Markets Mixed Ahead of USDA Quarterly Stocks Report
Trade is expecting a narrowly mixed bag of production changes in today’s report
Small Grain Report Wheat Production Estimates
- The final assessment of the 2019/20 wheat crop will be released in today’s Small Grains Annual Summary report.
- The average estimate for all wheat production is 1,841 million bushels in a range of 1,823-1,920 million, up from 1,838 previously.
- All winter wheat is expected at 1,198 million bushels, unchanged from the previous forecast, within a 1,187-1,244 million range.
- By class HRW is expected to be up slightly at 696 million bushels, SRW down a million at 276 million, and white up a million at 227 million bushels.
- The other spring wheat forecast is expected to be unchanged at 577 million bushels in a range of 568-590 million.
- The average forecast for durum is also unchanged at 62 million bushels.
FBN’s Take On What It Means: The trade is expecting a narrowly mixed bag of production changes in today’s report. However, it would not be a surprise to see the winter wheat production forecast lowered. Since 1985, there have been 10 years in which USDA lowered the winter wheat crop in both the July and August reports as they did this year, with all but one seeing another downward revision in the September Small Grains Annual report. While total production is projected to be lower this year, stocks are still expected to to be plentiful, capping any significant price gains.
U.S. Southern Plains Forecast Dry
- La Nina conditions may lead to a more restricted rainfall pattern during a large part of the fall and winter.
- Rainfall in August and early September has been supporting fieldwork this month.
- Hard red winter wheat planting is underway and the latest progress report suggests fieldwork is ahead of the average pace.
- Total precipitation for the area has been below average for the two month period.
- Concern for germination and establishment is increasing due to a steady decline in soil moisture in unirrigated areas.
FBN’s Take On What It Means: A general soaking rain is needed soon to support growing conditions before winter dormancy. However, the two week weather forecast in the central and southwestern Plains remains drier than needed, and those areas that get rain will not likely receive enough to seriously improve soil moisture.The situation is not yet critical, but bears watching as the La Nina weather pattern brings greater risk of continued dryness.
FBN Market Advisory services are offered by FBN BR LLC, dba FBN Brokerage, FBN BR and FBN Market Advisory (NFA ID: 0508695)
The risk of trading futures and options can be substantial and may not be suitable for all investors. Past performance is not necessarily indicative of future results.
This is not an offer or solicitation in any jurisdiction where we are not authorized to do business or where such offer or solicitation would be contrary to the local laws and regulations of that jurisdiction, including, but not limited to, persons residing in Australia and Canada.