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August Supply-Demand Summary


August S&D Highlights

August 10, 2018

Market Trend

Pre-Report Release Current (12:30)

Corn

-3 -5 -9 3/4

Soybeans

-9 -16 -40

Wheat

+5 SRW, +2 HRW, -1 MW +2 SRW,-9;HRW, -11; MW, -14

U.S. Carry-Out

July 17/18 USDA Aug 17/18 Trade Aug 17/18 USDA July 18/19 USDA Aug 18/19 Trade Aug 18/19 USDA

Soybeans

465 463 430 580 648 785

Corn

2,027 2,015 2,027 1,552 1,636 1,684

Wheat

1,100 1,100 1,100 985 967 935

Sorghum

34 NA 44 35 NA 40

Cotton

4.00 NA 4.40 4.00 NA 4.60

U.S. Production (mbu)

2017 Final July 18/19 USDA Aug 18/19 Trade Aug 18/19 Range Aug 18/19 USDA

Corn

14,604 14,230 14,416 14,210-14,740 14,586

Soybeans

4,392 4,310 4,425 4,346-4,576 4,586

Sorghum

34 356 NA NA 375

All Wheat

1,741 1,881 1,857 1,700-1,907 1,877

World Ending Stocks (MMT)

July 17/18 USDA Aug 17/18 Trade Aug 17/18 USDA July 18/19 USDA Aug 18/19 Trade Aug 18/19 USDA

Corn

191.7 190.8 193.3 152.0 152.6 155.5

Wheat

273.5 273.1 273.1 260.9 256.4 259.0

Soybeans

96.0 95.5 95.6 98.3 99.3 105.9

2017 U.S. Wheat Production (bbu)

2017 Final Crop 2018 July Estimate 2018 Aug Average of Analysts’ Estimates 2018 Aug Range of Analysts’ Estimate 2018 Aug Estimate

All Wheat

1,741 1,881 1,857 1,700-1,907 1,877

Total Winter

1,269 1,193 1,185 1,050-1,225 1,189

Hard Red Winter

750 657 657 635-665 661

Soft Red Winter

292 302 303 290-322 291

White Winter

227 232 230 202-260 236

Other Spring

416 614 597 560-633 614

Durum

55 75 74 69-78 73

August Supply-Demand Summary

CORN: Another August shocker (recall 2017). The USDA raised its yield estimate 4.4 bpa to 178.4, which was 2.2 bpa above the average trade estimate. New crop ending stocks were increased 132 mbu to 1.684 billion or about 50 mbu more than the trade average. Old crop ending stocks held steady from last month at 2.027 bbu. If the adage holds, “big crops get bigger”, then certainly a little negative.

SOYBEANS: NEGATIVE as the USDA boosted its yield estimate 3.1 bpa to 51.6, well beyond the trade average of 49.6 and even with a 36 mbu boost in expected demand, ending stocks surged 205 mbu to 785 million. Note that China’s 17/18 imports were revised 1 lower to 96.0; 18/19 continues at 95.0. Sizable boost in ending 18/19 global bean carry-out, up 7.7 MMT. Or, about as many soybeans as are grown in Ohio or South Dakota.

WHEAT: Somewhat bearish as U.S. HRS production was greater than expected and the downward adjustments in world production numbers and ending stocks generally fell short of expectations. U.S. HRS crop did decline from last month, but only fractionally. EU crop size was lowered 7.5 MMT but some were expecting a reduction of 10+. No change in Australia production, despite ongoing drought in key eastern areas. And FSU-12 production was increased 1.3 MMT from last month with exports up 1.0 MMT from July. Attention now shifts to southern hemisphere crop prospects. In Australia, drought remains intense in some regions but some believe Argentina output could increase. Price volatility likely to remain the norm as uncertainty about U.S. exports persists.

DOMESTIC

Corn

Old Crop:

  1. No changes to any of the S&D components;
  2. Ending stocks continue to be forecast at 2.027 billion;
  3. The USDA’s average producer price forecast narrowed in from $3.30-$3.50 last month, to $3.35-$3.45 this month.

New Crop:

  1. Yield UP 4.4 bpa to 178.4;
  2. Production 356 LARGER at 14.586 billion;
  3. Imports unchanged at 50 million;
  4. Feed/residual use increased 100 to 5.525 bbu on the larger crop and reduced price outlook;
  5. Ethanol grind remains estimated at 5.625 billion;
  6. Exports raised 125 to 2.350 bbu;
  7. Ending stocks increased 132 mbu from LM to 1.684;
  8. Average producer price range falls from $3.30-$4.30, to $3.10-$4.10.

Milo

Old Crop:

  1. Ending stocks increased 10 mbu to 44;
  2. Exports cut 20 to 210 mbu;
  3. FSI/ethanol grind increased 10 to 60 mbu
  4. Average producer price range continues at $3.15-$3.25.

New Crop:

  1. Another August bump in the milo yield, up 3. 6 bpa to 70.9;
  2. Production rises 19 million to 375; beginning stocks increased by 10 from above;
  3. Feed/residual remains at 80;
  4. FSI use increased 25 to 125;
  5. Exports hold steady from LM at 175;
  6. Ending stocks edge 5 million higher to 40;
  7. Price impact: —down $.20 to $2.90-$3.90

Corn Yield Notes: Versus 2016, IL at 207 TY/201 LY; IN, 186/180; IA, 202/202; MO, 131/170; OH, 180/177; MN, 191/194; NE, 196/181; SD, 170/145; ND, 148/139; WI, 177/174. South: AL, 170 TY/167 LY; AR, 182/183; GA, 173/176; LA, 174/184; MS, 185/189.

Soybeans/Products

  • Old Crop:
    1. Crush increased 10 to 2.040 bbu—export meal demand;
    2. Exports increased 25 mbu to 2.110 bbu;
    3. C/O falls 35 to 430 million; trade estimate was 463;
    4. Average producer price steady at $9.35/bu.
  • Products:
    • SBO
      1. Larger crush boosts sbo production 55 million pounds to 23.495 billion;
      2. No change in imports, continues at 315 mil lbs;
      3. Domestic use up 200 million pounds to 20.9 billion;
      4. Exports unchanged at 2.450 billion;
      5. Carry-out declines 145 million pounds to 2.171 billion;
      6. Average price of sbo oil off 25 points to $.3000/pound.
    • SBM
      1. Exports increased 600 K ST to 14.1 million;
      2. Domestic use forecast falls 400 K from LM to 34.9 MST;
      3. Ending SBM stocks steady at 400 K
      4. Meal price estimate steady at $350.
  • New Crop:
    1. Yield forecast jumps, up 3.1 bpa to 51.6;
    2. Production increased 276 mbu to 4.586 bbu, 194 mbu more than LY;
    3. Crush 15 larger from LM at 2.060 billion;
    4. Exports increased 20 mbu to 2.060 bbu;
    5. C/O rises 205 mbu to 785;
    6. Average farm price range falls from $8.00-$10.50 in July, to $7.65-$10.15 this month.
  • Products:
    • SBO
      1. Beginning stocks down 145 from above;
      2. Larger crush adds 175 million pounds to production;
      3. Imports steady at 300 mil lbs;
      4. Non-bio diesel/bio diesel use increased 200 million pounds to 22.0 billion;
      5. No change in exports from LM, still at 2.2 bil lbs;
      6. Net with use up 200 million pounds is a 170 million decline in ending stocks to 2.066 billion pounds;
      7. Oil price range unchanged at $.2800-$.3200 per pound;
    • SBM
      1. 15 mbu higher crush adds 250 K ST to production;
      2. Domestic meal use estimate steady at 35.7 MST (34.9 LY);
      3. Exports increased 250 K to 13.35 MST;
      4. $20 reduction in expected prices, to $295-$335.

Soybean Yield Notes: Versus 2016: IL, 64/58; IN, 58/54; IA, 59/56.5; MO, 45/49; OH, 56/49.5; MN, 49/47; NE, 61/57.5; SD, 49/43; ND, 38/34; WI, 50/47. South: AL, 48/46; AR, 50/51; GA, 38/42; LA, 50/54; MS, 53/53.

Wheat

  • Spring Wheat Production – 18/19
    1. HRS crop forecast at 583 mbu, which was down 1 million from last month. However, the trade was expecting a decrease of closer to 15-20 mbu. There were no changes made to harvested acreage in this report. The next update on harvested acreage and production will be included in the USDA Small Grain Summary, which is due on Sep. 28. Looking at individual states, yield increases relative to the July report were noted in Montana (+1.0 bpa); South Dakota (+1.0); and Idaho (+2.0). Minnesota saw a reduction of 4.0 bpa vs. last month, while North Dakota was unchanged.
  • Winter Wheat Production — 18/19
    1. Update pegs winter wheat production at 1.189 bbu, which was slightly above the avg. trade guess of 1.185 but within the trade range (1.050-1.225);
    2. Harvested acreage was lowered 15,000 acres vs. July. National avg. yield forecast decreased 0.1 bushels to 47.9 bpa (vs. 50.2 in 2017);
  • U.S. All Wheat Supply/Demand—18/19
    1. All wheat production was lowered 4 mbu to 1.877 bbu reflecting slightly smaller winter wheat and Durum crops vs. last month. Total supply of 3.112 bbu is down 0.2% vs. last year;
    2. Usage—Food use up 5 mbu vs. last month; feed/residual down 10 mbu to 120; and exports up 50 mbu to 1.025 bbu. Total use of 2.177 bbu is up 10.1% vs. 17/18;
    3. Ending stocks of all wheat are forecast at 0.935 bbu, which was below the average trade guess of 0.967; average farm price forecast at $4.60-$5.60, which is a dime higher compared to July. The ending stocks-to-use ratio is forecast at 42.9% vs. 46.2% last month and 55.6% in 17/18.
  • U.S. All Wheat Supply/Demand—17/18
    1. Food use up 1 mbu;
    2. Feed/residual was decreased 2 million to 48 mbu;
    3. Exports unchanged
  • U.S. Supply/Demand by Class—18/19
    1. Hard Red Winter
      • Production up 4 mbu;
      • Domestic use down 8 mbu at 464 mbu;
      • Exports forecast at 395 mbu, up 30 million vs. July;
      • Carry-out projected at 394 mbu, down 23 million vs. last month;
      • Stocks-to-use forecast at 45.9% vs. 49.8% in July and 75.9% for 17/18
    2. Soft Red Winter
      • Production down 11 mbu;
      • Domestic use down 15 mbu from last month at 214;
      • Exports forecast at 115 mbu—down 10 mbu vs. July;
      • Ending stocks forecast at 178 million, up 9 mbu vs. last month;
      • Stocks-to-use estimated at 54.1% vs. 47.7% in July and 67.0% for 17/18
    3. Hard Red Spring
      • Production down 1 mbu;
      • Updated domestic use for 18/19 is 292 mbu, up 15 million from July;
      • Exports projected at 285 mbu, up 15 from last month;
      • Carry-out projected at 262 mbu vs. 283 in July;
      • Stocks-to-use pegged at 45.4% vs. 51.7% last month and 36.9% for last year

 

GLOBAL

  • Coarse Grains/Corn
    1. Global beginning coarse grain stx increased 1.7 MMT from LM to 222.7; ending stocks now estimated at 183.1, up from 179.8 in July;
    2. Foreign coarse grain production down 4.4 MMT to 957.5 (930 LY); overseas corn output down 2.3 MMT to 690.5 (662.3 LY);
    3. Foreign corn use increased 2.2 MMT to 778 (750 LY);
    4. 17/18 foreign wheat feeding trimmed 3.6 MMT to 135.2 (143.9 LY); EU cut 2 ½ MM TM!;
    5. Competitor production:
      1. 17/18: Brazil down ½ MMT from LM to 83.0; Argentina steady at 33.0; RSA remains at 13.8; FSU corn crop steady at 42.1; EU raised slightly, up 60 K MT to 62.3 MMT;
      2. 18/19: Argentina steady at 41.0; Brazil 1.5 MMT lower to 94.5; RSA, ½ MMT smaller at 13.6; FSU crop increased 1.2 MMT to 47.7 (42.1 LY)
    6. Competitor Exports:
      1. 17/18—down 3 MMT to 49.3 with Brazil reduced 3 MMT to 23.0; no change in Argentina at 24.0; Ukraine trimmed back 1 MMT to 18.50;
      2. 18/19—No change in S Hemi estimates; Black Sea shipments raised 600 K MT to 28.95 MM (24.3 LY);
    7. Imports:
      1. Old crop foreign imports essentially steady at 145.3 MMT
      2. 18/19 imports raised 1.1 MMT including a 2 MMT increase for the EU to 18.0; SE Asia cut back ½ MMT to 15.5 but this is still an increase of 1.1 MMT from 17/18;
    8. China corn crop continues at 225 (241 LY); imports remain at 5.0 (4.0 LY);
    9. Global ending corn stocks up 3.5 MMT to 155.5, virtually all U.S. (3.3).
  • Soybeans
    1. China imports remain estimated at 95 for 18/19 while 17/18’s were lowered 1 MMT to 96.0;
    2. No change in the 17/18 Arg/Brazil/Para crops; likewise for 18/19 with the 3 major S Am producers expected to be 22.1 MMT LARGER;
    3. World SB imports for 17/18 reduced 800 K MT to 153.5; 18/19’s were increased about the same amount;
    4. Brazil’s 17/18 export forecast increased 850 K MT to 75.5 MMT (63.1 LY); no change for Argentina and Paraguay;
    5. Argentina import forecast raised 150 K MT to 3.9 MMT;
    6. USDA trims back overseas SBM use slightly (less than 1 MMT) for both TY and 18/19;
    7. Beginning world bean stocks estimate reduced 400 K to 95.6; while ending stocks forecasted 7.7 MMT greater at 105.9 MMT.
  • Wheat
    1. More changes to world production. Production for 18/19 decreased 6.6 MMT to 729.6 MMT—down 28.4 MMT from last year’s record of 758.0;
    2. Carry-out for 17/18 decreases 430,000 MT vs. last month to 273.1 MMT;
    3. World ending stocks for 18/19 now pegged at 259.0 MMT with the stocks-to-use ratio at 34.8%, unchanged vs. July but below 36.8% in 17/18;
    4. Updated production forecasts for competitors are mixed;
    5. EU-27 crop lowered 7.5 MMT to 137.5 with exports reduced by 4.5 MMT to 23.0 (VS. 23.5 MMT last year;
    6. FSU-12 production forecast up 1.3 MMT from last month due to increases in Russia (+1.0 MMT); and Kazakhstan (0.5) offset small reductions in other member countries. Total FSU-12 exports estimate boosted 1.0 MMT to 61.0, which is down from last year’s record of 69.1 MMT. Relative to July, an increase in exports was noted for Russia (+1.0)
    7. Canada production unchanged from last month at 32.5 with exports steady at 24.5 MMT;
    8. Australia crop was unchanged at 22.0 MMT, although some believe that is optimistic given ongoing drought. Exports were also steady at 16.0;
    9. Argentina production unchanged at 19.5 MMT with exports steady at 14.2

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