** More sideways! The USDA May Crop Report was seen as positive with CBOT corn, soybeans and wheat slightly firmer at midday. The report will not cause CBOT values to break out of their recent range until more is known about the Northern Hemisphere growing season and the resulting yield.
** NASS estimated 2017 US all wheat production at 1,820 Mil Bu, down nearly 500 Mil Bu from last year. The decline is the largest year to year in a non drought year. The chart to the left reflects that NASS pegged the US winter wheat yield at 48.8 BPA, just above trend. In Kansas, the crop was pegged at 289.8 Mil Bu on a yield of 42 BPA, which was down 26% from last year. 1.3 Mil acres of wheat will not be harvested in Kansas which is 16% of the total. NASS, producers nor traders are yet able to define all of the cold weather damage.
** US 2017/18 wheat end stocks are projected at 914 Mil Bu, down 245 Mil Bu from last year with an average farmgate price of $4.25 which is up $.35 from last year. ARC would note that we fear further downside adjustments in yield and harvested acres from fungal disease and the aftereffects of the freeze.
** World 2017/18 world wheat stocks were pegged at an estimated 258.3 MMTs, a record large total which will help mollify some of the bullishness from sharp decline in US wheat end stocks. ARC notes that WASDE forecast the ‘17 Russian wheat crop at 67 MMTs (down 5.5 MMTs), EU wheat crop of 151 MMTs (up 5.5 MMTs), Indian wheat at 97 MMTs (up 10 MMTs) with China at 131 MMTs (up 2.2 MMTs). ARC notes that China holds a record 128 MMTs of wheat or 50% of the world stocks total. China will not export wheat so some of the sheer size of world wheat stocks is attributed to China’s 17/18 wheat stocks rising 18 MMTs. World wheat exporter wheat stocks are declining which is price positive.
** US 2017/18 corn end stocks are projected at 2,100 Mil Bu which is down 185 Mil Bu from last year via smaller 2017 seedings. NASS used a corn trend yield at 170.7 BPA and reduced 2017/18 US corn exports to 1,875 Mil Bu due to record large South American corn harvests. The USDA held its average farmgate price for corn at $3.40 – the same as the February 2017 Annual Outlook Conference.
** World 2017/18 corn stock were pegged at 195.3 MMTs, down a hefty 28.6 MMTs from last year. 2016/17 world corn production was raised 12 MMTs to 1,065 MMTs. World 2017/18 corn domestic use is record large at 1,062 MMTs!
**2017/18 US soybean end stocks were pegged at 480 Mil Bu with the old crop lowered to 435 Mil Bu. The average 2017/18 farmgate price was estimated at $9.30 which offers key support to November below $9.50. WASDE pegged 2017/18 US soybean exports at a record large 2,150 Mil Bu and raised old crop exports to 2,050 Mil Bu. Such stocks argue for a spring trading range of $9.40-10.25.
** World 2017/18 soybean end stocks were forecast at 88.8 MMTs, down 1.3 MMTs. WASDE raised China’s 2016/17 soybean imports to 89 MMTs (still 2 MMTs too low) with 2017/18 imports at 93 MMTs (too low by 2-3 MMTs). Brazil’s 2018 soy crop was pegged at 107 MMTs and Argentina at 57 MMTs. The 17/18 soy stock/use ratio is 25.8%, down from this year’s 27%.
** AgResource Market Comment: The USDA May Crop report will offer another peg of support under the CBOT, with a sharp price drop not expected until mid to late June when more is known about 2017 US wheat/corn yield potential. China is more active in new crop purchases and US 2017/18 end stocks of 480 Mil Bu means that a 1 BPA loss in US yield would justify a rise back above $10.25. Our bet is that wheat is too cheap. Large US soymeal exports underpins soybeans.
**10 Day GFS Rainfall Estimate:
