PF Reaction: New-crop Corn Carryover Back Above 2 Billion Bushels

Posted on 07/11/2019 11:48 AM

Market reaction

Ahead of USDA's report, corn futures were trading steady to a penny lower, soybeans were mostly steady to 2 cents higher, wheat futures were steady to 3 cents lower and cotton futures were 35 to 70 points lower.

After the reports, corn futures are trading 2 to 3 cents higher, soybeans are steady to 2 cents higher, winter wheat futures are 8 to 13 cents higher, spring wheat futures are generally 6 to 7 cents higher and cotton futures are 30 to 90 points lower.

 

Wheat production

All wheat: 1.921 billion bu.; trade expected 1.908 billion bu. 
— compares to 1.903 billion bu. in June
All winter wheat: 1.291 billion bu.; trade expected 1.277 billion bu. 
— compares to 1.275 billion bu. in June
HRW: 804.5 million bu.; trade expected 799 million bu. 
— compares to 794 million bu. in June
SRW: 259.2 million bu.; trade expected 255 million bu. 
— compares to 258 million bu. in June
White winter: 227 million bu.; trade expected 223 million bu. 
— compares to 222 million bu. in June
Other spring wheat: 572 million bu.; trade expected 569 million bu.
Durum: 58 million bu.; trade expected 59 million bu.

USDA’s all wheat estimate is up 18 million bu. from its June projection and 13 million bu. above the average pre-report trade estimate. USDA puts the national average all wheat yield at 50 bu. per acre, up from the June projection of 48.7 bu. per acre.

Its winter wheat production peg climbed 16 million bu. from last month to 1.291 billion bu., which is 14 million bu. above the average pre-report trade estimate. USDA puts the national average winter wheat yield at 51.8 bu. per acre, up from last month’s estimate of 50.5 bu. per acre and ahead of last year’s 47.9 bu. per acre.

The HRW wheat crop estimate is up about 10 million bu. from last month and about 5 million bu. above trade expectations. USDA’s soft red winter wheat crop peg is up just slightly from last month and is about 4 million bu. above the average pre-report trade estimate. White winter wheat production is up 5 million bu. from last month and 4 million bu. above trade expectations.

In the first survey-based spring wheat crop estimate of the year, USDA puts the crop at 572 million bu., about 3 million bu. above trade expectations. USDA puts the national average other spring wheat yield at 47.2 bu. per acre, down from last year’s 48.3 bu. per acre.

Durum wheat production is in line with trade expectations on a national average yield of 42.9 bu. per acre, up from last year’s 39.3 bu. per acre.

Looking at the top winter wheat production states, USDA puts the Kansas crop at 330 million bu. on an average yield of 50 bu. per acre; that’s unchanged from June. Washington is expected to produce 116.2 million bu. on an average yield of 70 bu. per acre, up 1 bu. per acre from last month. Illinois is expected to produce 37.17 million bu. of wheat on a yield of 63 bu. per acre, down 2 bu. per acre from last month.

Spring wheat production will be led by North Dakota with 300.8 million bu. of production on an average yield of 47 bu. per acre, down 2 bu. per acre from year-ago.

 

U.S. carryover

Corn: 2.340 billion bu. for 2018-19; up from 2.195 billion bu. in June
— 2.010 billion bu. for 2019-20; up from 1.675 billion bu. in June
Beans: 1.050 billion bu. for 2018-19; down from 1.070 billion bu. in June
— 795 million bu. for 2019-20; down from 1.045 billion bu. in June
Wheat: 1.072 billion bu. for 2018-19; down from 1.102 billion bu. in June
— 1.000 billion bu. for 2019-20; down from 1.072 billion bu. in June
Cotton: 5.00 million bales for 2018-19; up from 4.65 million bales in June
— 6.70 million bales for 2019-20; up from 6.40 million bales in June

USDA raised its old-crop corn ending stocks estimate by 145 million bu. from last month, which was 143 million bu. higher than traders expected. USDA made no changes to the supply side of the balance sheet. USDA cut feed and residual use by 25 million bu. (to 5.275 billion bu.), food, seed and industrial use by 20 million bu. (to 6.88 billion bu.; ethanol use was unchanged at 5.45 billion bu.) and exports by 100 million bushels (to 2.1 billion bu.). USDA estimates the cash on-farm old-crop corn price at $3.60, unchanged from last month.

USDA increased its new-crop corn ending stocks forecast by 335 million bu. from last month, pushing it back above 2 billion bushels. The World Board incorporated the June planted and harvested acreage estimates from NASS, as we expected, and kept its yield forecast at 166 bu. per acre. That increased projected production by 195 million bu. from last month. When combined with the bigger beginning stocks, totals supplies increased 340 million bu. from June. USDA increased total use only 5 million bu. from last month. Projected feed and residual use was increased 25 million bu. (to 5.175 billion bu.) and food, seed and industrial use was cut 20 million bushels (to 6.93 billion bu.; ethanol use was unchanged at 5.5 billion bu.). USDA now projects the national average on-farm cash new-crop corn price at $3.70, down a dime from last month.

USDA trimmed its old-crop soybean ending stocks estimate 20 million bu. from last month. It made no changes to the supply side of the old-crop balance sheet. On the demand side, USDA cut estimated crush by 15 million bu. (to 2.085 billion bu.), cut seed use by 5 million bu. (to 93 million bu.) and increased residual use by 41 million bushels (to 72 million bu.). USDA projects the national average on-farm old-crop cash soybean price at $8.50, unchanged from last month.

USDA cut its new-crop soybean carryover projection 250 million bu. from June. The World Board used NASS’s June acreage estimates and trimmed yield by 1 bu. to 48.5 bu. per acre, “based on a weather-adjusted trend model and reflects the impact of delayed planting.” That trimmed the projected crop size by 305 million bu. from last month. Combined with the smaller beginning stocks, total supplies are projected down 325 million bu. from June. The only change to the demand side of the new-crop balance sheet was a 75-million-bu. cut to exports, which are now projected at 1.875 billion bushels. USDA raised its cash on-farm new-crop soybean price projection by 15 cents from last month to $8.40.

The old-crop wheat carryover number at 1.072 billion bu. was set by the June Grain Stocks Report. To get that 30-million-bu. reduction, USDA raised feed and residual use by 41 million bu. (to 91 million bu.), offsetting a 14-million-bu. cut to exports (to 936 million bu.) and a 5-million-bu. cut to imports (to 135 million bu.). USDA estimates the cash on-farm old-crop wheat price at $5.16, down 4 cents from June.

USDA cut projected new-crop wheat ending stocks by 72 million bu. from last month. On the supply side of the balance sheet, USDA’s higher crop estimate was more than offset by smaller beginning stocks. That reduced total supply by 12 million bu. from last month. On usage side of the balance sheet, USDA raised exports 50 million bu. (to 950 million bu.) and feed use by 10 million bushels (to 150 million bu.). It now projects the cash on-farm new-crop wheat price at $5.20, up a dime from last month.

USDA increased its old-crop cotton ending stocks forecast by 350,000 bales from last month. The department made no changes to old-crop supplies. On the demand side of the balance sheet, USDA cut exports by 250,000 bales (to 14.5 million bales) and domestic use by 100,000 bales (to 3 million bales). USDA estimates the cash on-farm old-crop cotton price at 70 cents, unchanged from June.

USDA increased its new-crop cotton carryover projection by 300,000 bales from last month. Total supply climbed 350,000 bales due to bigger beginning stocks. On the usage side of the balance sheet, USDA cut unaccounted use by 50,000 bales (to 210,000 bales). USDA now projects the cash on-farm new-crop cotton price at 63 cents, down a penny from last month.

 

Global carryover (without China)

Corn: 118.92 MMT for 2018-19; up from 115.54 MMT in June
— 107.1 MMT for 2019-20; up from 98.71 MMT in June
Beans: 91.78 MMT for 2018-19; up from 91.60 MMT in June
— 83.15 MMT for 2019-20; down from 91.28 MMT in June
Wheat: 135.45 MMT for 2018-19; down from 136.58 MMT in June
— 140.57 MMT for 2019-20; down from 148.15 MMT in June
Cotton: 43.91 million bales in 2018-19; up from 43.16 million bales in June
— 47.43 million bales for 2019-20; up from 45.76 million bales in June

 

Global production highlights

Argentina beans: 56.0 MMT for 2018-19; compares to 56.0 MMT in June
— 53.0 MMT for 2019-20; compares to 53.0 MMT in June
Brazil beans: 117.0 MMT in 2018-19; compares to 117.0 MMT in June
— 123.0 MMT for 2019-20; compares to 123.0 MMT in June
Argentina wheat: 19.5 MMT in 2018-19; compares to 19.5 MMT in June
— 20.0 MMT for 2019-20; compares to 20.0 MMT in June
Australia wheat: 17.3 MMT in 2018-19; compares to 17.3 MMT in June
— 21.0 MMT for 2019-20; compares to 22.5 MMT in June
China wheat: 131.43 MMT in 2018-19; compares to 131.43 MMT in June
— 132.0 MMT for 2019-20; compares to 132.0 MMT in June
Canada wheat: 31.8 MMT in 2018-19; compares to 31.8 MMT in June
— 33.3 MMT for 2019-20; compares to 34.5 MMT in June
EU wheat: 137.22 MMT for 2018-19; compares to 137.22 MMT in June
— 151.3 MMT for 2019-20; compares to 153.8 MMT in June
Russia wheat: 71.69 MMT for 2018-19; compares to 71.69 MMT in June
— 74.2 MMT for 2019-20; compares to 78.0 MMT in June
Ukraine wheat: 25.06 MMT for 2018-19; compares to 25.06 MMT in June
— 29.0 MMT for 2019-20; compares to 30.0 MMT in June
China corn: 257.33 MMT for 2018-19; compares to 257.33 MMT in June
— 254.0 MMT for 2019-20; compares to 254.0 MMT in June
Argentina corn: 51.0 MMT for 2018-19; compares to 49.0 MMT in June
— 50.0 MMT for 2019-20; compares to 50.0 MMT in June
South Africa corn: 11.5 MMT for 2018-19; compares to 11.5 MMT in June
— 14.0 MMT in 2019-20; compares to 14.0 MMT in June
Brazil corn: 101.0 MMT for 2018-19; compares to 101.0 MMT in June
— 101.0 MMT for 2019-20; compares to 101.0 MMT in June
China cotton: 27.75 million bales for 2018-19; compares to 27.75 million bales in June
— 27.75 million bales for 2019-20; compares to 27.75 million bales in June

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