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MARKET COMMENTARY

USDA WASDE Recap May 2018

Thursday, May 10, 2018, 12:05 PM
Submitted by: Landus Cooperative


Good afternoon,

 

USDA released its monthly Supply and Demand estimate at 11 a.m. this morning. Included in this report was a fresh look at old crop estimates and our first look at the new crop ‘18/’19 balance sheet. Let’s tackle the old crop numbers first. The corn carryout was steady at 2.182 bln bu, with no changes made to exports or ethanol use from the April Report. While corn exports continue to lag last year’s pace, we’ve been making up ground in the last 6 weeks. Perhaps USDA wants to see more strong export sales and shipments before making any changes to the balance sheet. Soybeans saw an increase of 20 mln bu in crush and no changes anywhere else. Carryout dropped 20 mln bu to 530 mln bu. Overall, not many changes to the demand side for the remainder of the current crop year.

 

The new crop projections came within most trade estimates. Corn production reflected the 88 mln acres USDA reported in late March at 174 bu/acre yield. Exports are shown as 125 mln bu lower vs. this year, feed use is 125 mln bu lower, ethanol usage is 50 mln bu higher. Summed up, total usage is down 175 mln bu. Our bottom line Ending Stocks number is 500 mln bu lower vs. last year at 1.682 bln bu. This is would be the lowest carryout since crop year ‘13/’14. These numbers were very close with pre-report estimates – it feels like much of this was already “priced into” the market.

 

The new crop soybean projections provided the most fireworks today. At 89 mln acres, a 48.5 bu/acre yield, and a 530 mln/bu carryout, we have a total supply of 4.835 bln bu (117 mln bu higher vs. last year). Crush was marginally higher. The big surprise is the estimated export total – 2.290 bln bu (225 mln bu higher vs. this year). As trade relationships with China are rocky, it’s tough to see a 10% increase in exports next year while we are struggling to meet our export number this year. The subsequent ending stocks # is 415 mln bu, the 2nd highest in the last 5 years.

 

All-in-all, using trend line yields and acres from March 31st, the report today was generally within what was expected. Projected new crop soybean exports provided a little drama initially. At the time of this writing, corn is down 1c and beans are up 3c. We now return our attention on weather for spring work, the resulting potential acreage shifts, and the final acres numbers to be released at the end of June.

 

Have a great day!

 

 

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