USDA July WASDE Estimates: Bullish/Neutral Soy and Neutral Corn
Reuters’s analyst poll for the July WASDE ending stocks numbers saw what we at FBN believe is supportive soy, neutral corn and neutral/bearish wheat.
The USDA’s July WASDE is Thursday, July 11, at 11:00 CST.
Analysts are predicting that 2019/20 soybean stocks will decline by 233 MBU from the June WASDE to 812 MBU.
As a reminder U.S. planted area for 2019 is estimated at 80 million acres, down 10% YoY and -4.6 MA from the June WASDE. This represents the lowest soybean planted acreage in the United States since 2013.
The estimated 2019/20 USDA corn carryout is 1.69 BBU which is +22 MBU from the June WASDE. We believe that the USDA’s adding back 1.9 million acres has forced the USDA to raise both their feed and residual and export demand numbers.
The all-wheat carryout is estimated at 1.043 BBU and -29 MBU from the June WASDE.
The USDA present the first, by-class, wheat supply and demand balance sheets for the 2019/20 marketing year on Thursday.
What It Means for the U.S. Farmer: We believe that the soybean demand number can be interesting as the USDA will likely reduce some export demand following the acreage reduction. We also feel as if the July corn numbers are a “temporary solution” while the government resurveys planting intentions in key states during early July. At FBN we believe that the August WASDE can possess greater relevance as it will contain updated corn and soybean acres numbers.
Black Sea Wheat Production: Ukraine Bumper Crop At + 16.5% YoY
European agri-consultant Agritel has Ukrainian wheat production estimated to spike by 16.9% YoY to 28.8 MMT, with favorable growing weather which is expected to produce record yields.
Agritel projected a record average wheat yield of 4.36 tonnes per hectare, up sharply higher from 3.82 in 2018, as well as a crop area of 6.61 million hectares.
Crops benefited from optimal planting conditions during the fall and then an ideal hydrological configuration during the growing season due to winter snow and ideal rainfall have helped.
The bumper production volume should leave Ukraine with a large exportable surplus. Agritel and the USDA are estimating that 2019/20 Ukrainian wheat exports in the could be at 19.5 MMT.
What It Means for the U.S. Farmer: At FBN we believe that the ample Ukrainian wheat supplies combined with a strong U.S. dollar has the ability to once again make the U.S. the supplier of last report in 2019/20 marketing year. With Russia, Europe and Ukraine making large high-protein crop we believe that the U.S. wheat export program should struggle for most of the marketing year.
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