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February Supply-Demand Summary

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February S&D Highlights

February 8, 2019

Market Trend

CORN: The trade was somewhat on the high side with its pre-report stocks estimate of 2.467 billion. The USDA came in 115 million lower as production issues in Argentina and to a much lesser extent in Ukraine have boosted U.S. export prospects. The latter forecast was raised from 1.925 bbu in February to 2.050 this month. While it means a very aggressive export pace for the remainder of the campaign, the forecast does seem justified given the strength in export sales of late. At the global level, the USDA reduced the Argentine crop 3 MMT to 39.0 and took the Ukraine’s production down 880 K to 24.1. Competitor export forecasts adjustments include: (1) Argentina, down 1.5 MMT; (2) Brazil, up 1 and (3) Ukraine, down ½ MMT. No changes in the China corn balance sheet and, the USDA left its forecast for PRC milo imports steady at 6.3 MMT (5.2 LY). Certainly supportive as the market returns to monitoring South American weather but at 2.35 bbu, U.S. stocks are adequate.

SOYBEANS: The trade expected the USDA to boost U.S. ending stocks by an average of 22 mbu; the Gov came in 42 million higher at 530 million, crediting a corresponding reduction in exports as the culprit. Weak sales to-date and an increasing Brazilian crop may make the new 2.1 bbu export forecast still somewhat difficult to achieve. South American production was essentially a wash this go-around with a 2 MMT reduction in the Argentine crop offset with a like increase in the Brazil estimate. The USDA did lower its Paraguay estimate 200 K to 9.2 million (10.7 LY). South American weather forecasts may counter a somewhat negative U.S. stocks picture. No change in the China numbers . . . imports remain forecast at 97.0.

WHEAT: Somewhat negative as the USDA’s stocks forecast of 1.009 billion was 21 million above the average trade estimate. U.S. exports were reduced by 25 million with larger shipments expected out of Argentina (12.5 vs 11.9 LM); Canada (22.5 vs 22.0) while EU exports were trimmed back 1 MMT to 26.0. The market’s focus will now shift to world production prospects starting with India and then on to the U.S., EU, FSU, Canada and China this spring.

Market Trend

Pre-Report Release Current (12:15)

Corn

Steady to ½ Lower +2 ¼ +1/2

Soybeans

Up 3+ -3/4 +4 ¾

Wheat

1-2 higher Down 6-7 -12 to -13

U.S. Carry-Out

Dec 16/17 USDA Jan 16/17 USDA Dec 17/18 USDA Jan 17/18 Trade Jan 17/18 USDA

Soybeans

301 302 445 442-595/479 470

Corn

2,295 2,293 2,437 2,263-2,550/2,437 2,477

Sorghum

34 33 21 NA 24

Wheat

1,181 1,181 960 855-987/959 989

Cotton

2.75 2.75 5.80 NA 5.7

December 1 Stocks

Dec 16/17 USDA Jan 17/18 Trade Jan 17/18 USDA

Soybeans

2,899 2,963-3,306/3,179 3,157

Corn

12,383 12,230-12,675/12,429 12,516

Sorghum

309 NA 226

Wheat

2,079 1,725-2,005/1,851 1,874

U.S. 2016 Winter Wheat Seedings (million acres)

2017 Final Jan Trade Ave Range 2018 USDA

All Winter

32.7 31.5 30.1-32.5 32.6

HRW

23.4 22.4 21.1-23.3 23.1

SRW

5.7 5.6 5.2-5.9 5.98

White

3.5 3.5 3.1-3.8 3.56

Southern Hemisphere Production (MMT)

Corn

Dec 16/17 USDA Jan 16/17 USDA Dec 17/18 USDA 17/18 Trade Jan 17/18 USDA

Soybeans

Argentina

57.8 57.8 57.0 54.0-58.0/56.0 56.0

Brazil

114.1 114.1 108.0 108.0-115.0/110.1 110.0

Paraguay

10.7 10.67 9.4 NA 9.4

Argentina

41.0 41.0 42.0 40.0-42.5/41.4 42.0

Brazil

98.5 98.5 95.0 86.7-98.5/93.3 95.0

South Africa

17.5 17.5 12.5 NA 12.5

World Ending Stocks (MMT)

Dec 16/17 USDA Jan 16/17 USDA Dec 17/18 USDA Dec 17/18 Trade Jan 17/18 USDA

Corn

227.3 228.8 204.1 203.1 206.6

Soybeans

96.6 96.5 98.3 100.5 98.6

Wheat

255.3 252.7 268.4 268.3 268.0

Corn

  • Production was increased 26 million bushels to 14,604 billion as the USDA reduced harvested area by 400 thousand
    acres and increased yield 1.2 bpa to 176.6 bushels;
  • Imports unchanged at 50;
  • No change in exports, remaining at 1.925 billion;
  • December 1 stocks were 12.526, 87 million above the average trade estimate;
  • Implied 1st quarter feed/residual use is approximately 2.301 billion and up 26 million from last year;
  • Exports continue to be forecast at 1.925 billion;
  • Implied BOY feed/residual use based on the USDA’s new estimate which is 25 million lower at 5,550 billion works out
    to 3.249 billion, or 61 million more than last year;
  • FSI use was increased 10 million to 6.995 billion while ethanol grind continues at 5.525 billion;
  • USDA adds a dime to the low end of the producer price range which is now $2.95-$3.55 per bushel; the $3.25 average
    would be $.11 less than the 16/17 average
  • Dec 1 stocks revealed slightly more on the farm—61.8% of the total versus 61.4% LY. One state jumped out on the
    stocks side—IL inventories were up 5% year to year with the 106 mbu increase split about even between on-farm and
    off-farm.

Sorghum

  • Harvested area unchanged at 5.0; yield 1.7 bpa higher at 72.1 generated an 8 mbu increase in production;
  • USDA raises feed/residual use 5 to 65 mbu (130 LY);
  • No change in FSI at 50 (115 LY);
  • Exports continue to be estimated at 260 (241 LY);
  • Ending stocks up 3 from LM to 24 mbu (33 LY);
  • Expected producer price range up a dime on the low end, $2.85-$3.45 ($2.79 LY)
  • December 1 stocks down 83 million from LY at 226.

Soybeans

  • Planted total reduced 100 K acres to 90.1 mil; harvested, unchanged at 89.5; yield reduced 4/10’s to 49.1 which puts
    production down 33 mbu at 4.392 billion;
  • Residual 2 million lower at 33 mbu (36 LY);
  • Exports trimmed 65 million to 2.160 billion;
  • Crush increased 10 to 1.950 billion;
  • Ending stocks increase 25 to 470 million;
  • Producer price range narrows in $.20 on both ends to $8.80-$9.80;
  • SBO
    • USDA sees higher production with the larger crush, up 20 million pounds;
    • Domestic use up 100 million pounds to 21.1 (19.8 LY) (note biodiesel steady at 7.5 mil lbs);
    • Exports unchanged at 1.9 billion;
    • Ending stocks decline 80 million lbs from LM to 1.536 billion (1.711 LY);
    • Expected sbo price range drops from $.3250-$.3650 to $.32-$.35 and versus $.3248 LY.
  • SBM
    • Meal production unchanged despite 10 mbu increase in crush;
    • No change on the demand side;
    • Price range: $295-$335, unchanged from LM and versus $316.88 LY.
  • 9% more beans stocks on Dec 1 versus LY;
  • Farmer had 46%% of the total LY; 47% this year. ON farm stocks up 11%; OFF farm supplies 7% larger
  • WCB states accounted for 164 of the 258 mbu increase, or 64%. Note most of the WCB stocks increase occurred on
    the farm; in the ECB, 2/3rds of the increase was at the elevator level.

WHEAT

U.S. All Wheat Supply/Demand – 17/18

  • Production for 2017 continues at 1.741 billion bushels;
  • Feed/residual usage was reduced 20 to 100 million (156 LY);
  • Exports remain forecast at 975 million;
  • Carryout for 17/18 raised 29 million to 989 and versus the average trade guess of 959;
  • Avg. farm price forecast range holds at $4.50-$4.70; stocks-to-use at 47.4%, compared to 45.5% in Dec. and 53.2% last year

U.S. Supply/Demand by Class – 17/18

  • Hard Red Winter
    • Total supply up 1 from LM to 1.346 billion;
    • Domestic use forecast trimmed 13 to 457 million;
    • Exports continued to be forecasted at 405 mbu vs. 455 mbu in 16/17;
    • Carryout for 17/18 raised 14 million to pegged at 484 mbu vs. 589 for 16/17;
    • Stocks-to-use for 17/18 pegged at 56.1% vs. 62.5% for 16/17
  • Soft Red Winter
    • Total supply unchanged from LM at 527 million ;
    • Domestic use reduced 6 to 206 million (228 LY);
    • Exports forecasted 5 million higher from LM at 90 and versus 92 last year;
    • Ending stocks for 17/18 increased 1 to 231 million and vs. 215 for 16/17;
    • Stocks-to-use for 17/18 pegged at 78.0% vs. 67.2% for 16/17
  • Hard Red Spring
    • Total supply holds steady from December at 385;
    • Domestic use 1 higher to 272;
    • Exports forecast at 245, down 10 mbu from LM and vs. 321 last year;
    • Carryout for 17/18 at 178 mbu, up 11 from the December estimate and vs. 235 a year ago;
    • Stocks-to-use for 17/18 pegged at 34.4% vs. 41.2% for 16/17

U.S. Winter Wheat Seedings

  • All Winter
    • 32.6 myn acres vs. 32.7 last year
  • Hard Red Winter
    • 23.1 myn acres vs. 23.4 last year
  • Soft Red Winter
    • 5.98 myn acres vs. 5.7 last year
  • White
    • 3.56 myn acres vs. 3.5 last year

U.S. December 1 Grain Stocks</strong

  • December 1 wheat stocks were 1.875 million, 23 mbu above the trade average

GLOBAL

Coarse Grains/Corn

  • Ending coarse grain stocks estimate increased 1.5 MMT to 233.8 (261.8 LY);
  • Ending corn stocks estimate raised 2.5 MMT to 206.6 (228.8 LY);
  • S AM corn production unchanged . . . Arg continues at 42.0; Brazil remains 95.0. South Africa also unchanged at 12.5;
  • Only changes on the EX/IM side was a 100 K increase to the SE Asia forecast to 820 K MT (1.27 million LY);
  • Note EU corn crop remains estimated at 60.1 MMT;
  • China continues at 3 on the import forecast; exports hold at 20 K MT.

Soybeans/Meal

  • Ending global bean stocks forecast edges up 350 K MT to 98.6 million (96.5 LY);
  • Argentina production estimate lowered 1 to 56.0 (57.8 LY); USDA ups Brazil 2 MMT to 110 (114.1 LY);
  • Arg exports unchanged at 8.5 (7.0 LY); Brazil shipments up 1.5 to 67.0 (65.5 LY);
  • No change in PRC SB imports, estimate remains at 97.0 (93.5 LY)
  • USDA increases cuts foreign SBM use slightly, down 680 K to 202 MMT (191.8 LY);
  • World SBO stocks reduced 130 K to 3.13 MMT (3.25 LY)

WHEAT

  • World production for 17/18 pegged at 757 MMT vs. 755 in December;
  • Australia production at 21.5 vs. 21.5 last month;
  • EU crop size reduced 900 K to 151.6 MMT vs. 152.5 in December;
  • FSU-12 crop increased by 2 to 141.3 and up nearly 11 MMT from LY;
  • Canada production estimated 30.0 MMT vs. 30.0 in December;
  • Argentina crop size forecast at 17.5 MMT vs. 17.5 last month;
  • World ending stocks for 17/18 forecast at 268.0 MMT vs. 268.4 in December.
  • Ending stock-to-use ratio for 17/18 is projected at 36.1% vs. 36.2% LM and 34.2% LY.

Regards:

Larry/Brian


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