and corn gaining on wheat, with any breaks being shallow/brief. However, it is also difficult to justify July corn much above $4.20-4.30 resistance or July soybeans much above $10.50, or July wheat above $5.40 without adverse US/world weather. We would not be buying the morning Chicago price bulge amid worsening US trade tensions and improving US and world weather. NASS projected the 2018 US wheat crop at 1,821 million bu or 80 million bu above last year. The US all wheat yield was pegged at 38.9 bushels/acre with the Kansas wheat crop estimate at 270 million bu vs 334 million bu last year. US 2018 HRW wheat production was pegged at 647 million bu, SRW at 315 million bu with SWW at 229 million bu.
- US 2018/19 US wheat end stocks are forecast at 955 million bu, a four-year low. The stocks estimate is based on trendline spring wheat yields and their keeping 2018/19 US wheat export estimate at 925 million bu. Should the Black Sea wheat crop estimate enlarge with the heart of the growing season ahead, the US 2018/19 wheat export estimate could slide to 850 million bu with US 2018/19 wheat end stocks back above 1,000 million bu. US new crop wheat end stocks do not argue for a bull market unless a significant weather problem occurs overseas.
- World 2018/19 wheat end stocks are forecast to decline to 264 million mt, down 7 million from this year’s record at 271 million mt. WASDE estimated the 2018 Russian wheat crop at 72.0 million mt, which is well below last year’s 85.0 million mt harvest. The Ukraine wheat crop is forecast to be down nearly 500,000 mt at 26.5 million mt while the India crop was pegged at 95.0 million mt. There is room for world wheat production to rise from the WASDE forecast with normal weather. The Russian, Chinese, Indian, and European crops could rise, while Argentina and Australian crops could decline. The point is that world wheat production is large and likely to grow further with normal weather. Russian FOB new crop wheat price offers at $205/mt are unlikely to rise much more.
- US 2018/19 corn production at is forecast at 14,040 million bu with a yield of 174 bushels/acre. US corn planted and harvested acres were left at 88.0 million and 80.7 million acres, respectfully. WASDE raised their estimate of 2018/19 corn exports to 2,100 million with end stocks forecast at 1,682 million bu. Such stocks argue for a range of $3.80-4.20 basis spot Chicago futures.
- 2018/19 world corn end stocks at 159 million mt were down 36 million mt with a 20 million stocks decline in China. We note that China’s corn crop was estimated to be up 10 million mt (at 225 million) with demand rising to 249 million mt (24 million more than supply) which keeps pulling China’s corn stocks/use ratio lower. Next year, WASDE is in a “box” of either having to forecast that China will import corn, or cutting their domestic demand like that which occurred in 2004. The trade is untrusting of the world corn end stock total amid China’s likely larger supply.
- US 2018/19 soybean end stocks were forecast by WASDE at 415 million bu, down 114 million bu from the current crop year. WASDE used trendline yield of 48.5 bushels/acre with 2018 US production estimated at 4,280 million bu, down 112 million bu from last year. USDA estimated 2018/19 US soybean exports at 2,290 million bu, down 10 million from their prior February forecast. We would argue that WASDE needs to cut its 2017/18 US soybean export amid the 4.2-4.5 million mt of soybeans that are sold, but not shipped to China in the old crop position. The problem that US soybean traders have to work through is estimating US soybean export estimates amid the growing trade tensions between the US/China. World 2018/19 soybean stocks are forecast 86.7 million mt with a 2019 Brazilian soybean crop of 117 million mt and an Argentine crop of 56 million mt. The larger S American harvest will cut into US soy export opportunities beyond January. We note that China is forecast to import a record 103 million mt of all origin supply. Where China secures those soybeans will be key to Chicago price direction. The market demands a supply loss to justify a July Chicago rally above $10.50.
To download our WASDE data recap as a PDF file please click on the link below: