I’d like to say that yesterday was all about the report, but yesterday wasn’t really all about the report…, at least in the corn and soybeans. June acreage data was finally added to the S&D’s, so that was a known change. NASS is also typically very reluctant to make changes off of trendline for their yield calculations. Plus, enumerated and survey data doesn’t take place until the September report. Some traders were looking for adjustments to the yield data nonetheless, but they were disappointed, because it didn’t happen.
On the old crop corn balance sheet, ending stocks dropped to 1.082 bln bushels with all of it coming from a 25 mln bushel increase in corn feed and residual use. New crop ending stocks were 1.432 bln versus 1.357 bln last month, most of that coming from increased supply on 1.6 mln more acres planted than what the report showed last month.
Soybean acres were lowered 45,000 from the March Intentions to the June Final Plantings, but due to rounding, it still showed up as the same 87.6 mln planted and 86.7 mln harvested on the report for new crop. There were no changes in the demand side of the balance sheet, so ending stocks were the same 155 mln bushels that we got last month. For old crop beans, imports dropped 15 mln bushels, but crush was down 5 and exports down 10, so ending stocks on old crop beans were unchanged as well at 135 mln bushels.
Wheat was actually where all the excitement was at in the data. Production declined 152 mln bushels from a month ago and winter wheat production specifically, was UP 55 mln bushels. That meant spring and durum numbers combined went down 207 mln bushels! Coupled with the lower 844 mln bu carryin courtesy of the June Quarterly Stocks in the old crop marketing year, this current crop year ending stocks dropped to 665 mln bushels. That’s finally a number in wheat that we can call historically “pretty tight”. Not crazy bullish tight, but it certainly moved from comfortable stocks to uncomfortably tight.
I’d say NASS was incredibly proactive in knocking a lot of bushels off the spring and durum wheat crops and if you look at crop condition data in the weekly reports, it was warranted. Only 16% of the spring wheat crop was rated g/ex in yesterday’s data and 55% is p/vp. The g/ex numbers were unchanged this week, but 5 of the fair points were moved to p/vp, so conditions did in fact deteriorate again, despite the rains from last week.
Yield data versus last year’s crops for some of the states in the PNW and Northern Plains for spring wheat have Washington at 37 bu/ac versus 61 last year, South Dakota 25 vs 47 a year ago, North Dakota 28 vs 49 and Montana 25 vs 38. Total production was pegged at 345 mln bushels versus 586 mln last year. Durum production came in at 37 mln bushels versus 69 mln last year.
So, as you can probably tell by now, MGEX wheat was the big gainer yesterday, followed by KC and Chicago. Corn and beans were up nicely as well.
Corn and soybean crop condition ratings yesterday afternoon showed corn g/ex ratings improving 1 point from the prior week, moving up to 65% g/ex. Soybeans were 59% g/ex and that was unchanged from a week ago.
Weekly export inspections were bearish across the board, even in the corn, which was sad because corn inspections have been the highlight of the report over the last couple of months. There were 39.1 mln bushels in corn export loadings and we need to average 58.6 mln per week between now and the end of August to hit USDA’s export target. The marketing year for corn, milo and soybeans ends on the last day of August. Milo inspections were 2.9 mln bushels versus 5.5 mln needed each week. Soybeans were 7.4 mln bushels, which narrowly missed the target of 8.8 mln needed. Wheat just started its new marketing year on June 1 and inspections this week were 15.6 mln bushels versus 16.8 mln needed. Top destinations in everything were Japan in wheat, China in corn and milo and Indonesia in soybeans.
6-10’s last night were hot and dry for the Northern Plains and that included northern Iowa, northern Illinois and all of Minnesota and Wisconsin. From central Iowa south, including Kansas the temps were below normal. Precip was below normal all the way south through most of Kansas and east through most of Illinois. Excluding the Okie Panhandle, everything in Oklahoma and Texas, the Delta and SE US were all above normal on precip potential.
Pete Loewen
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell
www.loewenassociates.com