PDF’s attached include the USDA briefing
We like meal over oil over the short term.
Soybeans are trading at “trade estimate” figures, not USDA, IMO.
Corn should appreciate along with soybeans (16.00-16.50 area seen if SA weather does not improve).
We see wheat trading around current levels, give and take 50 cent swing from low to high.
USDA update
US soybean stocks 325 vs. 350 last month (-25), 15 million vs. trade
US corn stocks 1540 vs. 1540 last month (0), 28 million vs. trade
US wheat stocks 648 vs. 628 last month (20), 19 million vs. trade
WLD soy stocks 92.8 vs. 95.2 last month (-2.4), 1.3 million vs. trade
WLD corn stocks 302.2 vs. 303.1 last month (-0.8), 1.9 million vs. trade
WLD wheat stocks 278.2 vs. 280.0 last month (-1.7), -1.7 million vs. trade
Brazil Soy 134.0 vs. 139.0 last month (-5), 0.3 million vs. trade
Arg. Soy 45.0 vs. 46.5 last month (-1.5), 0.5 million vs. trade
Brazil Corn 114.0 vs. 115.0 last month (-1), 0.4 million vs. trade
Arg. Corn 54.0 vs. 54.0 last month (0), 1.8 million vs. trade
China soybean imports were lowered 3 million tons to 97 million, a large cut than expected. Last season they imported 99.8 million tons. We were a little surprised USDA did not make any adjustments to the US corn demand as SA crop production declines with Brazil’s first crop corn and Argentina’s early corn planted crop are thought to shift export business to the US this summer. What was more surprising was USDA leaving its 2.050-billion-bushel US soybean export forecast unchanged. We are thinking they are at least 50 million bushels too low and in the camp exports could be even 75-100 million bushels higher. China has been securing a lot of new-crop soybeans, a signal that they might be covered for the next several months, but other importers may turn to the US for supplies if they are unable to secure it from South America. USDA lowered Brazil corn production by 5 million tons and cut Argentina soybean production by 1.5 million tons, to 134 and 45 million tons, respectively, both above trade expatiations. USDA left Argentina corn production unchanged at 54 million tons and lowered Brazil by 1 million tons to 114 million. We think USDA will address SA soybean and corn production again next month. This month we thought they were too conservative. The higher-than-expected world corn and soybean stocks were surprising, in our opinion. For wheat, US wheat stocks were raised 20 million bushels to 648 million, 19 million above an average trade guess, also unexpected. USDA lowered wheat exports by 15 million, which we agree. Combined food and seed were lowered 5 million.
Back to the US soybean complex, the crush was upward revised by a much needed 25 million bushels, and this was the only revision in the balance sheet. The higher crush prompted USDA to add a large 295 million pounds to soybean oil supply. They increased food demand by 135 million, which we agree, and increased stocks by 160 million pounds. Soybean meal production was increased 400,000 short tons and USDA increased exports by same amount. The changes in the product balance sheets further supports meal/oil spreading as global vegetable oil supplies are rising and SA crop concerns are driving meal demand to the US.
Brazil soybean exports were cut 3.5 million tons to 90.5 million, still too high in our opinion for the Oct-Sep crop year. USDA estimated Paraguay’s soybean crop at 6.3 million tons, down from 8.5 million last month. Some are as low as 5 million tons. Next month we look for USDA to lower SA corn and soybean production, and at that time increase US soybean exports by around 50 million bushels and increase corn by 25-50 million. For wheat we look for little changes next month unless prices shoot higher.
Terry Reilly
Senior Commodity Analyst – Grain and Oilseeds
Futures International
One Lincoln Center
18 W 140 Butterfield Rd.
Suite 1450
Oakbrook Terrace, Il. 60181
W: 312.604.1366
ICE IM: treilly1
Skype: fi.treilly
Trading of futures, options, swaps and other derivatives is risky and is not suitable for all persons. All of these investment products are leveraged, and you can lose more than your initial deposit. Each investment product is offered only to and from jurisdictions where solicitation and sale are lawful, and in accordance with applicable laws and regulations in such jurisdiction. The information provided here should not be relied upon as a substitute for independent research before making your investment decisions. Futures International, LLC is merely providing this information for your general information and the information does not take into account any particular individual’s investment objectives, financial situation, or needs. All investors should obtain advice based on their unique situation before making any investment decision. The contents of this communication and any attachments are for informational purposes only and under no circumstances should they be construed as an offer to buy or sell, or a solicitation to buy or sell any future, option, swap or other derivative. The sources for the information and any opinions in this communication are believed to be reliable, but Futures International, LLC does not warrant or guarantee the accuracy of such information or opinions. Futures International, LLC and its principals and employees may take positions different from any positions described in this communication. Past results are not necessarily indicative of future results.
wasde0222.pdf