June S&D Highlights
Market Trend
| Pre-Report | Release | Current | |
|---|---|---|---|
| Corn | -3 | -3 | -9 to -10 |
| Soybeans | -1 | -1 | -9 to -10 |
| Wheat | +4; -1.5; -2.75 | +2.75; -3; -4.25 | +11; -3 to -4; -2 |
Production
| July 19/20 USDA | June 20/21 USDA | July 20/21 Trade | July 20/21 Range | July 20/21 USDA | |
|---|---|---|---|---|---|
| Corn | 13,663 | 15,995 | 15,041 | 14,868 - 15,296 | 15,000 |
| Soybeans | 3,557 | 4,125 | 4,154 | 4,115-4,324 | 4,135 |
| Sorghum | 341 | 351 | NA | NA | 327 |
| Cotton | 19.90 | 19.50 | NA | NA | 17.50 |
Wheat Production
| 2019 Final | 2020 June USDA | 2020 July Trade | 20/21 Trade Range | 20/21 July USDA | |
|---|---|---|---|---|---|
| All Wheat | 1,920 | 1,877 | 1,844 | 1,715 - 1,885 | 1,824 |
| All Winter | 1,304 | 1,266 | 1,249 | 1,223 - 1,285 | 1,218 |
| HRW | 833 | 743 | 733 | 710 - 766 | 710 |
| SRW | 239 | 297 | 289 | 269-301 | 280 |
| WW | 232 | 225 | 225 | 219 - 229 | 227 |
U.S. Carry-Out
| June 19/20 USDA | July 19/20 Trade | July 19/20 USDA | June 20/21 USDA | July 20/21 Trade | July 20/21 USDA | |
|---|---|---|---|---|---|---|
| Soybeans | 585 | 586 | 620 | 395 | 424 | 425 |
| Corn | 2,103 | 2,272 | 2,248 | 3,323 | 2,731 | 2,648 |
| Wheat | 983 | 983 | 1,044 | 925 | 950 | 942 |
| Sorghum | 30 | NA | 30 | 26 | NA | 22 |
| Cotton | 7.30 | NA | 7.10 | 8.00 | NA | 6.80 |
South America Production
| June 18/19 USDA | June 19/20 USDA | July 19/20 Trade | July 19/20 USDA | June 20/21 USDA | July 20/21 USDA | ||
|---|---|---|---|---|---|---|---|
| Soybeans | |||||||
| Argentina | 55.3 | 50.0 | 50.0 (49.0 - 51.0) | 50.0 | 53.5 | 53.5 | |
| Brazil | 119.0 | 124.0 | 123.3 (121.0 - 125.0) | 126 | 131.0 | 131.0 | |
| Brazil-CONAB | 115.0 | 120.4 | 122.7 (120.7 - 124.3) | 120.8 | NA | ||
| Paraguay | 8.85 | 9.90 | NA | 9.9 | 10.25 | 10.25 | |
| Corn | |||||||
| Argentina | 51.0 | 50.0 | 49.9 (49.0 - 50.0) | 50.0 | 50.0 | 50.0 | |
| Brazil | 101.0 | 101.0 | 100.4 (98.0 - 102.0) | 101.0 | 107.0 | 107.0 | |
| Brazil-CONAB | 100.0 | 101.0 | 100.6 (99.0 - 102.7) | 100.6 | NA |
July Supply-Demand Summary
Corn: At first glance, the USDA’s numbers weren’t all that different than the trade. The USDA’s corn production estimate of 15.0 billion was just 41 less than the trade average and the former’s ending stocks forecast of 2.65 billion fell 83 million shy of the trade average. It would appear an otherwise neutral report has taken a back seat to the weather forecast with the mid-day 7-day outlook suggesting some very timely rain for especially the drier areas of the Midwest. The USDA does expect a 10 MMT draw-down in Chinese corn stocks in the coming year and while there were no changes in both its old and new crop imports (7 MMT each), there may be some optimism for additional volume based on this morning’s sales announcement. Neutral report; bearish short-term weather picture.
Soybeans: Hopes for an increase in demand for U.S. soybeans in at least the short-term were dashed with the USDA upping this past spring’s Brazilian soybean crop by 2 MMT to 126.0, nearly 3 MMT more than the trade was expecting. Further, the country’s bean export forecast were raised 4 MMT to 89 million, which more than offset a 2 MMT increase in the USDA’s forecast for 19-20 Chinese imports. The latter total is now at 96.0. Interesting the USDA sees Chinese crush in 20-21 rising 6.5 MMT to 95.0 (TY was raised 1 to 88.5 TM) BUT IMPORTS are estimated to be unchanged at 96.0. Also note China’s soybean stocks are seen rising nearly 8 MMT in 19-20. The USDA’s 425 mbu forecast for 20-21 U.S. soybean ending stocks was 30 million more than last month but only 1 higher than the trade average. Weakness in corn and a stable Chinese import demand outlook in 20-21 are contributing to the market’s weakness post-report.
Wheat: Neutral to slightly supportive report, following a reduction in U.S. SRW and HRW production estimates. In contrast, initial survey-based estimate of U.S. Other Spring production was nearly in line with expectations at 550 mbu. U.S. SRW crop was lowered 17 mbu (5.7%), while HRW output was reduced by 33 mbu (4.4%). First estimate of U.S. HRS production is 502 mbu vs. last year’s 522 mbu. USDA indicates smaller competitor crops v. last month in European Union (-1.5 MMT) and Russia (-0.5), but that was offset somewhat by a higher export forecast for Australia (+0.5). Greatest support is evident in Chicago SRW Wheat as the market focuses on U.S. SRW harvest results, while more of a choppy trend appears likely for KC HRW and MGEX HRS with attention on crop prospects in Russia and Canada.
Domestic
New Crop:
- Beginning stocks up 145 million from above;
- Planted area reduced by 5.0 million as indicated in the June Acreage Report to 92.0; harvested acreage 5.6 million lower at 84.0;
- Yield was unchanged from the June WASDE at 178.5;
- Production declines 995 million as a result to 15.0 billion;
- Feed/residual use lowered 200 million as a result of the smaller crop (20%) to 5.85 billion;
- 20/21 ethanol use held steady at 5.2 billion; non-ethanol grind increased 25 million;
- No change in exports, still at 2.150 bbu;
- Carry-out drops 675 mbu from June to 2.648 bbu for a jumps 335 million to 2.010 (18.1% stx/use, versus 22.5% LM and 16.5% for the current year)
- Expected producer price range increased $.15 to $3.35/bushel.
Old Crop:
- Feed/Residual use 100 million lower to 5.6 billion based on the lower than expected third disappearance as suggested by the June 1 stocks report;
- Ethanol grind lowered 50 to 4.850; non-ethanol grind 5 mbu higher this month;
- Exports were unchanged at 1.775 despite a sizable corn sale announced to China this morning;
- Imports unchanged at 45 mbu;
- The net effect was to increase ending stocks by 145 million to 2.248 bbu;
- Average producer price range unchanged from last month at $3.60.
New Crop:
- Harvested area up 200 K acres, as indicated from the June Acreage report—yield unchanged at 49.8 bpa—production 10 million higher at 4.135;
- Beg stx 35 larger at above;
- New crop crush increased 15 to 2.160 bbu—300 K increase in domestic SBM use and 150 K increase in exports;
- Exports unchanged from LM at 2.050 bbu;
- Ending stocks rise 30 to 425; stx/use 9.8% vs 9.1% LM and 16.1% in 19-20;
- Average producer price rises $.10 to $8.50/bushel;
- SBO
- Beginning stocks increased 80 to 2.020 billion;
- Production 175 million higher;
- Imports steady at 400 million;
- Domestic SBO use at 23.0 with biodiesel accounting for 8.0 billion (7.4 in 19/20);
- Exports increased 200 million pounds to 2.4 billion;
- Endings stocks 55 million higher from LM to 2.055 billion;
- Average price remains estimated at $.2900/lb;
- SBM balance sheet:
- Production 450 K ST higher;
- Domestic use increased 300 K ST to 38.1 MST
- Exports 150 greater at 13.25 MST
- Ending stocks unchanged from June at 400 K ST;
- Average price of 48% Decatur SBM up $10 to $300/ST.
- SBO
Old Crop:
- Imports steady at 15;
- Residual use adjusted from +4 in June to -46, suggesting last fall’s crop was under-estimated;
- Seed use unchanged at 97 mbu;
- Exports hold steady at 1.65 bbu;
- Crush 15 higher as the result of a 300 K ST increase in domestic meal use;
- Net is a 35 mbu increase in 19/20 carry-out to 620 mbu;
- Average producer price estimate $.05 higher at $8.55.
- Meal
- Production 300 K ST greater;
- Domestic meal use up 300 K ST;
- Exports unchanged at 13.45 MST;
- Ending stocks steady at 375 K;
- Average price of 48% protein rises $5 from LM to $300.
- SBO
- Production increased 105 million pounds;
- Domestic use forecast reduced 150 million pounds;
- Exports increased 150 million pounds to 2.85 billion;
- Ending stocks increased 80 to 2.020 billion;
- Average price of crude SBO, fob Decatur raised 25 points to $.2875.
- Meal
Winter Wheat Production—20/21
- Update pegs winter wheat production at 1.218 bbu, which is below the avg. trade guess of 1.249 and below the trade range (1.223-1.285);
- National avg. yield est. decreased 0.1 bushels from last month to 52.0 bpa (vs. 53.6 in 2019);
- HRW forecast at 0.710 bbu, 33 million bushels below the June estimate of 0.743 bbu and below the avg. guess of 0.733. SRW output is pegged at 0.280 bbu, which is down 17 mbu from June and below the avg. guess of 0.289. White wheat production pegged at 0.227 bbu vs. the avg. of 0.225 and above last month’s 0.225.
U.S. All Wheat Supply/Demand—20/21
- The decrease in all wheat production from 1.877 bbu to 1.824 bbu primarily reflects lower winter wheat output and reduced harvested acreage of other spring relative to expectations. Total supply of 3.007 bbu is down 3.2% vs. last year;
- Usage—No change to food/seed vs. last month; feed/residual decreased 10 mbu to 90; and exports were unchanged at 950 mbu on smaller competitor crops. Total use of 2.065 bbu is essentially unchanged vs. 19/20;
- Ending stocks of all wheat are forecast at 0.942 bbu, which was below the average trade guess of 0.950; average farm price forecast at $4.60, which is unchanged versus June. The ending stocks-to-use ratio is forecast at 45.6% vs. 44.6% last month and 50.7% in 19/20.
U.S. All Wheat Supply/Demand—19/20
- Feed/residual was decreased 61 million to 74 mbu;
- Carryout up 61 mbu per the recent USDA Grain Stocks report to 1.044 bbu.
Global
- Foreign-held beginning 20/21 coarse grain stocks were lowered 5.5 MMT to 137.4 (136.8 LY;
- Foreign 19/20 coarse grain production unchanged from LM at 1,064 MMT (1,048 LY);
- 19-20 corn import changes: Egypt, +400 Kl; Mexico, -300K; SE Asia, +150 K;
- 19-20 corn export changes: Argentina, +2 MMT; Brazil, -1 MMT; EU, +1/2 MMT; Canada, -200 MT
- China 19-20 corn use: domestic feeding increased 3 MMT to 189; ending stocks down 3 to 204;
- No changes in most overseas balance sheets for 20-21 except China feed use was increased by 1 MMT to 190 and stocks are down 4 from LM to 194 MMT.
- Beginning 20-21 global SB stocks up ½ MMT to 99.2; year end stocks expected to decline 4.6 to 95.1 million;
- Larger 19-20 Brazil bean crop, up 2 MMT to 126.0
- Big boost in Brazil’s 19-20 SB exports (surprise?), from 85 MMT in June to 89.0 TM;
- No change in the Argentina soybean balance sheet
- USDA raised China’s 19-20 SB imports 2 MMT to 96.0; 20-21 unchanged from LM at 96.0; note that USDA expects China to add nearly 8 MMT to stocks in 19-20.
- Production for 20/21 decreased 4.1 MMT to 769.3 MMT (still a record);
- Carry-out for 20/21 declines 1.3 MMT vs. last month although still historically high at 314.8 MMT;
- World ending stocks-to-use ratio for 20/21 now est. at 41.9% vs. 42.0% in June
- Russia production forecast down 0.5 MMT from last month to 76.5 MMT, but export forecast is steady at 36.0 MMT (vs. 34.5 MMT last year). Production in Ukraine was unchanged at 26.5 with exports steady at 17.5 MMT (vs. 20.5 last year);
- EU-27 crop lowered 1.5 MMT to 139.5 and exports decreased by 1.0 MMT to 27.0;
- Australia crop unchanged at 26.0 MMT but exports increased 0.5 to 17.5 MMT (versus 9.2 last year);
- Canada production stead at 34.0, and exports were unchanged at 24.5 MMT (versus 23.2 last year);
- Argentina production and exports were steady at 21.0 and 14.5, respectively.
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