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December Supply-Demand Summary

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Information provided may include opinions of the author and is subject to disclosures found at the end of this document.

December S&D Highlights

December 10, 2019

Market Trend

Information provided may include opinions of the author and is subject to disclosures found at the end of this document.

Pre-Report At Release Current (12:00)

Corn-CH

unch +1 1/4 +1 1/4

Soybeans-SF

+2 to +3 +3 +2 1/2

Wheat-WH

unch +3 +3 3/4

U.S. Carry-Out

Nov 18/19 USDA Dec 18/19 USDA Nov 19/20 USDA Dec 19/20 Trade Dec 19/20 Range Dec 19/20 USDA

Soybeans

913 913 475 474 392-522 475

SBO

1,776 1,776 1,446 NA NA 1,446

Corn

2114 2,114 1,910 1,861 1,190-1,960* 1,910

Wheat

1,080 1,080 1,014 1,009 964-1,050 974

Sorghum

64 64 51 NA NA 51

Cotton

4.85 4.85 6.10 NA NA 5.50

*1,190 on the low end looks like a misprint by Bloomberg, as otherwise, 1,479 is the low end of the trade range

South America Production

Nov 18/19 Dec 18/19 Nov 19/20 Trade 19/20 Range Dec 19/20

Arg Corn

51.0 51.0 50.0 49.7 (48.0-51.5) 50.0

Brazil Corn

101.0 101.0 101.0 100.8 (99.0-101.5) 101.0

Brazil CONAB

115.0 120.9 121.5

Arg SB

55.3 55.3 53.0 53.1(52.0-54.0) 53.0

Brazil SB

117.0 117.0 123.0 123.1 (121.6-124.0) 123.0

Brazil CONAB

100.1 98.4 98.4

World Ending Stocks (MMT)

Commodity

Commodity Nov 18/19 USDA Dec 18/19 USDA Nov 19/20 USDA Dec 19/20 Range Dec 19/20 USDA

Wheat

277.9 277.85 288.3 286.9 (283.9-290.0) 289.50

Coarse Grains

347.3 346.4 326.8 NA 331.5

Corn

320.1 319.2 296.0 296.1 (292.0-305.0) 300.6

Soybeans

109.7 109.8 95.4 95.9 (93.9-101.9) 96.4

December Supply-Demand Summary

Corn: A non-event as the USDA left the 19/20 corn balance sheet unchanged from November with carry-out remaining at 1.910 bbu as there were no changes to either the supply or demand side of the equation. Additionally, the point estimate for average producer price was also steady at $3.85 per bushel. Likewise, there were no changes to key competitor balance sheets as Argentina and Brazil production continues at 50.0 and 101.0 MMT, respectively. Still not sure as to why the trade was using a 1.861 bbu U.S. carry-out estimate.

Soybeans: Similarly, no changes to the U.S. bean balance sheet, ending stocks are still at 475; exports, 1.775 and crush, 2.015 bbu. The former coincides very closely to the average trade ending stocks estimate of 474 million. The USDA did however, scale back its point estimate for average producer prices by $.15 per bushel, to $8.85. South American crop size? Also sharply unchanged with Argentina at 53.0 (55.3 LY); Brazil, 123.0 (117.0 LY) and Paraguay, 10.2 (8.85 LY).

Wheat: Slightly supportive as U.S. ending stocks were below expectations. Australia crop reduced 1.1 MMT to 16.1 MMT and Argentina lowered 1.0 MMT to 19.0 MMT. U.S. export forecast increased 25 mbu, while imports were lowered by 15 mbu which the USDA noted was a result of “a slower than expected pace to date”. Net was a 40 mbu reduction in ending stocks to 974 mbu. Today’s increase in U.S. exports combined with ongoing uncertainty about 2020 production potential could provide some support, with a stronger bias for Chicago SRW in relation to other classes for the short-term.

DOMESTIC:

CORN

  • Ending stocks unchanged at 1.910 bbu (2.114 LY);
  • Expectations for the average producer price range unchanged at $3.85 per bushel ($3.61 LY).

MILO

  • No adjustments to the supply side;
  • Demand/use continues at 370 mbu with ending stocks steady at 51 mbu (64 LY);
  • Producer price point estimate unchanged at $3.40 ($3.26 LY).

SOYBEANS & PRODUCTS

  • Soybean carry-out unchanged at 475;
  • Producer price point forecast $.15 per bushel lower at $8.85 ($8.48 LY);
  • SBM:
    • No changes in production;
    • Use however saw domestic disappearance raised 150 K ST to 36.8 MST (36.1 MMT LY);
    • SBM exports were reduced a like amount, to 13.2 MMT (13.554 LY);
    • Expected price lowered $15/ST to $310 (308.28 LY).
  • SBO:
    • No changes to any of the S&D components;
    • Expected price continues at $.31/lb ($.2826 LY).

WHEAT

U.S. All Wheat Supply/Demand—19/20

  • Imports were lowered by 15 mbu (Durum, 10 mbu; and HRS, 5 mbu) vs. last month;
  • Usage—Food, seed use and feed/residual unchanged vs. last month; however, exports were increased 25 mbu to 975 mbu. Total use of 2.131 bbu is up 4.5% vs. 18/19;
  • Ending stocks of all wheat are forecast at 0.974 bbu vs. the average trade guess of 1.009; average farm price forecast at $4.55 vs. $4.60 in November. The ending stocks-to-use ratio is forecast at 45.7% vs. 48.1% last month and 53.0% in 18/19.

U.S. Supply/Demand by Class—19/20

  • Hard Red Winter
    • Domestic use is unchanged at 481 mbu;
    • Exports forecast at 390 mbu, up 10 million vs. November;
    • Carry-out projected at 483 mbu, down 10 million vs. last month;
    • Stocks-to-use forecast at 55.5% vs. 57.3% in November and 70.5% for 18/19
  • Soft Red Winter
    • Domestic use unchanged from last month at 191;
    • Exports forecast at 100 mbu—unchanged vs. November;
    • Ending stocks forecast at 111 million, unchanged vs. last month;
    • Stocks-to-use estimated at 38.1% vs. 38.1% in November and 46.9% for 18/19
  • Hard Red Spring
    • Imports increased 5 mbu vs. November;
    • Domestic use unchanged from last month at 306 mbu;
    • Exports projected at 260 mbu, up 5 million from November;
    • Carry-out projected at 269 mbu vs. 279 in November;
    • Stocks-to-use pegged at 47.5% vs. 49.7% last month and 45.1% for last year

GLOBAL

Coarse Grains/Corn

  1. Foreign coarse grain production increased nearly 7 MMT to 1.402 billion, mostly the result of a near-7 MMT increase in Chinese output (6.7 MMT of which came from corn, now at 260.8 MMT);
  2. All but 1 MMT of the Chinese increase went into ending stocks, up 5.77 to 201.1. Feed use 1 MMT larger at 189 million, 1 less than 18/19;
  3. In addition to no change in South American production, major exporter shipments are steady from LM at 106.7 MMT and DOWN 4.4 MMT from the 18/19 total;
  4. Note virtually no change in foreign wheat feeding: 144.88 MMT vs 144.66 LM and 137.0 LY
  5. China corn import forecast steady at 7 MMT, versus 4.5 LY.

Soybeans

  1. 19/20 global bean ending stocks increased 1 MMT to 96.4 which is a 13.4 MMT/13.2% decrease from last year;
  2. No changes to S Am production estimates: 188.4 MMT, up 4.4 from 18/19;
  3. Minor tweak to Argentina’s export estimate, down 600 K to 8.2 MMT, 900 K LESS than the 18/19 estimate. Brazil continues at 76.0, a 1.05 MMT increase over last year
  4. China SB imports remain estimated at 85.0 MMT, up 2.5 from 18/19. Crush also steady at 84.5, down just ½ MMT from this past year. China bean crop increased 1 to 18.1; all of which went into ending stocks, now seen at 20.16 and versus 19.39 at the end of 18/19;
  5. Smaller U.S. SBM export forecast due to 550 K increase to 30.85 MMT for Argentina and 200 K increase for Brazil. Foreign consumption SBM estimate edges up 13 K to 202.1 MMT, a 4.2 MMT/2.0% increase from LY. Most of the demand increase is in SE Asia.

Wheat

  1. Production for 19/20 decreased 140,000 MT to 765.4 MMT, although that remains a record;
  2. World ending stocks for 19/20 now pegged at 289.5 MMT with the stocks-to-use ratio at 38.4% vs. 38.2% in November and 37.7% in 18/19;
  3. Updated production forecasts for competitors are slightly supportive to U.S. export prospects;;
  4. Australia crop was reduced 1.1 MMT to 16.1, although exports were only lowered 0.6 MMT to 8.4 MMT (9.0 last year);
  5. Argentina production was lowered by 1.0 MMT to 19.0 MMT and exports were reduced a like amount to 13.0 MMT (12.3 last year);
  6. Canada crop was reduced 0.650 MMT to 32.35 MMT, while exports were lowered 0.5 MMT to 24.0 MMT (24.4 last year);
  7. Production forecast for Russia was increased 0.5 MMT from last month to 74.5 MMT, while exports were raised a like amount to 35.0 MMT (35.8 last year).
  8. Ukraine production was unchanged at 29.0 MMT, while exports were steady at 20.0 MMT (16.0 last year);
  9. EU production was increased 0.5 MMT to 153.5 but exports were unchanged at 29.0 MMT (23.3 last year).

 
The risk of trading futures and options can be substantial. All information, publications, and material used and distributed by Advance Trading Inc. shall be construed as a solicitation. ATI does not maintain an independent research department as defined in CFTC Regulation 1.71. Information obtained from third-party sources is believed to be reliable, but its accuracy is not guaranteed by Advance Trading Inc. Past performance is not necessarily indicative of future results.

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