July 17, 2018

June 2018 USDA Stocks & Acreage Reports

June 29th, 2018

Summary:

USDA Acreage Estimates
Average Estimate USDA June 2018
Corn 88.562 89.100
Soybeans 89.691  89.600
Wheat 47.124 47.800
Grain Stocks
Corn 5.268 5.306
Soybeans 1.225 1.222
Wheat 1.091 1.100

Commentary:

June 2018 Acreage and Grain Stocks

 Two reports were issued by USDA’s National Agricultural Statistics Service today. Grain Stocks is the quarterly count of last fall’s harvest that is remaining on June 1. It represents stocks after 3 of the 4 quarters of annual usage. Acreage is an updated USDA survey of producers conducted around June 1. This year’s survey held results from approximately 70,500 producers. Today’s reports do not include the normal monthly supply/demand report numbers. There were no production estimates, demand estimates, or ending stocks. The only thing we received today was old crop stocks still around as of June 1 and USDA’s planted acreage estimate. USDA will later incorporate these numbers into the old and new crop balance sheets on the July 12 supply/demand report.

 Corn:

June 1 Grain Stocks: USDA counted 5.306 billion bushels of old crop still around after three quarters of usage. This was just over the 5.268 billion trade estimate (ALDL 5.320). This report fills in the blanks for the unknown feed/residual demand seen over the March – May quarter. USDA’s new numbers imply feed/residual this past quarter at 1.005 billion bushels. That would be 2.4% over last year. Feed/residual in the first half of the year was 1.3% lower year on year. As USDA expects a slight increase in this demand category this year, today’s report confirms their view. Feed/residual has been a disappointment for much of the year. Despite expansion in all livestock species this year, higher levels of competing feeds have limited the increase in corn feed use. We don’t see USDA adjusting its old crop balance sheet in July based on this report.

 2018 Acreage: USDA’s initial guess for corn acres back in March was considered a little too low by the trade. Today, they added 1.1 million acres to the March estimate. It is now at 89.128. That was over the trade guess of 88.562 (ALDL 88.698). This is still under last year’s 90.167.

Traders will note that the combined corn, soybean, and wheat acreage total comes to 226.506 million, 185,000 over 2017. In the trade’s mind, USDA may have been too low in March. That has been corrected. Today’s higher acreage does add a little to the 2018 production total. With our estimate of harvested acreage, and an above trend yield of 179.5, it would imply 14.693 billion bushels. That would be an increase of 93 million just from acreage. With a normal 30% - 70% offset, as demand flows with demand changes, ending stocks would increase by 40 million bushels or so. Assuming trend yield, our balance sheet shows 1.771 billion in stocks ($4.70 December corn). Assuming a 179.5 above trend yield, the balance sheet shows 1.990 billion ($4.15 for December corn). USDA’s June estimate of old crop stocks was 2.102.

Soybeans:

June 1 Grain Stocks: USDA found 1.222 billion in old crop soybeans still around as of June 1. That was on the 1.225 trade guess (ALDL 1.257). We don’t see USDA making any real changes to the old crop balance sheet based on this number.

2018 Acreage: The acreage revision from USDA showed 89.557 million. That was 575,000 over their March estimate. The trade guess was 89.691 (ALDL 89.454). Last year was seen at 90.142. This new number did add to the new crop balance sheet but not by much. With Allendale’s harvested estimate, and a yield above trend at 51.2 bpa, production comes to 4.546 billion. That is a minor increase of 29 million. At this time, the supply portion of the balance sheet is of little interest to the market. The entire focus is on new crop exports and the trade situation.

Wheat:

June 1 Grain Stocks: June 1 numbers for corn and soybeans represent what is left over after 3 quarters of usage. With wheat having a June 1 to May 31 marketing year, this represents the end of the completed old crop marketing year. USDA counted 20 million more bushels than their previous June 12 estimate. This therefore carries 20 million more bushels as beginning stocks in to the new crop balance sheet.

 2018 Acreage: A moderate increase in total wheat acres was noted. At 47.821 million, this would be an increase of 482,000 over the March estimate. Compared with last year, it was up 1.8 million. Winter wheat planting was only changed minimally, now at 47.732. The trade was a bit surprised by the “other spring” category. Spring wheat planting was found at 13.202 million. This is 2.2 million over last year. That’s a big increase for such a small acreage category. Using Allendale’s acreage and yield estimates, we see production at 1.846 billion. That is a 19 million increase due to acreage. With the 20 million in-flow coming from beginning stocks, total supply is up 39 million today. That is slightly negative but won’t be market moving in the current environment

 

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