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Hot/Dry Forecast Drives Overnight Gains

The trade looks for USDA to cut 50 million bushels from US 2020/21 corn stocks

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Cornfield Drought

Expectations for USDA’s June WASDE

  • The trade looks for USDA to cut 50 million bushels from US 2020/21 corn stocks with the average trade estimate at 1,207 million bushels.

  • No big changes are expected for US old crop wheat/soybean stocks.

  • But the trade looks for larger HRW wheat production.

  • For new crop, the trade looks for lighter corn stocks at 1,423 million bushels on average versus last month at 1,507 million bushels.

  • The trade looks for USDA to cut nearly three million tonnes off global corn stocks for both old and new-crop totals.

  • Marginal changes are expected to global wheat and soybean stocks.

  • On average, the trade expects to see Brazil + Argentina corn production at 144.4 million tonnes versus USDA’s May report at 149 million tonnes.

FBN’s Take On What It Means For The Farmer: Major changes to global soybean balance sheets would be surprising. But a smaller corn stocks total would probably be tied to lower production in Brazil and larger exports from the US. Larger US wheat production would not be too surprising given that HRW areas have received rains. White wheat production is at risk of being trimmed. We lean towards USDA raising global wheat production. Global rapeseed stocks will remain tight. Reports are scheduled for release on Thursday, June 10.

FBN

China Plans To Expand Dairy Production

  • Chinese demand for milk and cheese has been rising steadily as doctors have promoted the health benefits of dairy products.

  • China is the world’s third largest milk producer, but its annual output of 34 million tonnes only satisfied 70% of domestic needs last year.

  • More than 200 new dairy farm projects were announced last year, and 60% of those new projects plan to have herds of 10,000 or more.

  • That level of expansion would require 2.5 million cows, a 50% increase in the current milking herd.

  • China’s feed grain industry is unlikely to become self-sufficient despite the country’s efforts to ramp up domestic production.

  • USDA’s May projection for China to import 103 million tonnes of beans and 26 million tonnes of corn will be updated in Thursday’s report.

FBN’s Take On What It Means For The Farmer: Tightening domestic supplies of feed grains and rapidly increasing demand from China’s pork, poultry and dairy producers has led to record feed grain import purchases this year. The country will likely need to depend on expanded trade to satisfy this demand, and we expect China’s feed demand to continue to grow and support grain prices.

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