Written Commentary
by Steve Freed
SOYBEANS
US soybeans traded lower after USDA May supply and demand report. USDA estimated US 2019/20 soybean carryout is near 580 mil bu vs 480 USDA April estimate. The increase was due to a drop in exports of 100 mil bu. This would imply lower China soybean buying US old crop. USDA estimated US 2020/21 soybean carryout is 405 mil bu. Drop in carryout due to an export estimate increasing to 2,140. USDA estimated China 2019/20 soybean imports near 92.0 mmt versus 89.0 previous. Today, China estimated imports closer to 94.0. USDA also estimated China 2020/21 soybean imports near 94.0 mmt. One group estimates Brazil 2020/21 soybean exports to China near 55.0 mmt versus 66.0 this yearand US exports near 33.0 mmt vs 17.7 this year. USDA also estimated Brazil 2021 soybean crop near 131.0 mmt versus 124.0 this year. Argentina 2021 soybean crop is estimated near 53.5 mmt vs 51.0 this year. USDA estimated US 2020 farmgate prices near 8.20.
CORN
USDA left US 2019/20 corn carryout near 2,098 mil bu. Some feel final US demand number could be down 350-450 mil bu due to lower ethanol, feed and export numbers. By Monday, US corn plantings should be near 80 pct done. Quick plantings should help crops pollinate before summer heat. US Midwest 2 week weather forecast calls for normal to above temps and normal rains. USDA estimated US 2019/20 corn carryout is near 2,098 mil bu vs 2,092 USDA April estimate. USDA estimated US 2020/21 corn carryout is near 3,318 mil bu. USDA also estimated US 2020 corn crop at a record 15,995 mil bu. This should be bearish corn prices. USDA dropped ethanol use to 4.950 and 2020/21 is estimated and near 5,200. USDA raised 2020/21 feed use to 6,050 mil bu and exports to 2,150. Without a weather problem, CZ could trade below 3.00 and some fear as slow as 2.50 this fall. USDA estimated World 2020/21 corn carryout near a record 340 mmt or up 25 mmt from this year’s record. USDA also estimated Brazil 2021 corn crop near 106.0 mmt vs 101.0 this year. Argentina 2020 corn was estimated near 50.0 mmt vs 50.0 this year. Ukraine 2020 corn crop was estimated near a record 39 mmt.. USDA estimates US farmgate corn prices near 3.20 which some feel is 20-30 cents too high.
WHEAT
Wheat futures traded lower. USDA estimated US wheat carryouts higher than expected. This an improving Europe and Black Sea weather continues to offer resistance to prices. Large discount from old crop Russia export prices to new offers resistance to summer prices. USDA est US 2020 wheat acres near 44.7 vs 45.2 ly. Yield was est near 49.5 vs 51.7 ly. This suggest a crop near 1,866 vs 1,920 ly. Exports are est near 950 vs 970 which leaves a carryout near 909 vs 978 ly. World 2020 wheat crop is near 768 mmt vs 764 last year. Australia is 21 vs 15, Canada 24 vs 32, EU 143 vs 154, Russia 77 vs 73 and Ukraine 28 vds 29. Demand is est near 753 mmt v s 748 last year. Export trade is est near 188 mmt vs 183 this year. This leaves a record carryout of 310 mmt vs 295 last year. The carryout would suggest a cash wheat prices near 4.60. USDA estimated US 2020 winter wheat crop is 1,254 mil bu vs 1,304 last year, HRW 733 vs 833 and SRW 297 vs 239.
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Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.
