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May Supply-Demand Summary


May S&D Highlights

May 10, 2018

Market Trend

Pre-Report Release Current

Corn

-2 (CN) +1 -1

Soybeans

+2 (SN) +17 +4

Wheat

-1/2 (WN) to +2 (KWN) +1 to +4 -5 to -5

Production

2017 Final 2018 Trade Ave 2018 Trade Range 2018 May USDA

Corn

14,604 14,091 13,921-14,360 14,040

Soybeans

4,392 4,324 4,110-4,850 4,280

Sorghum

364 NA NA 343

All Wheat

1,741 1,774 1,612-1,860 1,821

All Winter

1,269 1,176 1,062-1,304 1,192

HRW

750 637 540-797 647

SRW

292 309 218-330 315

WW

227 230 201-260 229

Cotton

30.9 NA NA 19.5

U.S. Carry-Out

April 16/17 May 16/17 April 17/18 May 17/18 May 17/18 May 18/19 May 18/19
USDA USDA USDA Trade USDA Trade USDA

Soybeans

302 302 550 546 530 533 415

Corn

2,293 2,293 2,182 2,176 2,182 1,631 1,682

Sorghum

33 33 29 NA 29 NA 27

Wheat

1,181 1,181 1,064 1,068 1,070 NA 955

Cotton

2.75 2.75 5.30 NA 4.70 NA 5.20

South America Production (MMT)

April 16/17 May 16/17 April 17/18 May 17/18 May 17/18 May 17/18 May 18/19
USDA USDA USDA Trade CONAB USDA USDA

Soybean

Argentina

57.8 57.8 40.0 38.4 39.0 56.0

Brazil

114.1 114.1 115.0 116.3 117.0 +2.0 117.0 117.0

Paraguay

10.7 10.2 9.20 NA 10.0 9.8

Corn

Argentina

41.0 41.0 33.0 32.2 33.0 41.0

Brazil

98.5 98.5 92.0 88.6 89.2 +0.6 87.0 96.0

World Ending Stocks (MMT)

April 16/17 May 16/17 April 17/18 May 17/18 May 17/18 May 17/18 May 18/19
USDA USDA USDA Trade USDA Trade USDA
Corn 231 228 198 195 195 186 159
Soybeans 97 96 91 90 92 91 87
Wheat 255 256 271 271 270 269 264

May Supply-Demand Summary

Corn: Mostly a non-event. Old crop ending stocks were unchanged from April while the new crop forecast of 1.682 billion came in 51 mbu above the trade average. Weather and planting progress aside, U.S. producers and exporters can “look forward” to some 10 MMT in additional foreign corn exports in 18/19, largely back-end loaded although at least 6 ½ MMT of that total could be coming from the Black Sea region. Note the 18%/36 MMT decline in world ending corn stocks in 18/19, ½ of which occurs in China. Focus back to the summer growing season—here as well as in the Black Sea.

SOYBEANS: A little friendly at first glance . . . old crop stocks at 530 were 16 million less than the trade average while new crop at 415 came in 118 million below the average trade guess. Seemingly no impact on Chinese bean demand, either from the tariff squabble or with respect to softening meal demand—USDA sees 17/18 PRC SB imports unchanged at 97.0 with next year’s total increase by 6 million. Global bean stocks to fall 5.5 MMT by the end of 18/19.

WHEAT: U.S. winter wheat production slightly negative, but world ending stocks were slightly below expectations. There remains quite a bit of uncertainty about U.S. crop size, particularly HRW. Yield potential for HRW could be supported by delayed crop maturity if cool and wet conditions develop soon. Choppy as the market continues to closely monitor northern hemisphere weather conditions.

DOMESTIC:

Corn – Old crop c/o 6 mbu below the trade at 2.182 bbu; new crop 51 million greater at 1.68 billion

 
Old Crop:

  • A non-event as there were no changes to the demand side of the balance sheet;
  • The USDA did however, bump the expected farm price range up $.05 at both ends, from $3.20-$3.50, to $3.25-$3.55 this month.

New Crop:

  • Production estimate came in about 50 million less than the average trade estimate with planted at 88.0 million; harvested at 80.7; trend yield assumption remains in place at 174.0 for a 14.04 bbu crop;
  • Sizable scaling back of feed/residual use in 18/19 by 125 mbu from this year due to (a) smaller crop; (b) greater DDGs production and the impact of higher prices on feed demand;
  • FSI use raised 50 mbu from TY to 5.625 billion;
  • Exports trimmed 125 from 17/18 to 2.1 billion;
  • Total use falls 175 mbu in 18/19 to 14.59 bbu;
  • Ending stocks down significantly, 500 mbu to 1.682 billion; the trade had been a bit more bullish, expecting a 1.631 bbu stocks figure;
  • Expected producer price range is $3.30-$4.30; or $3.80 mid-point, up $.40 from 17/18.

Sorghum
Old Crop:

  • USDA sees no changes to old crop export (and domestic) demand due to imposition of tariffs by China as ending stocks continue to be forecast at 29 mbu. Average producer price remains at a mid-point of $3.20.

New Crop:

  • Production to fall 21 mbu in 18/19 to 343 mbu (5.9 planted; 5.1 harvested; 67.3 bpa yield);
  • Carry-out in 18/19 declines just 2 mbu to 27;
  • Versus 17/18:
    • Feed/residual unchanged at 80;
    • FSI consumption 55 higher at 100 million;
    • Exports to fall 80 mbu to 165 million;
  • Producer price range: $3.10-$4.10, up from $3.10-$3.30 TY

Soybeans — Old crop c/o down 20 (trade had been just 4 lower) at 530; 18/19 pegged at 415, 118 mbu LESS than the average trade estimate.

Old Crop:

  • Crush 20 mbu higher at 1.990 bbu;
  • Exports steady from LM at 2.065 bbu;
  • No change in seed/residual (103 and 30);
  • Carry-out as above;
  • USDA puts average producer price at $9.35, compared to $9.10-$9.50 range in April
  • Products:
    • Larger crush raises SBO production 130 mil lbs to 22.885 billion;
    • Domestic use 100 mil lbs lower at 20.7 billion
    • Exports raised 300 mil lbs to 2.3 billion;
    • Biodiesel use reduced 200 million lbs to 6.8 bil lbs;
    • Carry-out reduced 70 million to 1.896 billion;
    • Average SBO price at 30.50, versus 30 ½ to 32 ½ range in April;
    • SBM production increased 550 K ST on higher crush;
    • Domestic meal use up 450 K ST from April;
    • Export forecast increased 200 K to 12.7 MST;
    • Price: $360/ST against LM’s $340-$360 range

New Crop:

  • 89.0 million planted; 88.2 harvested and yield at 48.5;
  • Production at 4.280 bbu, which is a 112 mbu decline from 17/18;
  • Imports hold steady versus 17/18 at 25 mbu;
  • Versus 17/18:
    • Crush up 5 at 1.995 bbu, assumes a 200 K ST increase in domestic meal use and a 300 K ST decline in meal exports;
    • SB Exports to rise 125 million to 2,290—insatiable Chinese import demand (up 6 MMT to 103.0)—guess the tariff issue gets resolved;
  • Total use up 232 million vs 17/18;
  • Stocks fall 115 mbu, to 415;
  • Wide producer range price range. . . $8.75-$11.25 against $9.35 this year;
  • Products:
    • Domestic SBO use to grow by 600 mil lbs; 500 of which biodiesel;
    • SBO exports expected 200 million pounds lower at 2.1 bil;
    • SBO imports steady at 300 mil lbs;
    • Ending SBO stx forecasted to decline just 60 mil lbs to 1.836 bil;
    • 29 ½ to 33 ½ cent price range;
    • SBM exports expected to fall 300 K ST to 12.4 MST:
    • Domestic use projected to increase 200 K ST to 35.2 million;
    • $330-$370 48% protein average price range, $360 TY.

Wheat
Winter Wheat Production – 18/19

  • First survey based estimate pegs new-crop winter wheat production at 1.192 bbu, which is slightly above the avg. trade guess of 1.176 but 6% lower than 2017;
  • Harvested acreage pegged at 24.8 mil vs. last year’s final of 25.3. Avg. yield is forecast at 48.1 bpa vs. the 2017 level of 50.2;
  • HRW forecast at 647 mbu vs. avg. guess of 637; SRW pegged at 315 mbu vs. avg. guess of 309; and White at 229 mbu vs. avg. guess of 230;
  • Implied Other Spring/Durum production pegged at 629 mbu vs. 472 for last year.

U.S. All Wheat Supply/Demand—18/19

  • First glance at new-crop puts all wheat production at 1.821 bbu, which is up 5% from 17/18, with total supply down 2% at 3.027 bbu
  • Usage—Food/seed up 2 mbu vs. 17/18; feed/residual up 50 mil to 120; and exports up 15 to 925; total usage of 2.072 bbu is up 3% vs. 17/18
  • Net result is ending stocks for 18/19 of all wheat are pegged at 955 mbu, which was above the average trade guess of 932;
  • Average farm price forecast at $4.50-$5.50 with ending stocks-to-use ratio of 46.1%

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

  • Food use increased 8 mbu;
  • Exports were lowered 15 million to 910 mbu;
  • Carryout for 17/18 of all wheat was increased 6 mbu to 1.070 bbu, which was 2 million above the average trade guess of 1.068;
  • Avg. farm price forecast at $4.70 vs. $4.60-$4.70 in April; stocks-to-use at 53.3% compared to 52.9% in April and 53.2% in 16/17

U.S. All Wheat Supply/Demand by Class—17/18

  • Hard Red Winter
    • Domestic use up 4 million to 436 mbu;
    • Exports down 10 mbu to 360 million;
    • Carryout for 17/87 up 6 million to 551 mbu vs. 589 a year ago;
    • Stocks-to-use for 17/18 forecast at 69.2% vs. 62.5% for 16/17
  • Soft Red Winter
    • Domestic use increased 2 million to 211 mbu;
    • Export forecast steady at 90 mbu;
    • Ending stocks for 17/18 lowered 2 mbu to 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 230 mbu;
    • Carryout for 17/18 up 5 million to 195 mbu vs. 235 a year ago;
    • Stocks-to-use for 17/18 pegged at 39.1% vs. 41.2% for 16/17

 

GLOBAL

Coarse Grains/Corn

  • Hefty (38.9 MMT) increase in foreign coarse grain output for 18/19;
  • Overseas use forecasted just 23 MMT higher at 1,050 MMT in the coming year;
  • Old crop corn: USDA scales back overseas corn use 1 MMT to 509;
  • Larger South American corn crops seen for 18/19, Argentina to recover 8 MMT to 41.0; Brazil 9 MMT greater at 96.0;
  • USDA cuts 17/18 foreign corn imports 730 K MMT
    • Egypt down 600 K from LM;
    • EU, up 300;
  • Foreign exports for 17/18 down 1.5 MMT—96.1 LM to 94.6 TM from LM: Arg, +1.0 to 24.0; Brazil, -3.0 to 30.0; Ukraine, steady at 20.0;
  • China corn imports continue at 4.0 for 17/18 with 18/19 up 1 to 5.0;
  • 17/18: Argentine corn crop unchanged at 33.0; Brazil 5 MMT lower at 87.0; RSA, 300 K MT greater at 13.5; Ukraine estimated unchanged at 24.1
  • Foreign corn exports expected to increase 10.1 MMT in the coming year to 104.7;
  • 23.7 MMT increase see for overseas corn use in 18/19; compares to a mere 3.9 MMT increase this year;
  • Noted that foreign wheat feeding is expected to decline nearly 1.1 MMT in 18/19; versus a 1 MMT increase in the current year;
  • China corn crop up 10 MMT to 225; use up 8 MMT at 238; imports 1 MMT higher to 5.0; ending stocks to once again decline a not-so-insignificant 19 MMT to 60.5 million

Soybeans

  • 17/18 Argentine crop 1 MMT lower this month to 39.0; Brazil, up 2 to 117.0; Paraguay, 800 K larger to 10.0;
  • USDA raises 17/18 foreign SB export forecast 860 K to 95.06; expected to rise another 3 ½ MMT in 18/19;
  • 17/18 Chinese SB imports unchanged at 97.0; 18/19 estimated 6 MMT greater at 103.0;
  • USDA trims foreign SBM imports by about 700 K MT in 17/18; imports reduced 1 MMT;
  • Argentina 17/18 SBM exports revised 2.3 MMT lower to 29.0 on drought effects; Brazil to increase shipments by 1.8 to 15.6 MMT;
  • Overseas SBM demand revised 310 K MT higher in 17/18; now up 9.1/4.9% from LY; 18/19 demand expected to increase 10+ MMT to 211 million (a 5.0% increase);
  • World bean stocks to fall 5.5 MMT in 18/19 to 86.7 and a near 10 MMT decline in 2 years.

Wheat

  • World production for 18/19 pegged at 747.8 MMT, which is down 10.6 MMT vs. the record 17/18 total but slightly below the 16/17 total of 750.5;
  • NOTE: Even though 2018/19 production estimates for some of the major world competitors are down from 2017/18, there still appears to be ample export competition for U.S. origin if forecasted production levels are realized;
  • FSU-12 production forecast to decline 10.4% to 127.4 MMT due to smaller crops in Russia (-13.0 MMT) and Ukraine (-0.5); total FSU-12 exports est at 62.6 MMT, which is down 3.7 MMT from 2017/18 but still the second highest on record;
  • Canada production pegged at 32.5 (30.0 LY), and exports are up 0.5 MMT;
  • Australia crop est at 24.0 (21.5 LY), with exports at 17.0 vs. 15.0 for 17/18;
  • Increased competition from Argentina also projected: Crop forecast at 19.5 (19.0 LY), and exports forecast at 14.2 vs. 12.8 for 17/18;
  • Decline in EU-27 crop forecast—150.4 MMT vs. 151.6 LY—but exports pegged at 29.0 vs. 24.0 for 17/18 due in part to larger beginning stocks (+2.2 MMT);
  • World ending stocks for 18/19 estimated at 264.3 MMT vs. 270.5 for 17/18;
  • Ending stock-to-use ratio for 18/19 pegged at 35.1% vs. 36.4% for 17/18.

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