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May Supply-Demand Summary

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May S&D Highlights

May 10, 2019

Market Trend

Pre-Report Release Current

Corn

CN, +1; CZ, +1 CN, -5, CZ, -3 CN, -4; CZ, -3 1/2

Soybeans

SN, +1 1/4; SX, -1/2 SN, -3, SX, 0 SN, -2; SX, -2

Wheat

WN, +2 1/4; KWN, +2 WN, -5; KWN, -2 WN, -6 1/2; KWN, -10 3/4

Production

2018 Final Outlook Forum 2019 Trade Ave 2019 Trade Range 2019 May USDA

Corn

14,420 14,890 14,481 14,220-15,090 15,030

Soybeans

4,544 4,175 4,198 4,143-4,384 4,150

Sorghum

365 382 NA NA 310

All Wheat

1,884 1,902 1,911 1,779-2,044 1,897

All Winter

1,184 NA 1,282 1,116-1,406 1,268

HRW

662 NA 766 624-895 780

SRW

286 NA 280 250-302 265

WW

236 NA 235 201-270 223

Cotton

18.39 22.50 NA NA 22.0

U.S. Carry-Out

May 17/18 Apr 18/19 May 18/19 May 18/19 May 19/20 May 19/20
USDA USDA Trade USDA Trade USDA

Soybeans

438 895 926 995 940 970

Corn

2,140 2,035 2,061 2,095 2,166 2,485

Sorghum

35 60 NA 60 1,051 45

Wheat

1,099 1,087 NA 1,127 NA 1,141

Cotton

4.30 4.40 NA 4.65 NA 6.4

South America Production (MMT)

May 17/18 April 18/19 May 18/19 May 18/19 May 19/20 May 19/20
USDA USDA Trade CONAB USDA USDA

Soybeans

Argentina

37.8 55.0 55.0-57.0 56.0 53.0

Brazil

122.0 117.0 116.0-118.0 114.3 117.0 123.0

Paraguay

10.3 9.0 NA 9.00 10.2

Corn

Argentina

32.0 47.0 46.5-50.0 49.0 49.0

Brazil

82.0 96.0 95.0-98.5 95.2 100.0 101.0

World Ending Stocks (MMT)

April 17/18 May 17/18 April 18/19 May 18/19 May 18/19 May 19/20 May 19/20

USDA USDA USDA Trade USDA Trade USDA

Corn

340.1 339.3 314.0 315.3 325.9 306.8 314.7

Soybeans

99.1 99.1 107.4 109.0 113.2 110.9 113.1

Wheat

281.9 281.3 275.6 276.2 275.0 277.2 293.0

May Supply-Demand Summary

Corn: USDA leaves the 19/20 corn yield forecast untouched (versus Forum) at 176.0 for a crop of 15.030 billion and supply is up 565 million versus 18/19. With demand likely to grow by only 175 million, ending stocks to rise 390 million bushels to 2.485 billion for a 16.9% stocks to use ratio (14.4% this year). The production estimate was nearly 90 million ABOVE the trade average; old crop stocks exceeded the trade average by 34 million and new crop carry-out was a rather huge, 319 mbu MORE than the average. China demand doesn’t appear to be bailing the U.S out, both for old and new crop. The USDA left 18/19 exports steady at 2.3 billion (Chinese imports, unchanged at 5.0) and new crop exports down 25 to 2.275 billion (PRC imports, up 2 to 7 MMT). And, the South American crop got 6 MMT larger this month! Justifiably down 5-6 cents

Soybeans: 18/19 exports sliced 100 to 1.775 billion; old crop ending stocks at 995 million exceed the trade average by nearly 70 million; 970 new crop carry-out forecast comes in 30 above the trade average; USDA adds 1 to the Argentine soybean crop while leaving Brazil unchanged; PRC 18/19 SB imports scaled back 2 MMT to 86.0 with only a 1 MMT increase forecast for 19/20. And, ending 18/19 global soybean stocks grew by 213 mbu. Surprised the market isn’t down more than 3-4 cents.

Wheat: Although U.S. winter wheat production was slightly supportive, increased export competition resulted in higherthan-expected projections of old- and new-crop U.S. ending stocks. World ending stocks for 2019/20 were also projected at a record level. There remains quite a bit of uncertainty about U.S. winter wheat crop potential. Yield potential for SRW could be negatively impacted if wet conditions across the Midwest persist. Strong export competition is possible in 2019/20, however, with the projected rebound in production in the Russia and the EU. Choppy but upside potential appears limited.

DOMESTIC:

CORN – Old crop c/o 34 mbu ABOVE the trade at 2.061 bbu; new crop 319 ABOVE the trade at 2.485 billion
Old Crop:

  • Ending stocks were increased 60 million to 2.095 billion, 34 above the trade average;
  • Ethanol grind was reduced 50 to 5.45 billion;
  • Non-ethanol FSI use trimmed 15 million;
  • Exports continue at 2.3 billion;
  • Imports reduced by 5 to 35 million;
  • Average farm price forecast adjusted from $3.40-$3.70 range in April to $3.50 this month.

New Crop:

  • Production was estimated at 15.030 billion, 49 million above the trade average;
  • Planted acreage was unchanged as expected versus the Prospective Plantings report of 92.8 million and the USDA is confident that even with the slow start to planting, the 176.0 trend yield can still be achieved;
  • New crop usage:
    • Feed/residual up 150 versus the current year to 5.45 bbu;
    • Ethanol grind seen 50 million larger in 19/20 at 5.5 billion;
    • Exports were scaled back a modest 25 million, despite sizable South American competition through the first half of the coming year;
  • Ending stocks pegged at 2.485 billion, a 390 million increase over 18/19;
  • Expected producer price point is $3.00, $.20 below this year.

SORGHUM

Old Crop:

  • No changes from April, with c/o remaining at 60 mbu;
  • The average producer price forecast was adjusted from a $3.05-$3.35 range to a price point of $3.30 per bushel.

New Crop:

  • Production to fall 55 mbu in 19/20 to 310 mbu (5.1 planted; 4.6 harvested; 67.4 bpa yield);
  • Carry-in 19/20 at 60 million, up from 35 LY;
  • Versus 18/19:
    • Feed/residual 30 lower at 125;
    • FSI consumption unchanged at 100 million;
    • Exports to increase 15 mbu to 100 million;
  • Producer price point: $3.00, down from $3.20 TY

SOYBEANS

Old Crop:

  • The USDA blew the socks off the trade stocks estimate . . . 995 versus the latter at 926;
  • Crush holds steady at 2.100 bbu;
  • Exports sliced 100 million, down to 1.775 billion;
  • No change in seed/residual (98 and 31);
  • Carry-out as above;
  • USDA puts average producer price at $8.55, down a nickel from the midpoint of last month’s $8.35-$8.85 range.
  • Products:
    • Beginning SBM stocks up 5 million pounds to 1.995 billion;
    • Domestic use increased by 5 to 26.965 billion;
    • Biodiesel use unchanged at 8.35 billion;
    • Exports reduced by 100 million pounds to 2.15 billion;
    • Ending stocks 5 higher this month at 1.865 billion;
    • Decatur SBO average price at $.28 per pound, down from $.28-$.30 range last month;
    • SBM production reduced 2 K ST to 49.095 million;
    • Beginning stocks up 2 to 555;
    • No change in either domestic SBM or exports;
    • Decatur 48% price at $305 versus $305-$325 range last month.

New Crop:

  • 84.6 million planted; 83.8 harvested and yield at 49.5;
  • Production at 4.150, 48 million below the trade average;
  • Imports up 3 versus 18/19 at 20 mbu;
  • Versus 18/19:
    • Crush up 15 at 2.115 bbu, assumes a 650 K ST increase in domestic meal use and a 150 K ST decline in meal exports;
    • SB Exports to rise 175 million to 1,950 (last year, the May estimate was 2,290, FWIW)
  • Total use up 191 million vs 18/19;
  • Stocks fall 25 mbu, to 970 (LY May forecast: 415);
  • Producer range price estimate, $8.10, down from $8.55 TY;
  • Products:
    • Domestic SBO use to grow by 650 mil lbs; 450 of which biodiesel;
    • SBO exports expected 350 million pounds lower at 1.8 bil;
    • SBO imports 50 larger in the coming year at 450 mil lbs;
    • Ending SBO stx forecasted to plummet 415 mil lbs to 1.450 bil;
    • 29 ½ per pound SBO price;
    • SBM exports expected to slip just 150 K ST to 13.6 MST:
    • Domestic SBM use projected to increase 650 K ST to 36.6 million;
    • $290 per ST 48% protein average price, $305 in 18/19.

WHEAT

Winter Wheat Production—19/20

  • First survey based estimate pegs new-crop winter wheat production at 1.268 bbu, which is slightly below the avg. trade guess of 1.282 but 7% higher than 2018;
  • Harvested acreage pegged at 25.2 mil vs. last year’s final of 24.7. Avg. yield is forecast at 50.3 bpa vs. the 2018 level of 47.9;
  • HRW forecast at 780 mbu vs. avg. guess of 766; SRW pegged at 265 mbu vs. avg. guess of 280; and White at 223 mbu vs. avg. guess of 235;
  • Implied Other Spring/Durum production pegged at 629 mbu vs. 700 for last year.

U.S. All Wheat Supply/Demand—19/20

  • First glance at new-crop puts all wheat production at 1.897 bbu, which is up 1% from 18/19, with total supply also up 1% at 3.164 bbu
  • Usage—Food/seed up 11 mbu vs. 18/19; feed/residual up 40 mil to 90; but exports down 25 to 900; total usage of 2.023 bbu is up 1% vs. 18/19
  • Net result is ending stocks for 19/20 of all wheat are pegged at 1.141 bbu, which was well above the average trade guess of 1.051;
  • Average farm price forecast at $4.70 with ending stocks-to-use ratio of 56.4%

Note: Wheat-by-class projections for 2019/20 will first be published by the USDA in July.
 

U.S. All Wheat Supply/Demand-18/19

  • Imports were lowered 5 mbu;
  • Food use lowered 5 mbu;
  • Feed and residual reduced 20 mbu;
  • Exports were lowered 20 million to 910 mbu;
  • Carryout for 18/19 of all wheat was increased 40 mbu to 1.127 bbu, which was 31 million above the average trade guess of 1.096;
  • Avg. farm price forecast at $5.20 vs. $5.15-$5.25 in April; stocks-to-use at 56.4% compared to 53.2% in April and 55.5% in 17/18

 
U.S. Supply/Demand by Class – 18/19

  • Hard Red Winter
    • Domestic use down 6 million to 423 mbu;
    • Exports down 5 mbu to 325 million;
    • Carryout for 18/19 up 11 million to 501 mbu vs. 581 a year ago;
    • Stocks-to-use for 18/19 forecast at 67.0% vs. 75.9% for 17/18
  • Soft Red Winter
    • Imports down 1 million;
    • Domestic use reduced 11 million to 188 mbu;
    • Export forecast lowered 5 mbu to 125 mbu;
    • Ending stocks for 18/19 increased 15 mbu to 183 million vs. 205 for 17/18;
    • Stocks-to-use for 18/19 estimated at 58.5% vs. 66.6% for 17/18
  • Hard Red Spring
    • Imports lowered 4 mbu;
    • Domestic disappearance reduced 7 mbu to 279 million;
    • Exports lowered 5 million to 255 mbu;
    • Carryout for 18/19 up 8 million to 313 mbu vs. 191 a year ago;
    • Stocks-to-use for 18/19 pegged at 58.6% vs. 37.0% for 17/18

GLOBAL

Coarse Grains/Corn

  • Modest (18 MMT) increase in foreign coarse grain output for 19/20;
  • Overseas use forecasted 22 MMT higher at 1,106 MMT in the coming year;
  • Old crop corn: USDA leaves 18/19 foreign corn use unchanged at 822;
  • Raises 18/19 South American production 6 MMT, Argentina 2 higher at 49; Brazil, up 4 to 100 million;
  • Very modest increase seen for 19/20 South American corn crops, Argentina flat at 49 MMT; Brazil just 1 MMT greater at 101
  • USDA raises 18/19 foreign corn imports 2.2 MMT to 163.1
    • EU up 1.0 to 23.5;
    • Mexico up 800 K to 17.6;
  • Foreign exports for 18/19 up 2.2 —Arg, +1.0 to 31.5; Brazil, +1.0 to 32.0; Ukraine, steady at 29.5;
  • China corn imports continue at 5.0 for 18/19 with 19/20 up 2 to 7.0;
  • 18/19: Argentine corn crop 2 MMT higher at 49.0; Brazil 4 MMT larger at 100.0; RSA, unchanged at 11.0; Ukraine estimated unchanged at 35.8
  • Foreign corn exports expected to increase 1.9 MMT in the coming year to 113.8;
  • 7.6 MMT increase seen for overseas corn use in 19/20; compares to a rather substantial 46.3 MMT increase in 18/19;
  • Noted that foreign wheat feeding is expected to rise by over 9 MMT in 19/20; versus a 7 MMT decline in the current year;
  • China corn 19/20 crop down 3.3 MMT to 254; use up 4 MMT at 279; imports 2 MMT higher to 7.0; ending stocks to again decline 18 MMT to 191.8 (LY May estimate: 60.5 million)

Soybeans

  • 18/19 Argentine crop 1 MMT larger this month to 56.0; Brazil, unchanged at 117.0;
  • USDA reduces 18/19 foreign SB export forecast 1.3 MMT to 102.0; expected to DECLINE nearly 4 MMT in 19/20 to 98.1 million;
  • 18/19 Chinese SB imports reduced 2 MMT to 86.0; only slight increase expected in 19/20, up 1 to 87.0;
  • USDA leaves 18/19 Argentine SB export forecast at 6.3; 19/20 seen at 7.0; Brazil forecast lowered 1 MMT to 78.5 for 18/19; 19/20 seen 3 ½ MMT lower at 75.0
  • Overseas SBM demand revised 2.9 MMT higher in 18/19; 19/20 demand expected to increase 5.2 MMT to 205
  • World bean stocks increased 5.8 MMT from LM for 18/19 to 113.2 million; 19/20 flat at 113.1.

Wheat

  • World production for 18/19 pegged at a record 777.5 MMT, which is up 45.9 MMT vs. the 18/98 total;
  • NOTE: With 2019/20 production estimates for some of the major world competitors up significantly from 2018/19, there appears to be ample export competition for U.S. origin if forecasted production levels are realized;
  • Russia production forecast to increase 7.4% to 77.0 MMT with exports at 36.0 MMT compared to 37.0 in 2018/19;
  • Ukraine production forecast at a record 29.0 MMT—up 15.7% from the 2018/19 level of 25.1. Exports are forecast at 19.0 MMT compared to 16.5 in 2018/19;
  • Significant increase in European Union crop forecast—153.8 MMT vs. 137.2 LY—with exports pegged at 27.0 vs. 24.0 for 18/19;
  • Canada production est. at 34.5 (31.8 LY), and exports are 24.0 MMT (24.0 LY);
  • Australia crop est. at 22.5 (17.3 LY), with exports at 13.5 vs. 10.0 for 18/19;
  • Argentina crop is forecast at 20.0 (19.5 LY), and exports forecast at 14.0 vs. 13.7 for 18/19;
  • World ending stocks for 19/20 estimated at a record 293.0 MMT vs. 275.0 for 18/19;
  • Ending stock-to-use ratio for 19/20 pegged at 38.6% vs. 37.3% for 18/19.

Regards:

Larry/Brian


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