March 21, 2019

April 2018 USDA Supply & Demand Report


US Ending Stocks (17/18 in million bushels)
USDA Mar 18 Avg Estimate USDA Mar 18
Corn 2,127 2,189 2182
Soybeans 555 574 550
Wheat 1,034 1,036 1064

Each month USDA updates various estimates of supply and demand and revises its moving target for where stocks will end at the end of the marketing year, August 31 for corn and soybeans and May 31 for wheat. The April report typically holds only minor changes to the US balance sheet and moderate changes to the world numbers due to South American production adjustments. Today’s report covered only old crop adjustments. The first new crop balance sheets will start on this report on May 10.

Corn: USDA raised its ending stock forecast from 2.127 billion bushels to now 2.182. Analysts had expected 2.189. Higher old crop stocks were expected after the March 29 Grain Stocks report found larger than expected supplies of last fall’s crop still around as of March 1. USDA cut the feed/residual use category by 50 million bushels on this report. The only other change was a minor 5 million bushel cut to the small other industrial category.

World Numbers: World stocks were lowered from 199.2 million tonnes last month to 197.8. USDA cut Argentina from 36 to now 33 mt. Brazil’s crop was lowered from 94.5 to now 92 mt.

Price Expectations: USDA’s corn price forecast left unchanged from last month at $3.35. This is a cash corn estimate for Central Illinois that is weighted according to marketing patterns. Current bids in that location yesterday were at $3.58. The 14.8% stocks to use implies nearby futures of $3.70. However, don’t forget we are on the cusp of the new crop season. Futures are now going to start blending the old and new crop numbers together for price determination. New crop numbers will be in the 11% to 13% range which implies $4.20 – $4.80.

Soybeans: Ending stocks were lowered from 555 million bushels last month to 550.  Analysts were expecting an increase up to 574 on this report due to the March 29 Grain Stocks. USDA chose to keep that usage category unchanged on this report due to their sharp revision for Argentina’s crop. A 10 million increase was noted for domestic crush and minor declines were recognized for seed and residual.

World Numbers: New crop stocks have been lowered from 94.4 to 90.8 million tonnes. Argentina was lowered from 47 million tonnes to 40 for production. USDA is now in line with the general private trade. It was just two months ago they were at 54. Brazil’s crop was raised from 113 to 115. Much of the private trade is above that number.

Price Expectations: No changes were made to USDA’s Central Illinois price projection of $9.30 per bushel. This is an estimate of the weighted average according to seasonal marketing patterns from September 1 – August 31. Bids yesterday for that location were at $10.06. USDA’s stocks to use estimate, the measure of tightness that determines price, is now at 13.2%. This implies prices at $9.25. However, current prices are not determined just by the old crop situation. New crop estimates range from 8% to 11% which implies $9.80 - $10.80 in pricing.

Wheat: Ending stocks were raised from 1.034 to 1.064 billion bushels. The trade expectation was 1.036. USDA lowered the feed/residual by 30 million. We would argue they need to lower exports next month. We are behind on the needed pace and the marketing year ends on May 31.

World Numbers: World stocks were raised from 268.9 million tonnes to 271.2. No production changes were noted to competitors. Most of this increase came from a higher 2017/18 beginning stock revision.

Price Expectations: USDA’s whole marketing year price expectation was left unchanged at $4.65. This is an average for the whole June 1, 2017 to May 31, 2018 old crop marketing year that is coming to a close.

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