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February Supply-Demand Summary

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ATI February Supply-Demand Summary

February 11, 2020

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

Corn

Neutral, perhaps slightly negative. The February WASDE found the USDA leaving carry-out at 1.892 billion with a 50 mbu cut in exports neutralized by a corresponding increase in ethanol grind. The forecast for the average producer price continues at $3.85 per bushel. The trade was expecting only a slight—12 mbu—cut to carry-out. South American production and exports were left untouched but the USDA did increase South African and Ukrainian corn production by ½ MMT and 300 K MT, while the export forecast from both countries was boosted by ½ MMT each. The fact the WASDE people chose not to go along with the Ukrainian attache’s 2.5 MMT reduction in exports is rather interesting. Export demand for U.S. is picking up seasonally as expected but whether the final total will come in above the USDA remains to be seen.

Soybeans

A 50 million cut in ending stocks would seem to be supportive but not much market reaction. Carry-out was revised 50 million lower to 425 mbu, 23 below the average trade estimate on a like increase in the export forecast. Interesting that the USDA made no reference to the Phase I Trade Agreement per se but they did increase China’s imports by 3 MMT. Part of that increase will likely be met by Brazil with the crop there boosted 2 MMT to 125.0 and exports raised by 1 to 77 million. Trade reaction to the smaller than expected carry-out estimate was rather muted.

Wheat

Mostly neutral, although U.S., exports were increased by 25 mbu and ending stocks lowered by a like amount. Recent improvement in weather conditions for 2020 crops in the Black Sea region and the EU appear to have taken the steam out of the market for the time being. Ample/surplus moisture also continues for most U.S. winter wheat. Choppy, with a weaker bias short-term.

Market Trend

Pre-Report At Release Current (12:15)

Corn

-1/4 0 -1 1/2

Soybeans

-2 +1/2 -1

Wheat

-4, -3, & -1/4 -2, -1, +1/2 -9, -5, -3

U.S. Carry-Out

Jan 18/19 USDA Feb 18/19 USDA Jan 19/20 USDA Feb 19/20 Trade Feb 19/20 USDA

Soybeans

909 909 475 448 (320-520) 425

Corn

2,221 2,221 1,892 1,880 (1,788-2,017) 1,892

Sorghum

64 64 45 NA 40

Wheat

1,080 1,080 965 959 (934-999) 940

Cotton

4.85 4.85 5.40 NA 5.40

Southern Hemisphere Production (MMT)

Jan 18/19 USDA Feb 18/19 USDA Jan 19/20 USDA Feb 19/20 Trade Feb 19/20 USDA

Soybeans

Argentina

55.3 55.3 53.0 53.1(52.5-54.0) 53.0

Brazil

117.0 117.0 123.0 123.7(122.5-125.0) 125.0

CONAB

115.0 115.0 122.2 123.25

Paraguay

8.85 8.85 10.2 9.90

Corn

Argentina

51.0 51.0 50.0 49.8(48.0-51.0) 50.0

Brazil

101.0 101.0 101.0 100.9(99.0-102.0) 101.0

CONAB

100.0 100.0 98.7 100.5

South Africa

11.80 11.80 14.0 14.5

World Ending Stocks (MMT)

Dec 18/19 USDA Jan 18/19 USDA Dec 19/20 USDA Jan 19/20 USDA

Corn

320.4 320.5 297.8 297.2 (295.0-299.5) 296.8

Soybeans

110.3 111.2 96.7 96.9 (94.2-96.7) 98.9

Wheat

278.1 278.3 288.1 287.4 (285.0-288.8) 288.0

Corn

  • No changes this month in this month’s ending stocks;
  • However, the USDA did cut exports by 50 million, down to 1.725 bbu as shipments have been extremely slow for the 1st five months of the year;
  • And, increased ethanol grind by 50, to 5.425 billion as reflected in the monthly Grain Crushings and Co-Product report;
  • Ending stocks continue to be forecast at 1.892 bbu;
  • And, the expected average producer price remains at $3.85 per bushel.

Sorghum

  • The only change in the sorghum S&D was a 5 mbu increase in FSI use to 105;
  • Ending stocks declined by a like amount to 40 mbu;
  • But the average producer price estimate was $.05 lower at $3.35 per bushel.

Soybeans

  • The USDA took exports up a bit more than expected by the average trade stocks estimate;
  • They are now pegged 50 mbu greater at 1.825 bbu;
  • Ending stocks declined to 425 million;
  • But despite a smaller carry-out, expectations for average producer prices were revised $.25 lower to $8.75 per bushel.
  • SBO
    • Beginning stocks were reduced 1 to 1.775 billion;
    • Production was trimmed back 130 million pounds on a slight reduction in oil yield;
    • Domestic soybean oil use was reduced 400 million pounds to 23.1 billion and this included a 300 million pound decline in biodiesel use;
    • Exports were increased 200 million pounds reflecting the strong early shipment pace;
    • Ending stocks rose 69 million pounds from the January estimate to 1.515 billion;
    • The average price of crude soybean oil at Decatur dropped from $.34 to $.3350 per pound.
  • SBM
    • Meal production reduced 25 K ST to 49.473 K;
    • No changes on the demand side, neither domestic nor exports;
    • Ending stocks reduced by 25 to 375;
    • Average price of 48% protein meal remains forecast at $305/ST.

WHEAT

U.S. All Wheat Supply/Demand—19/20

  • Feed/residual usage is unchanged at 150 mbu;
  • Exports were increased 25 mbu to 1.0 bbu;
  • Carryout for 19/20 pegged at 940 mbu vs. the average trade guess of 959;
  • Avg. farm price forecast range pegged at $4.55, which is unchanged from; stocks-to-use at 43.4% compared to 45.1% in Jan. and 53.0% last year

U.S. Supply/Demand by Class—19/20

  • Hard Red Winter
    • Domestic use unchanged at 480 mbu;
    • Exports forecast at 390 mbu, which is up 5 mbu vs. January;
    • Carryout for 19/20 pegged at 484 mbu vs. 489 last month and 516 for 18/19;
    • Stocks-to-use for 19/20 pegged at 55.6% vs. 56.5 in January and 70.5% for 18/19
  • Soft Red Winter
    • Domestic use unchanged at 196 mbu;
    • Exports forecast steady at 100 mbu vs. 128 last year;
    • Ending stocks for 19/20 unchanged vs. January at 106 mbu and 158 for 18/19;
    • Stocks-to-use for 19/20 pegged at 35.8%, unch vs. January and 46.9% for 18/19
  • Hard Red Spring
    • Domestic use unchanged at 311 mbu;
    • Exports forecast at 275 mbu, up 15 mbu vs. January and 259 last year;
    • Carryout for 19/20 at 249 mbu, down 15 mbu from January and v. 263 in 18/19;
    • Stocks-to-use for 19/20 pegged at 42.5% vs. 46.1% in January & 45.1% in 18/19

GLOBAL

Coarse Grains/Corn

  • Ending global coarse grain stocks revised 1 lower to 326.6 MMT;
  • Ending global corn ending stocks also revised 1 lower, to 296.8 MMT;
  • Only a modest 350 K MT reduction in foreign wheat feeding but this is still up 7.2 MMT year to year;
  • No change in South American production with Argentina continuing at 50.0 and Brazil at 101.0;
  • The South African corn crop was increased ½ MMT to 14.5 and Ukraine’s edged up 300 K to 35.8 MMT;
  • No change in the South American export forecast with Argentina a 33.5 (36.0 LY) and Brazil at 36.0 (42.0 LY);
  • ½ MMT increases in exports were noted for South Africa (to 2.0; 1.1 LY) and Ukraine (to 31.0; 30.3 LY):
  • About the only change on the import side was a 200 K increase in Brazil’s, to 1.2 MMT (1.7 LY) as the USDA did raise Brazil’s domestic feed forecast by ½ MMT to 56.5 (55.4 LY);
  • China balance sheet unchanged from last month: 261 MMT crop; imports at 7; ending stocks at 199 million.

Soybeans/Meal

  • USDA boosts China’s SB import forecast 3 MMT to 88.0 million (82.5 LY). Note that China’s Sep-Dec imports from the 3 major exporters are up 9.5 MMT this year at 30.5 million while crush during that same period is running about 1.8 MMT BEHIND last year. The USDA crush forecast was increased by 1 to 86.0, 1 higher than LY;
  • With the Brazil crop raised 2 MMT to 125.0, exports were increased by 1 to 77.0 (74.6 LY); Argentina’s continue at 8.2 (9.1 LY);
  • No other changes were noted among the world’s importers;
  • Ending global soybean stocks increased 2.2 MMT from January to 98.9 million.

Wheat

  • World production for 19/20 pegged at 764.4, down fractionally vs. January;
  • Australia production unch at 15.6 vs. January; exports steady at 8.2 MMT
  • EU crop steady at 154.0 MMT; however, exports increased 1.0 MMT to 32.0;
  • Russia production unch at 73.5 MMT; exports steady at 34.0 MMT;
  • Ukraine production steady at 29.0 MMT; exports unchanged at 20.5;
  • Canada crop unch at 32.4 MMT; however, exports lowered 0.5 MMT to 23.5;
  • Argentina production steady at 19.5 MMT; exports unch at 13.0;
  • World ending stocks for 19/20 forecast at 288.0 MMT vs. 288.1 in January.
  • Ending stock-to-use ratio for 19/20 is projected at 38.3%, unch vs. last month

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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