Morning Highlights


Highlights                

  • The USDA June supply and demand report: unchanged corn yield @ 174 bpa, beans @ 48.5 bpa.
  • USDA June 17/18 ending stocks: all wheat 1.080 bil bu, corn 2.102 bil bu, beans 505 mil bu.
  • The Federal Reserve is expected to raise interest rates on Wednesday.
  • Dryness still prevalent over the Black Sea growing areas next 7-10 days, adding stress to corn and wheat growing. Some light rains reported over parts of Ukraine.
  • Brazil trucker strike effects still lingering as port loading delays continue due to slow inbound movement.
  • The Senate Ag Committee will vote today on Farm Bill considerations, trying to move it out for a full vote. The House will likely vote again late week on an amended version of their Bill.
  • U. S. Dollar index -.033 @ 93.785, Dow Futures +33 @ 25,329, Crude Oil futures -.34 @ $66.02.

        

Corn

  • The USDA report lowered old crop corn carryout 80 mil bu to 2.102 bil, increasing exports 75 mil and lowering imports 5 mil bu. This rolled over to the new crop 18/19 corn balance sheet giving a lower new crop carryout projection at 1.577 bil bu, down 105 mil bu. Next year’s feed use was adjusted lower, while ethanol grind demand was up 50 mil.
  • USDA put world corn ending stocks at 192.7 mil tons, versus their May estimate at 194.8 mil. They lowered Brazil corn production to 85 mil tons, and left Argentina corn at 33 mil tons. 2018/19 world corn carryout was estimated at 154.7 mil tons
  • Funds were estimated buyers of up to 26,000 corn contracts yesterday.

 Outlook: the longer term shock and awe of the report may be that next year’s world corn carryout could be 37 mil tons lower for 18/19 than this year’s 17/18 balance sheet. This could dial in next year the lowest world corn stocks to use ratio since 1973, and the lowest US ratio in the past five years. Overnight seeing a mild set-back from the strong up-move yesterday. Calls: a couple lower.      

 

Oilseeds

  • The USDA report dropped old crop bean carryout 25 mil bu to 505 mil, as crush demand was up 25 mil bu. Next year’s new crop carryout sank to 385 mil from 415 mil bu in May. US bean exports were unchanged both old and new.
  • Traders still questioning whether the US bean export number at 2.065 bil bushels is obtainable given current export loading pace and China uncertainty.
  • USDA put world soybean carryout at 92.4 mil tons for 17/18, while the 18/19 world carryout was estimated at 87.0 mil tons. Brazil bean production was up 2 mil to 119 mil tons, while Argentina slid to 37 mil tons [with next year’s crop back up to 56 mil tons].

Outlook: beans were firmer yesterday until the close, but still looked like the tired horse in the race. Brazil has plenty of beans. Demand stories are stuck in neutral. Weather seems fine in the US. Negative technicals still hanging over the market. Calls: 8-9 cents lower to start

 

 Wheat

  • USDA report took old crop all wheat carryout up 10 mil bu to 1,080 bil, as they lowered exports 10 mil bu. This year’s new crop and 18/19 ending carryout number dropped 9 mil bu to 946 mil bu. They increased US wheat exports to 950 mil bu for the coming year.
  • World wheat carryout was up to 272.3 mil tons versus 270.4 in the May report. Next year’s carryout estimate is at 266.1 mil tons. Russian wheat production estimate was lowered 2.5 mil tons to 68.5 mil. This compares to last year Russian production at 85 mil.
  • ABARE lowered its new crop Australian wheat estimate to 21.9 mil tons, down from their previous March number at 23.7 due to lower autumn rainfall during planting. Farmers there may trim the planted acreage due to dryness.USDA left next year Australia wheat unchanged at 24 mil tons.
  • Egypt bought 420,000 tons of wheat in their tender yesterday. 120k tons Romanian, and 300k tons Russian origin wheat. Shipment is for July 15-25th, and prices ranged from $209.50-$210/ton FOB.
  • WN18 closed +.20 better, with KWN18 up +.18 ¾ while MWU only managed gains of .03 cents. Chicago and KC putting in outside higher trade on the charts.
  • HRW harvest continues to expand into central Kansas this week, with a lot of 12%-13%+ proteins reported. Elevator bids continue to leap higher to bid for bushels and fill space.

 

Outlook: perhaps the market got a shock when it compared last year’s Russian all wheat crop of 85 mil tons to this year’s lower projection at 68.5 mil and said ‘that’s a lot!’. Buy wheat. It’s not a disaster yet, but why else would Chicago jump .19 cents right after the report? And to add confusion, USDA put next year’s US wheat exports up to 950 mil? We’re not that competitive are we, especially with July19 futures above $6.00?  Markets are retreating lower this morning, perhaps we slept on it overnight!  Calls: 3-7 cents lower