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April Supply-Demand Summary

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April S&D Highlights

April 9, 2019

Market Trend

CORN: A little negative at release but the 200 mbu increase in the USDA’s carry-out forecast was only 20 or so above the average trade estimate. The USDA’s new feed/residual forecast—down just 75 mbu from March—suggests over a 30% increase in MAM GCAU consumption so this story may not be over yet. Cuts in ethanol grind (down 50) and exports (down 75) were to be expected. And, foreign corn competition just keeps getting larger and larger. Focus on planting progress or lack thereof resumes. Will China buy more old crop corn?

SOYBEANS: Mostly a neutral effort with stocks of 895 mbu coming 18 million below the trade average. No change in either exports or crush; the Brazil crop went up (1/2 MMT) rather than down as expected by the trade but not that great of an impact. China imports continues to be forecast at 88.0 MMT. Splitting hairs but thought the USDA’s 2 mbu increase in seed use leaves acreage ½ MMT short of the 84.6 million in the Prospective Plantings Report.

WHEAT: Slightly negative with higher-than-expected U.S. and world ending stocks. U.S. exports were lowered by 20 mbu, while feed/residual usage was reduced by 10 mbu. Combined with a slight decline in seed use, ending stocks increased by 32 mbu to 1.087 bbu—slightly above the average trade guess of 1.076. World ending stocks were 5.1 MMT higher at 275.6, which were well above the average guess of 271.1. Key now will be northern hemisphere weather, including U.S. winter wheat prospects and spring wheat planting conditions. Condition ratings remain quite high for Plains HRW wheat, while most HRS areas in the Northern Plains are projected to stay cold and wet near-term.

Market Trend

Pre-Report Release Current (12:00)

Corn

-3 to -4 -3 -3/4

Soybeans

-2 to -3 -2 -1/2

Wheat

-4 -6 -4 to -4

U.S. Carry-Out

Mar 17/18 USDA Apr 17/18 USDA Mar 18/19 USDA Apr 18/19 Trade Apr 18/19 USDA

Soybeans

438 438 900 913 (847-1,062) 895

Corn

2,140 2,140 1,835 2,031 (1,940-2,211) 2,035

Sorghum

35 35 65 NA9 60

Wheat

1,099 1,099 1,055 1,076 (1,045-1,103) 1,087

Cotton

4.30 4.30 4.30 NA 4.40

South America Production (MMT)

Mar 17/18 USDA Apr 17/18 USDA Mar 18/19 USDA Apr 18/19 Trade Apr 18/19 USDA

Soybeans

Argentina

37.8 37.8 55.0 55.5 (54.5-56.0) 55.0

Brazil

120.8 122.0 116.5 116.1 (115.0-117.0) 117.0

Paraguay

10.30 10.30 9.0 NA 9.0

Corn

Argentina

32.0 32.0 46.0 46.8 (46.0-49.0) 47.0

Brazil

82.0 82.0 94.5 94.7 (94.4-95.0) 96.0

CONAB

Mar 17/18 April 17/18* Mar 18/19 Apr 18/19 Trade April 18/19*

Brazil SB

119.3 NA 113.5 NA NA

Brazil C

80.7 NA 92.8 NA NA

*Next release: 4/11/2019

World Ending Stocks (MMT)

Mar 17/18 USDA Apr 17/18 USDA Mar 18/19 USDA Apr 18/19 Trade Apr 18/19 USDA

Corn

341.2 340.41 308.5 312.4 (308.9-315.1) 314.01

Soybeans

98.6 99.05 107.2 108.4 (106.5-114.6) 107.36

Wheat

279.6 281.89 270.5 271.1 (268.5-274.2) 275.61

Corn

  • Ending 18/19 corn stocks were increased by 200 million to 2.035 bbu (trade: 2.013)
  • Feed/residual consumption was reduced 75 million as a result of the March 1 stocks report, which showed higher than expected inventory levels;
  • Interesting that the USDA’s new feed/residual forecast and the implied 2nd quarter disappearance from the stocks report suggests approximately 300 mbu/33% increase in year to year 3rd quarter consumption to over 1.25 billion bushels;
  • The USDA reduced ethanol use by 50 million bushels to 5.50 bbu and left the non-ethanol portion unchanged at 1.465 billion;
  • Exports were reduced 75 million to 2.300 billion, in part due to a 2 ½ MMT increase in the South American crops;
  • The expected range on producer prices narrowed in $.05 at both ends of the range, from $3.35-$3.75 in March, to $3.40-$3.70 this month.

Sorghum

  • Carry-out 5 lower at 60 million;
  • Feed/residual raised 10 to 155 mbu (97 LY);
  • FSI consumption reduced 5, to 100 million;
  • Total domestic use up 5 million to 255 (157 LY);
  • Exports steady at 85 (205 LY);
  • Producer price range down $.05 to $.15 per bushel to $3.05-$3.35 per bushel range.

Soybeans

  • Carry-out down 5 to 895 (trade: 913);
  • Crush steady at 2.1 bbu;
  • Exports unchanged at 1.875;
  • Seed use 2 million larger at 98 which would seem to suggest around 84.1 million planted, or a ½ million less than the Prospective Plantings Report of 84.6 million;
  • Residual use held steady at 31 million;
  • Imports reduced 3 to 17 mbu;
  • Average farm price narrowed in from $8.10-$9.10 in March to $8.35-$8.85 this month ($9.33 LY).
  • SBM Balance Sheet
    • Production scaled back 50 K ST on sub-par meal yield;
    • Imports increased 50 K to 500 K based on better than expected imports the first half of the year;
    • No adjustments to use;
    • Endings stocks remain estimated at 450 K ST;
    • Price range of 48% Decatur SBM narrows in from $295-$335 LM to $305-$325;
  • SBO
    • Production steady at 24.57 billion pounds;
    • Strong early pace of biodiesel production/decent profitability results in a 150 million pound increase in usage to 8.35 billion (7.1 LY);
    • Other domestic SBO use increased 100 million pounds to 14.5 billion (14.2 LY)
    • Exports unchanged at 2.25 billion;
    • Ending stocks fall 150 million to 1.860 billion pounds;
    • 28 to 30 cent price range, versus 28 ½ – 31 ½ LM and 30.04 LY.

WHEAT

U.S. All Wheat Supply/Demand – 18/19

  • Imports unchanged at 145 mbu;
  • Feed/residual usage was lowered 10 mbu to 70 mbu;
  • Exports were reduced by 20 mbu to 945 mbu—but up 44 million (5%) vs. last year;
  • Seed use down 1 mbu to 62 mbu;
  • Carryout for 18/19 of all wheat increased 32 mbu to 1,087 mbu, which was 11 mbu above the avg. trade guess of 1,076 but within the range of 1,045-1,103;
  • Avg. farm price forecast range was increased $0.05 from last month to $5.15-$5.25; stocks-touse is forecast at 53.2% compared to 50.9% in March and 55.5% last year

U.S. Supply/Demand by Class – 18/19

  • Hard Red Winter
    • Domestic use lowered 5 mbu to 429 mbu—up 9% vs. last year;
    • Exports increased 10 mbu to 330, which is down 11% vs. 17/18;
    • Carryout for 18/19 lowered 5 million to 490 mbu vs. 581 for 17/18;
    • Stocks-to-use for 18/19 pegged at 64.6% vs. 75.9% for 17/18
  • Soft Red Winter
    • Domestic use lowered 5 mbu to 199 mbu—down 8% vs. last year;
    • Export forecast unchanged at 130 mbu, up 43% vs. 17/18;
    • Ending stocks for 18/19 increased 5 mbu to 168 million vs. 205 for 17/18;
    • Stocks-to-use for 18/19 pegged at 51.1% vs. 66.6% for 17/18
  • Hard Red Spring
    • Domestic use unchanged at 286 mbu—down 1% vs. a year ago;
    • Exports lowered 15 mbu to 260 mbu, which is 14% higher vs. 17/18;
    • Carryout for 18/19 up 16 million to 305 mbu vs. 191 a year ago;
    • Stocks-to-use for 18/19 pegged at 55.9% vs. 37.0% for 17/18

WORLD

Coarse Grains/Corn

  • Global coarse stocks estimate increased 5 MMT to 341.3 (370 LY);
  • Ending corn stocks boosted 6 MMT to 314.0 (340.4 LY);
  • USDA cuts foreign wheat feeding 2 MMT to 137.6 (145.5 LY);
  • MORE foreign competition with exports increased 3.1 MMT to 109.7 (85.1 LY)!!;
  • Arg crop raised 1 to 47.0 (32.0 LY); Brazil crop increased 1 ½ MMT to 96.0 (82.0 LY); South Africa steady at 11.0 (13.1 LY); & the Ukraine crop got another 310 K MT larger at 35.8 (24.1 LY);
  • Exports: Arg, up ½ MMT from LM to 30.5 (21.0 LY); Brazil, up 2 to 31.0 (25.1 LY); Ukraine, ½ MMT more this month to 29.5 (18.0 LY);
  • Any import changes? EU raised 1 MMT to 22.5 (18.4 LY); SE Asian demand reduced 600 K to 16.4 (14.4 LY);
  • No changes to the China corn balance sheet—imports remain at 5 MMT; ending stocks unchanged at 205. The U.S. may struggle to hit the USDA’s 2.3 bbu forecast . . . need to average 52 mbu per week; unshipped sales aren’t terribly impressive and we haven’t seriously approached the 50 mbu/week mark other than the last week of March

Soybeans/SBM/SBO

  • SB Production—a little better than expected
    • Argentina steady at 55.0
    • Brazil up ½ MMT to 117.0; trade was thinking perhaps ½ MMT the other direction;
    • Paraguay steady at 9.0.
  • Exports
    • Argentina’s exports continue at 6.3 (2.1 LY);
    • Brazil’s exports held steady at 79.5 (76.2 LY);
    • Paraguay steady at 5.6 MMT; (6.0 LY)
  • Crush
    • Argentina crush unchanged at 43.0 (44.5 LY);
    • Brazil crush also steady at 42.7 MMT (44.5 LY);
  • Foreign SB imports essentially steady from LM at 150.7 MMT globally, 2 MMT less than LY;
  • Despite data showing China’s SB imports are down about 7 MMT YTD, USDA holds to an 88 MMT import forecast, 6 less than LY
  • Global stocks little changed this month at 107.4 (99.0 LY)
  • Note: recent Brazil attache release has 19/20 soybean production increasing to 124.0 MMT.

Wheat

  • World production for 18/19 pegged at 732.9 MMT, which is down 0.130 MMT vs. March;
  • FSU-12 production increased 0.080 MMT to 124.9 MMT. However, exports from all FSU-12 destinations were unchanged at 63.0 MMT. Exports are forecast to be down 9% from last year but 16% higher than two years ago;
  • Australia production unchanged at 17.3 MMT (vs. 21.3 MMT last year) with exports steady at 10.0 (13.9 last year);
  • Argentina crop size steady at 19.5 MMT, but exports were reduced by 0.5 MMT to 13.7 (12.2 last year);
  • India crop size steady at 99.7, and ending stocks unchanged at 17.5 MMT (vs. 13.2 last year);
  • Canada’s production estimate was unchanged at 31.8 MMT, and exports were steady at 24.0 (22.0 in 17/18);
  • EU production steady at 137.6 MMT but exports were increased by 1.0 MMT to 24.0 (vs. 23.3 last year);
  • China imports were steady at 3.5 (vs. 4.0 MMT last year);
  • World ending stocks for 18/19 were increased 5.1 MMT to 275.6, which was well above the average trade guess of 271.1. Increases were noted for several Mideast, Asian and African countries. Ending stock-to-use ratio for 18/19 is projected at 37.3% vs. 36.5% in March and 37.9% last year.

Regards:

Larry/Brian


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