Market Analysis
The USDA's May supply/demand updates had some surprises in their new-crop corn & soybean ending stocks when the World Board issued their 1st US & World 2018/19 S&D projections. Two things that didn't change however was the USDA's Ag Forum yields & 2018's planting intentions, which are normally used in 2018/19 balance sheets.
Smaller S. American corn estimates (Brazil -5.0 mmt & Argentina -0 mmt) didn't impact the USDA's old-crop corn exports this month since Brazil's safrinha crop competes primarily in 1st half of US crop year (Sept-Jan) so the USDA raised its new-crop exports by 200 million. No 2018 domestic US demand changes were made, but the World Board sliced 25 million from its Ag Forum ethanol and 100 million from its new-crop feed demand. Given the limited chance for reduced numbers given the current US feed costs, this prompted many quizzical trade responses. Overall, corn's
1.682 billion bu. 2018/19 ending stocks were slightly higher-than-expected, but still 500 million lower than this year and the lowest carryover in 5 years. Combine this 12.5 mmt US drop with China's current aggressive stock reduction of 19 mmt prompted the USDA to cut 18/19 world stocks by 30 mmt to 159 mmt, a 6 year low in this feed grain. This makes Brazil's safrinha crop dryness highly important over the final 6-8 weeks of its growing season.
The USDA did up old-crop bean processing by 20 million bu. but left exports unchanged in their 2017/18 soybean table. Their slight S. American output rise (Brazil +2 mmt & Argentina -1 mmt) prompted current exports to be left unchanged. The big surprise was the World Board decision to keep its 2018/19 export outlook at its Ag Forum level despite the current US/China trade problems. The USDA also upped its new-crop crush following their old-crop increase. This dropped 2019 stocks by 115 million bu to 415 million. This level & USDA's strong Chinese demand outlook cut their world stocks by 5.5 mmt to 86.7 mmt for 2018/19.
