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October Supply-Demand Summary

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October S&D Highlights

October 10, 2019

Market Trend

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

Pre-Report At Release Current (12:15)

Corn

2-3 lower -6 -13 to -14

Soybeans

1-2 higher +3 +4

Wheat

Up 1/Down 1 -1-2 -10

U.S. Production (mbu)

Sep 18/19 USDA Oct 18/19 USDA Sep 19/20 USDA Oct 19/20 Trade Oct 19/20 Range Oct 19/20 USDA

Soybeans

4,544 4,288 3,633 3,563 3,452-3,658 3,550

Yield

51.6 50.6 47.9 47.0 45.5-48.2 46.9

Harv

88.1 87.6 75.9 75.7 74.5 75.6

Corn

14,420 14,420 13,799 13,588 12,726-13-833 13,779

Yield

176.4 176.4 168.2 166.7 159.0-169.3 168.4

Harv

81.7 81.7 82.0 81.5 80.1-81.5 81.8

Sorghum

365 365 352 NA NA 349

Corn

18.37 18.37 21.86 NA NA 21.71

U.S. Carry-Out

Sep 18/19 USDA Oct 18/19 USDA Sep 19/20 USDA Oct 19/20 Trade Oct 19/20 Range Oct 19/20 USDA

Soybeans

1,005 913 640 496 342-584 460

Corn

2,445 2,114 2,190 1,682 1,257-1,993 1,929

Wheat

1,080 1,080 975 1,011 939-1,054 1,043

Sorghum

55 64 46 NA NA 52

Cotton

4.85 4.85 7.20 NA NA 7.0

South America Production

Sep 18/19 USDA Oct 19/20 USDA Sep 19/20 USDA Oct 19/20 USDA

Arg Corn

51.0 51.0 50.0 50.0

Brazil Corn

101.0 101.0 101.0 101.0

Conab

100.0 98.4

Arg SB

55.3 55.3 53.0 53.0

Brazil SB

117.0 117.0 123.0 123.0

Conab

115.0 120.4

World Ending Stocks (MMT)

Commodity

Sep 18/19 USDA Oct 18/19 USDA Sep 19/20 USDA Oct 19/20 Trade Oct 19/20 USDA

Wheat

277.2 277.7 286.5 285.5 287.8

Wheat

329.6 324.0 306.3 296.6 302.6

Soybeans

112.4 109.0 99.2 96.9 95.2

October Supply-Demand Summary

Corn: A bearish corn report with the USDA bumping its yield estimate 2/10’s of bushel higher, 1.7 bpa above the trade average. The trade was also looking for a ½ million acre or so reduction in harvested, the USDA took it down just 200 K. Net was a 20 mbu reduction in crop size from LM. Ending stocks were trimmed 261 mbu from last month to 1.929 billion; the trade was thinking more on the order of 1.682 billion. The USDA also found some more old crop export competition out of Brazil and the Ukraine. No changes in the China S&D, either. The market’s down 13-14 cents shortly after noon. Guess we will have to wait for the November report for some hopefully friendly numbers.

Soybeans: The USDA pegged the crop at 3.550 billion, 13 less than the trade average; ending stocks at 460 mbu were 36 million below the trade. China bought some more beans this morning via a Flash Sales Announcement of 398 K, adding to the optimism that they may indeed, import 30 MMT of U.S. soybeans during calendar year 2019.

Wheat: Slightly bearish but losses are being amplified by spillover weakness from sharp declines in corn. World ending stocks of wheat were slightly above expectations, while U.S. carry-out was also above the average trade estimate. Australia crop size was lowered 1.0 MMT and Russia output was unchanged. There are ideas Australia crop could decline further, perhaps significantly. Nothing bullish in the wheat numbers overall, with the market likely to take its cue from trends in corn short-term.

DOMESTIC:

CORN
Old Crop:

  • Ending stocks were down 331 mbu from September to 2.114 billion, reflecting the September 1 stocks report;
  • Exports were increased 5 to 2.065 billion;
  • Feed/residual use increased 343 million to 5.618 bbu, with the emphasis on “residual”;
  • FSI use 14 lower at 6.791 with ethanol grind 1 mbu higher at 5.376 billion;
  • Average produce price point estimate edged up $.01 to $3.61/bushel.

New Crop:

  • 19/20 Planted area reduced 100 K to 89.9 million;
  • Harvested area declined 200 K to 81.8 million;
  • Yield INCREASED 2/10’s to 168.4;
  • Production down 20 mbu to 13.779 bbu;
  • Beginning stocks 331 mbu lower;
  • Feed/residual estimate increased 125 to 5.300 bbu;
  • FSI use estimate DOWN 65 from LM at 6.815 bbu with ethanol grind 50 million lower at 5.400 bbu;
  • Exports reduced by 150 to 1.900 bbu;
  • Total use down 90 mbu to 14.015 (14.474 LY);
  • The net is 261 mbu decrease in c/o from LM to 1.929 bbu. Obviously, a bit negative versus the trade at an average of 1,682 bbu;
  • Average producer price upped $.20 to $3.80

MILO

  • Planted area unchanged at 5.3 million;
  • Harvested acreage steady at 4.7 million;
  • Yield down 4/10’s to 73.9;
  • Production slips 3 to 349 mbu;
  • 18/19 usage adjustments
    1. Feed/residual, down 17;
    2. Exports, up 3;
    3. FSI, up 6 to 106;
    4. Total use falls 8 to 336 with ending stocks 9 million higher at 64
  • 19/20 use
    1. Feed/residual, no change—160 versus 138 LY;
    2. FSI, no change at 100, 6 less than LY;
    3. Exports, co change at 100 and 7 more than LY;
  • Ending 19/20 stocks up 6 from LM to 52 mbu
  • Producer price a dime higher at $3.40.

SOYBEANS & PRODUCTS

  • 18/19 planted area unchanged at 89.2; harvested area 500 K lower at 87.6 and yield, a full bpa lower at 50.6.
  • Production sharply lower from LM, down 116 mbu to 4.428 bbu;
  • 18/19 Use revisions
    • Crush 7 higher at 2.092 bbu;
    • Exports up 3 to 1.748;
    • Seed/Residual down 36 (all residual);
  • Old crop supply was reduced 119 million. With the usage adjustments, ending stocks were 92 million lower as reflected in the Grain Stocks Report;
  • 19/20
    • Planted, 200 K lower; harvested, 300 K lower; yield down 1.0 bpa;
    • Crush, 5 higher at 2.120 bbu;
    • Exports, steady from LM at 1.775 bbu;
    • Imports, no change at 20 mbu;
    • Seed/residual, steady at 128 mbu;
  • Average producer soybean price for 19/20 increased $.50 to $9.00 range;
  • SBM: USDA upped 18/19 domestic use 300 K ST; reduced exports 150. 19/20 domestic use 150 higher at 36.65 MST; exports continue to be forecast at 13.70 MST;
  • Average 19/20 SBM Prx increased $20/ST to $325 and versus $308+ LY;
  • SBO: Old crop stocks revised 15 million lower to 1.710 billion
    • Supply up 60 million on higher crush/production;
    • Dom use up 100 mil lbs—non biodiesel;
    • Exports reduced 25 million to 2.025 billion pounds;
  • 19/20 SBO:
    • Beg stx, down 15 mil lbs;
    • Production, 55 million higher;
    • Imports, steady at 450 mil lbs;
    • Supply, unchanged from LM;
    • Use
      • Domestic use unchanged from LM at 23.5 billion although bio use down 100;
      • Exports remain forecast at 1.725 billion:
    • Ending stocks 40 mil lbs higher from LM to 1.525;
  • Prices:
    • 18/19 average revised 26 points higher to $.2826;
    • 19/20 forecast increased 50 points to $.3000.

WHEAT

U.S. All Wheat Supply/Demand—19/20

  • Updated production estimates from the USDA Small Grains Summary report were incorporated in this report— all wheat prod dn 18 mbu from Sep WASDE to 1.962 bbu;
  • Beginning stocks increased 8 mbu per revised June 1 stocks in USDA Grain Stocks report;
  • Imports lowered 15 mbu to 120 mbu;
  • Total supply of 3.161 bbu is dn 26 mbu from last month but up 1.3% vs. last year;
  • Usage—Food and seed use unchanged vs. last month; feed/residual lowered 30 mbu to 140; and exports down 25 mbu to 0.850 bbu. Total use of 2.118 bbu is up 3.9% v. 18/19;
  • Ending stocks of all wheat are forecast at 1.043 bbu, which was above the average trade guess of 1.011; average farm price forecast at $4.70 vs. $4.80 in September. The ending stocks-to-use ratio is forecast at 49.2% compared to 46.% last month but below 53.0% in 18/19.

U.S. Supply/Demand by Class—19/20

  • Hard Red Winter
    • Production decreased 7 mbu per Small Grains Summary report;
    • Domestic use is lowered 11 mbu to 483 mbu;
    • Exports forecast at 380 mbu, down 15 million vs. September;
    • Carry-out projected at 491 mbu, up 29 million vs. last month;
    • Stocks-to-use forecast at 56.9% vs. 52.0% in September and 70.5% for 18/19
  • Soft Red Winter
    • Production lowered 18 mbu per Small Grains Summary report;
    • Domestic use reduced 15 mbu from last month to 192;
    • Exports forecast at 100 mbu—steady vs. September;
    • Ending stocks forecast at 110 million, down 3 mbu vs. last month;
    • Stocks-to-use estimated at 37.7% vs. 36.8% in September and 46.9% for 18/19
  • Hard Red Spring
    • Production decreased 7 mbu per Small Grains Summary report;
    • Imports lowered 10 mbu to 55 mbu;
    • Domestic use unchanged from last month at 314 mbu;
    • Exports projected at 255 mbu, down 10 mbu vs. last month;
    • Carry-out projected at 308 mbu vs. 317 in September;
    • Stocks-to-use pegged at 54.1% vs. 54.7% last month and 45.1% for last year

GLOBAL

Coarse Grains/Corn

  1. Overseas wheat feeding marginally higher from LM, +250 K to 144.66 MMT for a year to year increase of 7.4 MMT (270 mbu);
  2. Foreign coarse grain ending 18/19 stocks increased 3 MMT from LM; U.S. reduced 8.1; net was a 5.1 MMT reduction;
  3. Ending 19/20 corn stocks 3.8 MMT lower this month to 302.6;
  4. No change in 18/19 nor 19/20 S Am production estimates; South Africa’s 18/19 corn crop steady at 11.5; this year’s crop remain estimated at 14.0;
  5. Ukraine crop steady at 36.0, versus 35.8 LY;
  6. Old crop exports: Brazil upped 1 MMT to 39.0; Ukraine 800 K greater at 30.3; Russian 19/20 exports ½ MMT larger at 5.2 million;
  7. No adjustments to the PRC balance sheet with production steady at 254 (257 LY) and ending stocks at 196 (212 LY);
  8. Foreign corn imports 3.4 MMT lower this month to 164.8 (163.2 LY).

Soybeans

  1. 19/20 beginning world stocks fall 2.5 MMT to 109.9; ending stocks 4 MT lower from LM to 95.2 million;
  2. China: no change . . . 18/19 imports/crush remain at 83.0 & 85.0; 19/20 at 85.0 & 85.0;
  3. 250 K reduction in old crop S AM exports to 89.05 MMT; 19/20 shipments continue to be estimated at 90.7 MMT;
  4. Non-PRC/Non-U.S. SBM use to grow at 4.78 MMT in 19/20, versus 4.85 MMT in 18/19.

Wheat

  1. Production for 19/20 decreased 0.3 MMT to 765.2 MMT—which is up 4.8% from last year and a record;
  2. Carry-out for 18/19 increases 440,000 MT vs. last month to 277.7 MMT;
  3. World ending stocks for 19/20 now pegged at 287.8 MMT with the stocks-to-use ratio at 38.1% vs. 37.9% in September and 37.7% in 18/19;
  4. Updated production forecasts for competitors are mixed;;
  5. Russia production forecast unchanged from last month at 72.5 MMT (vs. 71.7 last year). Russia exports estimate is unchanged at 34.0 MMT vs. 35.4 last year);
  6. Ukraine production forecast unchanged from last month at 28.7 MMT (vs. 25.1 last year). Ukraine exports estimate is steady at 19.6 MMT vs. 16.0 last year;
  7. Australia crop was reduced 1.0 MMT to 18.0 with exports lowered 1.0 MMT to 9.5 (9.0 last year); there are ideas crop size could decline further, perhaps significantly.
  8. EU-27 crop was increased 1.0 MMT to 152.0 and exports were 500,000 MT higher at 28.0 MMT (23.3 last year);
  9. Canada production lowered by 300,000 MT to 33.0 but exports were unchanged at 24.5 (24.4 last year);
  10. Argentina production steady at 20.5 MMT with exports unchanged at 14.5 (compared to 12.3 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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