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March Supply-Demand Summary

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March S&D Highlights

March 8, 2019

Market Trend

CORN: A smidgeon negative with the USDA trimming U.S. corn FSI (ethanol) and exports by 25 and 75 million, respectively. The 100 mbu addition to stocks puts carry-out at 1.835 billion, or 84 mbu above the average trade guess and matching the high end of the range. Really not much else to add, although the slightly negative price outlook might boost feed/demand somewhat. Clearly, Chinese demand in corn, DDGs and ethanol are needed to lift prices. Global changes were minor with RSA production lowered a ½ MMT but not enough to impact exports. EU corn imports were raised ½ MMT but so were exports from the Ukraine. Market key would now be cold, wet spring; planting delays, acreage shifts and prevent plantings.

SOYBEANS: Carry-out at 900 was within shouting distance of the trade’s pre-report 904 average. USDA was content to leave exports unchanged at 1.875 bbu while raising crush 10 million. The higher crush did not increase meal output but the USDA met higher domestic meal use (up 100 K) with a like increase in imports. The higher oil production figure (115 million pounds) accompanying the crush increase was totally absorbed and then some by increasing biodiesel use with the net being an 85 million-pound lower oil stocks forecast. No change in the Argentine crop and the ½ MMT reduction to Brazil was not as great as expected. No change in China SB imports; still forecast at 88 million, 6 less than LY. Likely the Board will continue to work lower, particularly if the weather forces more acres to beans AND, the U.S. doesn’t snag 20 MMT of old crop Chinese business.

WHEAT: Somewhat negative with a reduction in U.S. exports and larger world ending stocks. U.S. exports were lowered 35 mbu, imports up 5 mbu and food use down 5. Result was an increase in ending stocks to 1.055 bbu, which was well above the above trade estimate of 1.019. World carry-out for 2018/19 was also increased 3.0 MMT from last month. Key now will be northern hemisphere weather. At the moment, there are no major concerns among the U.S. or major competitors.

Market Trend

Pre-Report Release Current (12:00)

Corn

-1 -2 -9

Soybeans

-6 -5 to -6 -2

Wheat

+3/+4 +4/+5 +3/4 & + 1 1/2

U.S. Carry-Out

Feb 17/18 USDA Mar 17/18 USDA Feb 18/19 USDA Mar 18/19 Trade Mar 18/19 USDA

Soybeans

438 438 910 904 (852-944) 900

Corn

2,140 2,140 1,735 1,751 (1,685-1,835) 1,835

Wheat

1,099 1,099 1,010 1,019 (990-1,050) 1,055

Milo

35 35 65 NA9 65

Cotton

4.30 4.30 4.30 NA 4.30

South America Production (MMT)

Feb 17/18 USDA Mar 17/18 USDA Feb 18/19 USDA Mar 18/19 Trade Mar 18/19 USDA

Soybeans

Argentina

37.8 37.8 55.0 55.3 (54.0-56.7) 55.0

Brazil

120.8 120.8 117.0 115.7 (113.0-118.5) 116.5

Brazil CONAB

119.3 NA 115.3 NA

Paraguay

9.81 10.3 9.5 NA 9.00

Corn

Argentina

32.0 32.0 46.0 46.0 (44.0-46.0) 46.0

Brazil

82.0 82.0 94.5 94.6 (93.0-96.0) 94.5

Brazil CONAB

80.7 NA 91.7 NA NA

South Africa

13.5 13.1 11.50 NA 11.0

World Ending Stocks (MMT)

Feb 17/18 USDA Mar 17/18 USDA Feb 18/19 USDA Mar 18/19 Trade Mar 18/19 USDA

Corn

340.8 341.1 309.8 309.9 (306.3-315.0) 308.5

Soybeans

98.1 98.6 106.7 106.6 (104.0-113.6) 107.2

Wheat

280.0 279.6 279.6 267.7 (266.0-272.0) 270.5

Corn

  • Carry-out forecast increases 100 to 1.835 bbu on a (1) 25 mbu decrease in ethanol grind and (2) a 75 mbu reduction in exports (a little more than the 1.751 bbu trade average);
  • Feed/residual continues at 5.375 bbu;
  • Exports now at 2.375 billion, 63 million less than the 17/18 total;
  • Ending stocks of 1.835 billion are 305 million below the 17/18 figure;
  • The expected producer price range slipped a dime at the upper end, from $3.85 to $3.75 with the lower end holding at $3.35 ($3.36 LY).

Sorghum

  • The USDA reduced exports by 15, to 85 million;
  • Feed/residual use was increased by 20 million, apparently the lack of an export program is depressing interior values enough to work more milo into feed rations;
  • FSI consumption was trimmed by 5 to 105 million despite decent disappearance for the Sep-Jan period;
  • Ending stocks however, remain forecast at 65 million;
  • Expected producer price range narrows in from $3.10-$3.60 LM, to $3.10-$3.50.

Soybeans

  • Carry-out down 10 million to 900 (the trade was anticipating a 6 mbu decline, to 904 million);
  • Crush, up 10 to 2.100 bbu;
  • Exports, unchanged at 1.875 billion;
  • The expected producer price range continues at $8.10-$9.10 ($9.33 LY):
  • SBO
    • Production forecast rises 115 million on the higher crush;
    • Imports hold steady at 300 mil lbs;
    • Biodiesel use upped 200 million pounds to 8.200 billion as the result of better than expected demand through December;
    • Exports continued at 2.25 billion;
    • Ending stocks estimate declines 85 million pounds to 2.01 billion;
    • Average SBO price range remains $.2850-$.3150 ($30.04 LY);
  • SBM
    • Larger crush does nothing for production as meal yields continue sub-par;
    • Domestic use up 100 K ST to 35.950 MST (35.502 LY) as Oct-Dec disappearance has been quite good;
    • Exports remain at 13.75 MST; (14.1 LY);
    • Average price of 48% SBM holds in a $295-$335 range (LY: $345.02)

WHEAT

U.S. All Wheat Supply/Demand – 18/19

  • Imports up 5 mbu to 145 mbu;
  • Food use reduced 5 mbu to 965 mbu;
  • Exports lowered 35 mbu to 965 mbu—still up 64 million (7%) vs. last year;
  • Carryout for 18/19 of all wheat increased 45 mbu to 1.055 bbu, which was 36 mbu above the avg. trade guess of 1.019 and above the top end of the range of 0.990-1.050;
  • Avg. farm price forecast range pegged at $5.10-$5.20 vs. $5.05-$5.25 last month; stocks-to-use is forecast at 50.9% compared to 47.8% in February and 55.2% last year

U.S. Supply/Demand by Class – 18/19

  • Hard Red Winter
    • Imports increased 1 mbu to 6 mbu (vs. 6.75 last year);
    • Domestic use lowered 3 mbu to 434 mbu—up 10% vs. last year;
    • Exports unchanged at 320, which is down 14% vs. 17/18;
    • Carryout for 18/19 increased 4 million to 495 mbu vs. 581 for 17/18;
    • Stocks-to-use for 18/19 pegged at 65.6% vs. 75.9% for 17/18
  • Soft Red Winter
    • Domestic use unchanged at 204 mbu—down 6% vs. last year;
    • Export forecast unchanged at 130 mbu, up 43% vs. 17/18;
    • Ending stocks for 18/19 steady at 163 million vs. 205 for 17/18;
    • Stocks-to-use for 18/19 pegged at 48.8% vs. 66.6% for 17/18
  • Hard Red Spring
    • Domestic use lowered 2 mbu to 286 mbu—down 1% vs. a year ago;
    • Exports lowered 25 million to 275 mbu, which is 21% higher vs. 17/18;
    • Carryout for 18/19 up 27 million to 289 mbu vs. 191 a year ago;
    • Stocks-to-use for 18/19 pegged at 51.5% vs. 37.0% for 17/18

WORLD

Coarse Grains/Corn

  • Expected global coarse grain stocks declines about 800 K MT from LM to 336.2; LY’s total revised upwards by 350 K to 370.4 million;
  • Beginning global corn stocks 350 K larger at 341.2; ending stocks reduced 1.25 MMT to 308.5;
  • Competitor production:
    • Argentina and Brazil unchanged at 46.0 (32.0 LY) and 94.5 (82.0 LY);
    • South Africa trimmed back ½ MMT to 11.0 (13.1 LY);
  • Competitor exports:
    • Argentine estimate increased 1 MMT to 30.0 (20.3 LY);
    • Brazil holds at 29.0 (25.4 LY)
    • South Africa will still be a net exporter of 1.5 MMT TY (1.8 LY);
    • Ukraine estimate boosted ½ MMT to 29.0 (18.0 LY)
  • Importers:
    • EU to import ½ MMT more this year, now at 21.5 MMT and 3.1 million greater than LY;
    • Canadian corn imports upped ½ MMT to 1.7, same as LY and due to higher feed demand
  • China feed consumption upped 3 MMT from LM to 198.0 (187.0 LY); ending stocks decline 3 to 204.8 MMT (222.5 LY) as imports continue to be forecast at 5 MMT. FWIW: IF no trade deal, then the USDA’s export forecast looks 100 to 125 mbu TOO high.

Soybeans/Meal

  • Global ending SB stocks forecast increases 420 K MT to 107.2; beginning supplies revised 450 K MT higher to 98.56 million;
  • BRAZIL CROP gets a ½ MMT smaller at 116.5M (trade average was 115.7); Argentina steady at 55.0 (trade: 55.3); Paraguay’s crop reduced ½ MMT to 9.0 but last year’s out-turn was increased by virtually a like amount to 10.3;
  • Export changes: NONE;
  • China imports continue at 88.0 (6.1 LESS than LY);
  • Modest changes in global meal trade with Argentina’s total lowered ½ MMT to 29.3, up nearly 4 MMT from LY; Brazil’s forecast was increased 470 K to 15.7 MMT (but still down from 16.1 LY);
  • WASDE #’s don’t give enough detail but global SBM demand reduced 810 K from LM to 234.55 MMT with LY’s total revised up 450 K to 229.4;
  • USDA all backs off global SBO demand 800 K to 56.2 million.

Wheat

  • World production for 18/19 pegged at 733.0 MMT, which is down 1.75 MMT vs. Feb.;
  • FSU-12 production reduced 1.270 MMT to 124.8 MMT due primarily to a smaller crop in Kazakhstan. However, exports from all FSU-12 destinations were unchanged at 63.0 MMT. This is down 9% from 17/18;
  • Australia production increased 0.3 MMT to 17.3 MMT (vs. 21.3 MMT last year) with exports steady at 10.0 (13.85 last year);
  • Argentina crop size increased 0.3 MMT to 19.5 MMT, while exports were increased 0.2 MMT to 14.2 (12.2 last year);
  • Canada’s production estimate was unchanged at 31.8 MMT, and exports were steady at 24.0 (21.95 in 17/18);
  • EU production steady at 137.6 MMT but exports increased by 1.0 MMT to 23.0 (vs. 23.3 last year);
  • China imports were steady at 3.5 (vs. 4.0 MMT last year);
  • India crop size was unchanged at 99.7, but ending stocks increased 2.9 MMT to 17.5 MMT (13.2 last year) as a decline in domestic use more than offset a slight reduction in imports;
  • World ending stocks for 18/19 were increased 3.0 MMT to 270.5, which was well above the average trade guess of 267.7. Ending stock-to-use ratio for 18/19 is projected at 36.5% vs. 35.8% in February and 37.6% last year.

Regards:

Larry/Brian


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