- Overnight losses have been sustained in Chicago this morning. Trade focus is centred on the drier Central US forecast offered by the EU weather model, which features little/no rainfall across the Central Plains and Western Corn Belt into June 14. The debate over Prevent Plant acreage totals and yield potential goes on, but more weather info is needed before clarity over US production is available.
- Informa this morning pegged new crop corn planted acreage at 84.9 million, down 7.9 million from NASS’s Intention survey. New crop US soy acreage is pegged at 85 million, vs. NASS’s 84.6. Informa estimates 2019 corn yield at 174, vs. USDA’s 176, but estimates new crop soy yield at an elevated 51.1 bushels/acre, vs. USDA’s 49.5. We are unsure why above-trend soy yield is being used, but new crop US soy stocks will exceed 1.0 billion bu without adverse summer weather.
- Informa’s published estimates are just some of many. Some in the trade are lowering US corn yield to 165, with 2019 corn end stocks put closer to 1.0-1.2 billion bu. There is only agreement, that being US production is highly uncertain.
- The primary question is whether new market highs lie in the offing in the next few weeks. Work suggests that as corn seeding reaches 85-90% by mid-June, concern over area will be in retreat. There is little/no room for lasting heat/dryness in late Jul/early August, but the US weather pattern in the meantime won’t be overly threatening. A mix of rain, sun and near normal temperatures is expected into late month. Initial corn crop ratings will be below recent years, but early ratings correlate poorly with actual yield potential.
- This week’s EIA report leans bearish energy prices. US ethanol production through the week ending May 31 totalled 307 million gallons, vs. 311 million the prior week. US ethanol stocks were unchanged at 949 million. This is a record total for late May, however. US crude stocks, less strategic reserves, were up another 6.8 million barrels to the highest level since July of 2017. US motor gasoline supplies continue to build. Spot WTI is down $2.30/barrel at $51. Gasoline and ethanol markets are following.
- US tariffs on Mexican goods are scheduled to take effect next Monday. There are indications that the Senate plans to block tariff implementation. Key will be whether there is enough support to override a Presidential veto, which no doubt occurs if Congress blocks the Administration’s initial tariff schedule. Political anxiety will be high in the coming days.
- Germany’s farm co-op has raised Germany’s 2019 wheat crop estimate to 24.7 million mt, vs. 24.3 last month and 20.3 million a year ago.
- Heat and dryness will persist across much of Southern Russia over the next two weeks, but EU and Ukrainian crops will continue to thrive. EU wheat futures are down another €3.75/mt, bringing EU wheat losses since May 29 to €11.25/mt ($.35/bu).
- The midday GFS weather forecast is wetter in IA and IL in the 6-10 period. The GFS solution remains rather erratic. We note that the midday Canadian model did not follow this change, and in fact trended much drier across the heart of the Corn Belt into June 14.
- The GFS forecast keeps heavy rain isolated to the Southern Plains and Delta/Southeast into next Wednesday. A frontal system then sweeps across IA, IL and the Great Lakes next Thurs-Fri. Widespread rainfall lingers across the E Plains and Midwest June 15-19. The GFS forecast is threatening, but confidence in its output is low. It is our belief that improving Central US weather will cause rallies to struggle near term. Yield may be an issue, but not until mid-July.