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January Supply-Demand Summary

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January Production, Stocks & Supply-Demand Summary

January 10, 2020

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

Corn

Negative reaction initially as USDA ups yield forecast 1.0 bpa to 168.0 and raises crop size a modest 8 million. Exports were taken down 75 to 1.775 million. Ending stocks reduced just 18 mbu to 1.892 bbu as that old nemesis, “feed/residual” rears its consumptive head again. December 1 stocks of 11.389 bbu were 83 million higher than the trade average. SON feed/residual use estimated 2.631 billion, for a year to year increase of 219 million. Thus, the USDA’s 250 mbu higher feed/residual forecast and, an ending stocks figure which was 116 mbu above the trade average. Supportive.

Soybeans

Pretty much a non-event versus the December WASDE as despite some minor tweaks to acreage and yield, crush and exports emerged unscathed and carry-out remains at 475 million. After a negative reaction, futures are now only slightly firmer.

However, this may not be over yet as . . . The USDA said in a statement that it might release updated acreage, yield, production, and stocks estimates for corn and soybeans later this spring, if changes are warranted. The affected states are Michigan, Minnesota, North Dakota, South Dakota, and Wisconsin.

Wheat

Lower-than-expected Sep. 1 stocks implies greater-than-expected feed/residual usage during Sep-Nov. HRW seedings of 21.80 million for 2020 were below expectations, but SRW acreage was much higher-than-expected at 5.64 million. The lower-than-expected HRW estimate will place increased emphasis on weather given the lack of snow cover and some areas of dryness at the moment. No change to total U.S. exports, although there were some adjustments by class. Carryout for U.S. all wheat down 9 mbu, with the majority of decrease seen in SRW (-5 million). Supportive, given the lower U.S. 2020 HRW plantings with a focus now on northern hemisphere weather developments.

Market Trend

Pre-Report At Release Current (12:15)

Corn

-3 to -4 -5 +1

Soybeans

-1 to -2 -4 +1

Wheat

-2 to -3/-2/+1 -6/-4/+3 -3/+3-4/+3

Acreage/Production/Yield

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

Soybeans-Ac.

87.6 75.6 75.2-77.2/75.6 75.0

Yield

50.6 46.9 79.2-81.8/81.3 47.4

Prod

4,428 3,550 3,456-3,591/3,513 3,558

Corn-Ac.

81.7 81.8 79.2-81.8/81.3 81.5

Yield

176.4 167.0 163.0-168.5/166.0 168.0

Prod

14,420 13,661 13,030-13,701/13,502 13,692

U.S. Carry-Out

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

Soybeans

913 909 475 310-520/431 475

Corn

2,114 2,221 1,910 1,479-2,124/1,776 1,892

Sorghum

64 64 51 NA 45

Wheat

1,080 936 974 930-1,000/971 965

Cotton

4.85 4.85 5.50 NA 5.40

December 1 Stocks

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

Soybeans

3,746 3,023-3,379/3,190 3,252

Corn

11,937 10,926-11,650/11,472 11,389

Sorghum

259 NA 249

Wheat

2,009 1,750-2,047/1,914 1,834

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

2019 Final Jan Trade Ave Range 2020 USDA

All Winter

3,501 30,640 29,900-32,180 30,804

HRW

22,458 22,030 21,400-23,090 21,800

SRW

5,201 5,090 4,600-5,570 5,640

White

3,501 3,470 3,300-3,600 3,370

Southern Hemisphere Production (MMT)

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

Soybeans

Argentina

55.3 55.3 53.0 52.0-53.0/52.8 53.0

Brazil

117.9 117.0 123.0 121.8-124.0/123.1 123.0

Paraguay

8.85 8.85 10.2 NA 10.2

Corn

Argentina

51.0 51.0 50.0 47.5-50.0/49.7 50.0

Brazil

101.0 101.0 101.0 99.0-102.0/100.8 101.0

South Africa

11.8 11.8 NA 14.0

World Ending Stocks (MMT)

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

Corn

319.2 320.4 300.6 297.8

Coarse Grains

346.4 347.3 331.5 327.7

Soybeans

109.8 110.3 96.4 96.7

Wheat

277.9 278.1 289.5 288.1

Corn

  • Production increased 31 million bushels to 13,692 billion as the USDA reduced harvested area by 300 thousand acres and increased yield 1.0 bpa to 168.0 bushels;
  • Imports unchanged at 50;
  • Exports were reduced 75 to 175 billion;
  • December 1 stocks were 11.389 billion, 83 million ABOVE the average trade estimate;
  • Implied 1st quarter feed/residual use is approximately 2.631 billion and up 219 million from last year;
  • Implied BOY feed/residual use based on the USDA’s new estimate which is 83 million higher at 5,525 billion works out to 2.894 billion, or 31 reduced 20 million to 6.770 billion while ethanol grind continues at 5.375 billion;
  • USDA left the producer price forecast steady at $3.85.

Sorghum

  • Harvested area unchanged at 4.7; yield 2.9 bpa LOWER at 73.0 and generated an 17 mbu decrease in production;
  • USDA cuts feed/residual use 20 to 140 mbu (138 LY);
  • No change in FSI at 100 (106 LY);
  • Exports increased 10 to 120 (93 LY);
  • Ending stocks up 3 from LM to 24 mbu (33 LY);
  • Expected producer price unchanged at $3.40 ($3.26 LY)
  • December 1 stocks down 10 million from LY at 249.

Soybeans

  • The planted total reduced 400 K acres to 76.1 mil; harvested, 600 K lower at 75.0; yield INCREASED 5/10’s to 47.4 which puts production UP 8 mbu at 3.558 billion;
  • Residual use unchanged at 32 million (43 LY);
  • No change in exports (1.775) or crush (2.105);
  • Ending stocks UNCHANGED AT 475;
  • Producer price forecast increases $.15 to $9.00;
  • SBO—no change from December
  • SBM—no change from December

WHEAT

U.S. All Wheat Supply/Demand—19/20

  • Feed/residual usage increased 10 mbu due to higher-than-expected disappearance in Sept-Nov;
  • Seed use lowered 1 mbu reflecting lower-than-expected 2020 all winter wheat acreage;
  • Carryout for 19/20 of all wheat decreased 9 mbu to 965 million, which was 6 million below the average trade guess of 971, but within the range of 930-1,000;
  • Avg. farm price forecast range was unchanged from December at $4.55; stocks-to-use at 45.1% compared to 45.7% in Dec. and 53.0% last year

U.S. Supply/Demand by Class—19/20

  • Hard Red Winter
    • Domestic use declines 1 mbu but is still up 20% vs. last year;
    • Exports decreased 5 million to 385, which is up 16% vs. 18/19;
    • Carryout for 19/20 increased 6 million to 489 mbu vs. 516 for 18/19;
    • Stocks-to-use for 19/20 pegged at 56.5% vs. 70.5% for 18/19
  • Soft Red Winter
    • Domestic use increased 5 mbu;
    • Export forecast unchanged at 100 (vs. 128 last year);
    • Ending stocks for 19/20 down 5 mbu to 106 million vs. 158 for 18/19;
    • Stocks-to-use for 19/20 pegged at 35.8% vs. 46.9% for 18/19
  • Hard Red Spring
    • Domestic use up 5 mbu compared to December;
    • Exports unchanged at 260 vs. 259 last year;
    • Carryout for 19/20 down 5 million to 264 mbu vs. 263 a year ago;
    • Stocks-to-use for 19/20 pegged at 46.2% vs. 45.1% for 18/19

U.S. Winter Wheat Seedings

  • All Winter
    • 30.804 myn acres vs. 31.159 last year
  • Hard Red Winter
    • 21.8 myn acres, which is 3% lower vs. a year ago. Comparisons to 2019: KS, unchanged; OK, unchanged; TX, +0.40; MT, -0.40; NE, -0.17; S Dakota, -0.16; and CO, -0.25.
  • Soft Red Winter
    • 5.64 myn acres, which is up 8% vs. 2019. Comparisons to 2019: MO, -0.11; OH, +0.06; IL, -0.16; IN, -0.02; WI, -0.055; TN, +.09; PA, +.065; NC, +.15; MD, +.055; AR, +0.05; and AL, +.055.
  • White
    • 3.37 myn acres vs. 3.50 last year

U.S. December 1 Grain Stocks

  • December 1 wheat stocks were 1.834 million, 80 mbu below the trade average. Implied Sep-Nov feed/residual use was approximately 20 mbu compared to a negative 55 mbu in 2019. This is the largest Sep-Nov feed/residual estimate since at least the mid-1980s.

GLOBAL

Coarse Grains/Corn

  • Ending world coarse grain stocks reduced 3.8 and are now down almost 20 MMT from LY to 327.7;
  • Ending corn stocks estimate reduced 2.75 to 297.8 (320.4);
  • S AM corn production unchanged . . . Arg continues at 50.0; Brazil remains 101.0. South Africa also unchanged at 14.0; Russia raised ½ MMT to 14.5 and Ukraine unchanged at 35.5;
  • The only change in exports was a ½ MMT increase in the Ukraine forecast to 30.5;
  • No changed to imports;
  • China beginning stocks reduced 1 MMT to 210.2 and feed used increased 1 to 190.0 with the net a 2 MMT reduction in ending stocks to 199.1. Import forecast holds at 7.0.

Soybeans/Meal

  • Ending global bean stocks forecast edges up 270 K MT to 96.7 million (110.3 LY);
  • No changes to world/foreign exports;
  • China import estimate continues at 85.0 while crush increased a ½ MMT to 85.0 million

Wheat

  1. Production for 19/20 decreased 1.0 MMT to 764.4 MMT, although that remains a record;
  2. World ending stocks for 19/20 now pegged at 288.1 MMT with the stocks-to-use ratio at 38.2% vs. 38.4% in December and 37.8% in 18/19;
  3. Australia crop was cut 0.5 MMT to 15.6, although exports were only lowered 0.3 MMT to 8.2 MMT (9.0 last year);
  4. Russia production cut by 1.0 MMT to 73.5 MMT and exports were reduced 1.0 MMT to 34.0 MMT (35.8 last year);
  5. EU production was increased 0.5 MMT to 154.0, but exports were increased 2.0 MMT to 31.0 MMT (23.3 last year).
  6. Ukraine production was unchanged at 29.0 MMT, but exports were increased 0.5 MMT to 20.5 MMT (16.0 last year);
  7. Production forecast for Argentina was unchanged from last month at 19.0 MMT, while exports were steady at 13.0 MMT (12.2 last year).
  8. Canada crop was unchanged at 32.35 MMT, while exports were steady at 24.0 MMT (24.4 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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