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10

May USDA Supply & Demand

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In our first look at the USDA's 2018/19 supply demand outlook, the USDA confirmed expectations for tighter global supplies of corn, soybeans, and wheat.

In the U.S., 2018/19 corn ending stocks are seen at 1.682 billion bushels, 500 million bushels smaller than 2017/18 on a smaller trend line yield of 174 and reduced acres. Despite the reduction, corn futures finished the day essentially unchanged, as the 1.682 number was well within trade guesses and actually 54 million bushels over the average trade estimate.

U.S. soybean ending stocks for the 2018/19 crop years came in at 0.415 billion bushels, 115 million bushels smaller than 17/18 on a combination of smaller yield & acres, and a 225 million bushel year-over-year increase in exports. Soybean futures rallied following the 11am release as the number was at the low end of trade expectations and 120 million bushels under the average trade guess of 0.535 billion bushels.

U.S. wheat ending stocks for 18/19 came in at 0.955 billion bushels, 115 million bushels smaller than 17/18 as a slightly higher yield and acreage number were offset by an increase in exports and feed use. The wheat complex traded lower as ending stocks were above trade expectations and winter wheat production prospects came in better than expected. The USDA sees record winter wheat yields in Indiana, Michigan, Montanta, and Kentucky helping to offset drought losses in the southern Plains.

World corn ending stocks for the 2018/19 crop year are seen at just 159.15 million tons, 35.7 million less than 17/18 as reduced production prospects in the U.S. and smaller South American carry-in fail to keep up with record world demand. This was well below trade expectations looking for 182.75 million tons.

World soybean ending stocks are projected at 86.70 million tons for the 18/19 crop year, 5.46 million tons less than 17/18 on smaller South American carry-in, reduced U.S. production, and record world demand. This was within the range of trade expectations but still 3.82 million tons below the average trade guess.

The big take-away here is a confirmation of what we've been saying for some time, surplus fundamentals are in the rearview mirror (at least for corn & likely soybeans). The outlook is for smaller stocks ahead even if we have good yields in the U.S, this gives us more upside potential heading into the summer as yields need a repeat of last year to keep supplies from shrinking. Are farming practices and genetics good enough to give us another national corn and bean yield of 176.6 and 49.1 respectively? Maybe. But, odds are mother nature will give markets and traders a reason to doubt that between now and harvest.

 

 
2018-19 USDA U.S. Yield (bu/acre)
 
USDA
May
2018-19
Average Trade Est.
Range of
Trade Est.
Ag Forum
2018-19
Corn
174.0
174.1
172.0-177.4
174.0
Soybeans
48.5
48.8
47.8-50.5
48.5

2018-19 USDA U.S. Production (bln bu)
 
USDA
May
2018-19
Average Trade Est.
Range of
Trade Est.
Ag Forum
2018-19
Corn
14.040
14.091
13.921-14.360
14.390
Soybeans
 4.280
4.324
4.110-4.850
4.320

2017 U.S. Wheat Production (bln bu)
 
USDA
May
2018
Average Trade Est.
Range of
Trade Est.
USDA
2017
All Wheat
 1.821
1.774
1.612-1.860
1.741
Winter
 1.192
1.183
1.062-1.304
1.269
HRWW
 0.647
0.654
0.550-0.797
0.750
SRWW
 0.315
0.307
0.218-0.330
0.292
White
 0.229
0.229
0.201-0.260
0.227

2017-18 USDA U.S. Grain Carryout (bln bu)
 
USDA
May
2017-18
Average Trade Est.
Range of
Trade Est.
USDA
April
2017-18
Corn
2.182
2.178
2.150-2.207
2.182
Soybeans
0.530
0.541
0.495-0.575
0.550
Wheat
1.070
1.065
0.941-1.090
1.064

2018-19 USDA U.S. Grain Carryout (bln bu)
 
USDA
May
2018-19
Average Trade Est.
Range of
Trade Est.
Ag Forum
2018-19
Corn
 1.682
1.628
1.467-1.907
2.272
Soybeans
 0.415
0.535
0.400-0.715
0.460
Wheat
 0.955
0.930
0.780-1.075
0.931

2017-18 South American Production (million tons)
 
USDA
May
2017-18
Average Trade Est.
Range of
Trade Est.
USDA
April
2017-18
ARG Corn
33.00
32.27
31.00-33.00
33.00
ARG Soy
39.00
38.69
37.00-40.00
40.00
BRZ Corn
87.00
88.86
83.90-92.00
92.00
BRZ Soy
117.00
116.24
114.90-119.00
115.00

2017-18 USDA World Grain Carryout (million tons)
 
USDA
May
2017-18
Average Trade Est.
Range of
Trade Est.
USDA
April
2017-18
Corn
194.85
195.18
192.17-198.00
197.78
Soybeans
92.16
89.90
88.50-91.00
90.80
Wheat
270.46
271.13
268.50-273.40
271.22

2018-19 USDA World Grain Carryout (million tons)
 
USDA
May
2018-19
Average Trade Est.
Range of
Trade Est.
USDA
April
2018-19
Corn
 159.15
182.75
148.73-193.80
N/A
Soybeans
 86.70
90.52
75.50-97.00
N/A
Wheat
 264.33
269.18
260.00-278.70
N/A
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These data and comments are provided for information purposes only and are not intended to be used for specific trading strategies. This commentary is written as a daily marketing tool to help farmers sell the grain they raise. Although all information is believed to be reliable, we cannot guarantee its accuracy or completeness. Past performance and testimonials are not necessarily indicative of future results. Commodity trading involves the risk of loss, and you should fully understand those risks before trading.