Reaction: Bullish. We upward revised our near-term trading ranges
September one US soybean stocks were reported at 523 million bushels versus USDA’s S&D outlook of 575 million, a huge difference, and 53 million below an average trade guess. Either Q4 crush &/or export were miscounted (usually known), or residual was way off USDA’s previous interpretation, which is partially justified in an unchanged production estimate for 2019. June one soybean stocks were 1.381 billion bushels, 5 less than what was reported three months ago, so unlike corn, September one stocks deviations from trade do not reflect previous quarters. The soybean stocks are a mystery, but regardless how one interprets it, stocks are tighter and that should reflect higher prices year over year.
2019 US corn production was upward revised 3 million bushels to 13.620 billion. Going forward USDA will revise previous year corn production in every September Grain Stocks report. Corn September one stocks of 1.995 billion bushels were reported 255 million below trade expectations. Note USDA revised previous quarter June one corn stocks by 205 million bushels! A big explanation for the deviation in corn stocks from USDA’s S&D stocks projection of 2.253 billion. Therefore, the trade missed feed/residual demand by roughly 50 million bushels, in our opinion. But what happened with the previous quarters? We will likely see that question come up in October when USDA typically hosts a statistical conference.
US wheat production came in lower than the trade estimate by 15 million bushels to 1.826 billion due to downward revision to winter wheat led by hard red winter. Wheat stocks came in much below trade expectations at 2.159 billion bushels, implying a potential 25 to 50-million-bushel upward revision by USDA to its feed demand in the upcoming supply and demand report.
Price projections revised below.
- December corn is seen in a $3.60-$4.00 range. (up 20, up 15)
- November soybeans are seen in a $9.90-$10.75 range (up 15, up 25)
- December soybean meal is seen in a $330-$360 range. (up 20, dn 10)
- December soybean oil is seen in a 32.00-35.00 range. (up 50, dn 50)
- December Chicago wheat is seen in a $5.50-$6.10 range. (up 20, up 35)
- December KC wheat is seen in a $4.80-$5.25 range. (up 20, up 40)
- December MN wheat is seen in a $5.30-$5.60 range. (up 25, up 15)
Senior Commodity Analyst – Grain and Oilseeds
Futures International │190 S LaSalle St., Suite 410│Chicago, IL 60603
ICE IM: treilly1
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