FW: FI Grain Market Update 06/29/18

PDF attached includes US soybean and corn balances

 

USDA released their June Grain Stocks and Acreage reports

 

Initial reaction

In our opinion, we don’t see any strong indications to be buying agriculture futures markets based on the latest USDA reports.  Corn, wheat, and minor feedgrain plantings came in above trade expatiations and soybeans were 134,000 acres below.  We could see prices setback in corn and soybeans by the end of today, if not then by early next week, if wheat prices come well off their Friday morning highs.

 

·         June 1 corn stocks of 5.306 billion bushels were 38 million above trade expectations, soybeans of 1.222 only 3 million below and all-wheat stocks of 1.100 billion were 9 million above an average trade guess. There were minor, non-factor, revisions to March 1 stocks.

·         Soybean plantings were revised 575,000 acres higher to 89.557 million, only 134,000 below a average trade guess.

·         US corn plantings of 89.128 million came in 566,000 acres above a trade guess and are up 1.102 million acres from March Intentions.

·         All-wheat plantings of 47.821 million are 719,000 acres above an average trade guess and 482,000 above March. The largest increase came from spring wheat, 575,000 above March and 771,000 acres above the trade estimate. Durum acres came in 143,000 acres below the trade and winter wheat was revised higher by 23,000 acres.

 

Using USDA’s latest planted and harvested area, and our estimate for yields, we look for US corn production, if conditions remain unchanged from now until the end of the season, to end up 196 million bushels above the previous year. The same goes for soybeans with production 16 million bushels above 2017 and all-wheat wheat by 135 million bushels.

 

We are bearish corn. For US corn balance, using USDA’s planted and harvested, and our 181 yield (USDA 174), our production estimate increases to 14.800 billion bushels, 116 million above our previous estimate and 760 million above USDA June. Our carryout expanded to 2.030 billion from previous 1.914 billion. USDA June is at 1.577 billion bushels, and we already using a higher new-crop usage than USDA. Our 2017-18 US corn carryin is predicated on 2.060 billion, 42 million below USDA. At a 13.7% STU, the average 2018-19 corn price should end up below $3.65/bu.

 

Prior to the USDA Acreage report, we were using 4.396 billion bushels for US 2018 soybean production. Using USDA updated planted and harvested area, we are now at 4.408 billion bushels, slightly higher than previous, but 128 million bushels above USDA June.  Our 2018-19 US soybean carryout is projected at 525 million bushels, 140 million above USDA June.  Note our 2017-18 US soybean carryout is 18 million above USDA, and 2018-19 soybean total usage is 5 million below USDA. The crop-year average for soybeans in 2018-19 could end up around $9.45, down from about $9.80 we were previously using.

 

USDA Executive Briefing

https://www.nass.usda.gov/Newsroom/Executive_Briefings/2018/06-29-2018.pdf

 

FI Price Projections:

·        September corn may trade in a large $3.30-$3.75 range. December corn is seen in a $3.15-4.15 range. If the US good/excellent US corn condition hold over through July, look for December corn to possibly test the $3.00 level.

·        August soybeans are seen in a $8.25-$9.25 range; November $8.00-$10.00 range.

·        August soybean meal $300-370 range; December $280-$400 range.

·        August soybean oil 27.50-30.25 range; December 27.00-30.50 range.

• September Chicago wheat $4.50-$5.30 range.
• September KC $4.55-$5.40 range.
• September MN $5.00-$6.00 range.

 

 

See attached PDF for trade versus actual results