Reaction: Neutral to friendly feedgrains and neutral to slightly bearish soybeans. We tightened up our trading ranges for May soybeans & corn, and raised our trading ranges for all three US wheat contracts.
USDA OCE Secretary Briefing
CBOT soybeans trended lower post USDA report and wheat trimmed gains. CBOT corn sold off post USDA report which created a buying opportunity for some longs. Prices dipped as USDA made a less than expected upward adjustment to US exports by only 75 million bushels (trade was looking for 100-to-200-million-bushel increase). USDA’s outlook on 2020-21 corn exports indicated we could see some current crop year corn commitments rolled into new-crop at the end of the marketing season, or USDA acknowledging actual corn shipments need to increase in order to convince the government US corn exports could reach commitment potential. US corn stocks dropped a more than expected 150 million bushels. Corn for feed was upward revised 50 and food use was down 25. They lifted corn for ethanol by 25 million bushels, a surprise in our opinion. Corn exports were taken up only 75 as we mentioned. World corn stocks were lowered 3.8 million tons to 283.9 million, 19.1 million tons below 2019-20. Argentina corn production was lowered 0.5 million tons to 47 million. Brazil was left unchanged at 109 million tons.
US soybean stocks were unchanged but USDA did tinker with demand, by taking exports up 30 million bushels, offset by 10 million bushels lower crush, 2-million-bushel lower seed and 17 million downward revision in residual. US soybean oil food was up 400 million pounds, and biodiesel use lowered 400 million. This could be a glimpse of what USDA is thinking for soybean oil for renewable biodiesel use. Next month USDA will add biofuel use, replacing soybean oil for biodiesel use. USDA made a bearish move by raising Brazil exports by 1 million tons to 86 million tons of soybeans for 2020-21. Brazil soybean production was taken up 2 million tons to 136 million while Argentina was left unchanged at 47.5 million tons.
All-wheat US stocks were raised 16 mil bu, 5 above trade expectations. Wheat imports were lowered 10 million bushels and feed was taken down 25 million to 100 million bushels. We think feed could be trimmed another 10 million in the next report. By class HRW wheat stocks were upward revised 28 million bushels, and durum, HRS & SRW wheat stocks were each lowered 5 million bushels.
World wheat production was lowered 300,000 tons and world stocks decreased a large 5.7 million tons to 295.5 million, 4.5 million below 2019-20. USDA noted “World 2020/21
consumption is increased 5.1 million tons to 781.0 million, mainly on higher feed and residual use for China. Auction sales of China’s old-crop wheat stocks continue to be large and domestic corn prices in China remain at a premium to wheat. This is expected to further increase China’s 2020/21 wheat feed and residual use, raised 5.0 million tons to a record 40.0 million.”
In the end, Chinese demand continues to hammer away at grain and oilseed stocks.
FI price ranges
May corn is seen in a $5.55 and $6.00 range (up 15, unch)
July is seen in a $5.25 and $6.00 range
December corn is seen in a $3.85-$5.50 range.
May soybeans are seen in a $13.75 and $15.50 range (unch, down 25)
May soymeal is seen in a $395 and $415 range (unch, down $10)
May soybean oil is seen in a 51 and 55 cent range (up 100, unch)
December 40-60 cent wide range
May Chicago wheat is seen in a $6.20‐$6.75 range (up 20, up 15)
May KC wheat is seen in a $5.70‐$6.15 range (up 20, up 15)
May MN wheat is seen in a $6.25‐$6.75 range (up 50, up 25)
Senior Commodity Analyst – Grain and Oilseeds
One Lincoln Center
18 W 140 Butterfield Rd.
Oakbrook Terrace, Il. 60181
ICE IM: treilly1
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