Bearish soybean oil and wheat. Bull spreading corn justified with change in 2019-20 and 2020-21 US ending stocks.
USDA NASS and OCE executive summaries
- USDA increase 2020 US wheat production by 27 million bushels by increasing HRW by 25 million and winter white by a small amount.
- US all wheat ending stocks were taken up 16 million bushels to 925 million, 6 percent below 2019-20.
· US 2019-20 corn ending stocks came in 47 million bushels below trade expectations at 2.103 billion, 5 million above the previous month, promoting bull spreading. This is because new-crop US corn stocks of 3.323 billion ended up 37 million bushels below an average trade guess. US corn for ethanol for 2019-20 was
· US new-crop (2020-21) soybean oil stocks were upward revised 135 million pounds, the biggest surprise in this report, in our opinion. USDA took the 2019-20 soybean crush up 15 million bushels and to compliment new-crop, they raised 2020-21 US crush by 15. This added a combined 285 million pounds of soybean oil to supply. At 2.0 billion pounds ending stocks for 2020-19 and 2019-20 stocks forecast at 1.940 million, soybean oil prices fell further late this morning. USDA increased 2019-20 US soybean oil exports by 150 million pounds and raised new-crop exports by 100 million. Biodiesel was again cut by USDA for 2019-20, this time by 100 million pounds to 7.500 billion, too low in our opinion.
· US soybean stocks for 2019-20 were near expectations and new-crop were reported 31 million below the trade guess. USDA lowered 2019-20 US soybean exports by 25 million to reflect higher Brazilian exports.
· There was no change in soybean meal stocks by USDA increased domestic use for 2019-20 by 400,000 short tons and raised new-crop by 300,000 short tons.
· 2019-20 world ending stocks for corn and soybeans tightened slightly, and world wheat was up slightly. USDA took 2019-20 Brazil soybean exports up 1 million tons to 85 million tons.
· New-crop world wheat stocks increased 6.0MMT to 310 million, 6.8 percent higher than end of 2019-20. India’s wheat production was upward revised a large 4.2 million tons to 107.2 million tons, and if the government provides an incentive for exporters, India could easily contribute to the world trade.
· July corn is seen in a $3.20 and $3.40 range. December lows could reach $2.90 if US weather cooperates.
- July soybeans are seen in a $8.44-$8.85 range.
- July soybean meal is seen in a $280 to $310 range.
- July soybean oil range is seen in a 26.75 to 28.25 range.
- Chicago July is seen in a $4.80-$5.05 range
- KC July $4.35-$4.65
- MN July $5.00-$5.25
Senior Commodity Analyst – Grain and Oilseeds
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