June S&D Highlights
June 12, 2018
|+4 to +5||+6||+9|
|+2 to +3||+6||+3|
|+2(Chi) to +3/4(KC)||+6 to +5||+15/+13|
|2017 Final||2018 May USDA||2018 June Trade Ave||2018 Trade Range||2018 June USDA|
|May 17/18||June 17/18||June 17/18||May 18/19||June 18/19||June 18/19|
|USDA||Trade Ave||USDA||USDA||Trade Ave||USDA|
South America Production (MMT)
|May 16/17||May 17/18||June 17/18||June 17/18||May 18/19||June 18/19|
World Ending Stocks (MMT)
|June 16/17||May 17/18||June 17/18||June 17/18||May 18/19||June 18/19||June 18/19|
June Supply-Demand Summary
CORN: The larger old crop export forecast (75 mbu) seems to have caught the trade by surprise and filtered all the way through to next year’s ending stocks which were down 105 mbu from last month, aided by a 50 mbu increase in expected ethanol grind. For the moment the market is focused on a somewhat tighter S&D and the outlook for a period of mostly hot and dry weather. Black Sea crops continue to merit monitoring, as well as here in the U.S. Talk of further cuts in the Brazil crop in the coming months could provide additional support.
SOYBEANS: The USDA was well below (kind of?) the trade for both old and new crop carry-out. A sub-400 18/19 ending stocks figure should stop the recent hemorrhaging in the bean market but next year’s South American potential lurks in the background. And, just how many old crop U.S. beans will China take?
WHEAT: U.S. winter wheat production slightly negative and world ending stocks were above expectations. However, there remains quite a bit of uncertainty about U.S. crop size—particularly HRW—and production estimates are declining in the FSU-12 and EU. Plus, dryness continues to impact key production areas of Australia despite recent rain. Very choppy with a somewhat firm undertone as the market continues to closely monitor northern hemisphere production prospects.
- A bit of a surprise, endings stocks were reduced 80 mbu, down to 2.012, 61 below the trade average;
- The reduction came as the result of a 5 mbu cut in imports and secondly, a 75 mbu increase in exports to 2.3 billion;
- No change in either Feed/Residual (5.500) nor FSI (7.040 billion);
- The expected farm price range continues at $3.25-$3.55 per bushel.
- The trade had been expecting a 40 mbu cut in the 18/19 ending stocks forecast; the USDA went a little further, trimming carry-out by 105 million to 1.577 billion;
- No change in crop size but the 80 million reduction in beginning stocks reduced supplies by a like amount;
- Feed/residual usage cut back 25 million to 5.35 billion—higher prices and increased ethanol byproduct output;
- FSI usage boosted 50 million, all in the ethanol sector with a corresponding reduction in sorghum FSI consumption;
- Exports were unchanged from last month at 2.1 billion;
- The expected range for producer prices was raised $.10 at both ends, to $3.40-$4.40.
- Old crop feed/residual use increased by 10 to 90 million;
- 17/18 FSI consumption 5 mbu higher to 50;
- 17/18 Exports shaved 15 to 230 million;
- Ending stocks unchanged at 29 mbu;
- Expected producer price range remains at $3.10-$3.30.
- No change in the production forecast, with the crop remaining at 343 mbu;
- USDA expecting a resumption of Chinese milo buying with the export forecast increased 50 million to 215 mbu;
- Feed/residual use unchanged at 80 mbu;
- FSI/ethanol grind cut back 50 million with Chinese milo imports expected to buy the crop away from domestic ethanol producers;
- Ending stocks however, unchanged at 27 mbu;
- Expected milo price range increases $.10 from last month to $3.10-$4.20.
- Crush 25 mbu higher at 2.015 bbu (domestic meal use and exports increased 200 K and 400 K ST, respectively);
- USDA adamant that exports won’t top 2.065 bbu, no change this month;
- No other adjustments resulted in carry-out declining 25 to 505. The average trade estimate was 18 mbu higher at 523;
- Producer price upped $.05 to $9.40 per bushel;
- Meal changes as above with the average price of 48% remaining at $360 per ST;
- Imports up 15;
- Production 265 million greater;
- Domestic use scaled back 100 million pounds to 20.6 billion;
- Exports increased 100 to 2.4 billion;
- No change to the biodiesel forecast;
- Stocks increase 280 mil to 2.176 bil lbs;
- SBO price continues to be estimated at $.3050/lb.
- No change in estimated crop size; supplies 25 million lower due to beginning stocks reduction;
- 18/19 crush raised 5 to 2.0 billion;
- Exports hold steady at 2.29 billion;
- c/o down 30 as a result to 385 million (trade: 435);
- Expected price range holds at $8.75-$11.25;
- 200 K increase in domestic SBM use to 35.4 MST, absorbing the production increase;
- Exports steady at 12.4 MST;
- $330-$370 price range, unchanged from May
- Bigger crush adds 60 mil lbs to production;
- Beginning stocks up 280 million lbs;
- No changes on the demand side;
- The increase in supply goes into ending stocks, up 340 million to 2.176 billion;
- Yet, price range remains at $.2950-$.3350 per pound.
Winter Wheat Production – 18/19
- Updated estimate pegs new-crop winter wheat production at 1.198 bbu, which is slightly above the avg. trade guess of 1.187 but 6% lower than 2017;
- Harvested acreage pegged at 24.8 mil—unchanged vs, last month—and vs. last year’s final of 25.3. Avg. yield is forecast at 48.4 bpa vs. 48.1 in May and the 2017 level of 50.2;
- HRW forecast at 650 mbu vs. avg. guess of 641; SRW pegged at 316 mbu vs. avg. guess of 319; and White at 232 mbu vs. avg. guess of 228;
- Implied Other Spring/Durum production pegged at 630 mbu vs. 471 for last year.
U.S. All Wheat Supply/Demand—18/19
- New-crop all wheat production estimated at 1.827 bbu, which is up 6 mbu from May and 5% from 17/18. Total supply for 18/19 is down 1% at 3.043 bbu
- Usage—Total usage of 2.097 bbu is up 5% vs. 17/18. Compared to last month, domestic use is steady but exports are increased 25 mbu to 950;
- Net result is ending stocks for 18/19 of all wheat are pegged at 946 mbu, which was slightly below the average trade guess of 957;
- Average farm price forecast at $4.60-$5.60 vs. $4.50-$5.50 in May with ending stocks-to-use ratio of 45.1% vs. 46.1% in May and 54.1% in 17/18
Note: Wheat-by-class projections for 2018/19 will first be published by the USDA in July.
U.S. All Wheat Supply/Demand—17/18
- No change in domestic use;
- Exports were lowered 10 million to 900 mbu;
- Carryout for 18/19 of all wheat was increased 10 mbu to 1.080 bbu, which was 1 million above the average trade guess of 1.079;
- Avg. farm price forecast at $4.75 vs. $4.70-$4.70 in May; stocks-to-use at 54.1% compared to 53.3% in May and 53.2% in 16/17
U.S. All Wheat Supply/Demand by Class—17/18
- Hard Red Winter
- Domestic use unchanged at 436 mbu;
- Exports up 10 mbu to 370 million;
- Carryout for 17/18 down 10 million to 541 mbu vs. 589 a year ago;
- Stocks-to-use for 17/18 forecast at 67.1% vs. 62.5% for 16/17
- Soft Red Winter
- Domestic use unchanged at 211 mbu;
- Export forecast steady at 90 mbu;
- Ending stocks for 17/18 unchanged at 223 million vs. 215 for 16/17;
- Stocks-to-use for 17/18 estimated at 74.1% vs. 67.2% for 16/17
- Hard Red Spring
- Domestic disappearance steady at 269 million;
- Exports lowered 5 million to 225 mbu;
- Carryout for 17/18 up 5 million to 220 mbu vs. 235 a year ago;
- Stocks-to-use for 17/18 pegged at 40.5% vs. 41.2% for 16/17
- 17/18 ending corn stocks down 2.2 MMT from LM, to 192.7; ending stocks for 18/19 forecasted 4.5 MMT lower this month at 154.7 million;
- Outside of the 2 MMT reduction in the Brazilian corn crop, no other changes to the 17/18 overseas production forecast;
- USDA lowers 17/18 Brazil corn exports 1 MMT to 29.0; FSU-12 shipments reduced ½ MMT;
- Foreign corn consumption increased 630 K MT to 751, now up 4.8 MMT from last year;
- 18/19 foreign balance sheet changes relatively few but perhaps significant . . . FSU-12 corn production reduced by 4 MMT, down to 49.5 but still some 7+ MMT above 17/18, exports reduced by 2, to 29.85 (24.8 this year);
- No change in expected South American 18/19 exports . . . Argentina, 27.0; Brazil, 31.0;
- China numbers unchanged for both 17/18 and 18/19 . . . imports of 4.0 and 5.0;
- Note the USDA trimmed foreign wheat feeding estimate for 18/19 by nearly 3 MMT TM to 139.4 and is now down 4.2 MMT from 17/18;
- Also note, the USDA reduced 18/19 foreign corn consumption by 2 MMT, to 772.5, which is still a rather sizable increase from this year’s 751.4 forecast;
- USDA still sees significant export competition in the coming year: down 2 MMT from May but up nearly 9.6 MMT from the 17/18 estimat is perhaps the reason for a 2.1 bbu U.S. export forecast in the coming year?
- Big surprise was perhaps, the 2 MMT increase in the Brazilian crop to 119.0 (trade: 117.5) while Argentina at 37.0 came in 800 K below the trade average;
- No change in the China S&D with this year’s import forecast holding at 97.0 and next year’s still projected 6 MMT larger at 103 MMT;
- Brazil crop estimate for 18/19 raised 1 MMT from LM to 118.0; Argentina continues at 56.0;
- Global protein demand (crush) expected to increase 15 MMT in the coming year; SB production forecast to rise 19 MMT.
- World production for 18/19 pegged at 744.7 MMT, which is down 3.1 MMT vs. last month and 13.5 MMT below the record of 758.2 set in 17/18;
- FSU-12 production forecast declines 3.7 MMT vs. last month to 123.7 MMT due to primarily to a 3.5 MMT reduction in Russia (68.5 vs. 72.0 in May and 85.0 last year). Total FSU-12 production is now forecast to be down 18.5 MMT vs. last year. Exports are est. at 61.0 MMT, which is down 1.6 MMT from last month and 6.3 MMT below 2017/18. This would still be the 2nd largest total ever;
- Canada production pegged at 32.5, which is unchanged from May. Exports are forecast at 23.5, also steady with last month but up 0.5 MMT vs. last year;
- Australia crop estimated at 24.0, which is steady with last month. Exports are forecast at 17.0, also unchanged vs. May but up 2.0 MMT vs. 17/18;
- No change in production estimate for Argentina at 19.5 MMT, with exports also steady at 14.2 vs. 12.8 for 17/18;
- European Union production forecast was lowered 1.0 MMT to 149.4 MMT vs. 151.6 LY. Exports for 18/19 pegged at 29.0, which is unchanged from May but up 5.0 MMT vs. 24.0 for 17/18
- World ending stocks for 18/19 estimated at 266.2 MMT compared to the average trade guess of 263.7;
- Ending stock-to-use ratio for 18/19 pegged at 35.4% vs. 36.6% for 17/18.