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As I have said every year "Think what you want but always have a hedge on". Bull or bear, we use the same strategies, but each self-directed person reflects what they think in the strike prices they select and use. No herd following here. It is the opposite, when everyone is buying and the price is near significant resistance, we are improving our hedge by capturing more income when cheap to do so, and on price breaks when everyone is selling and the market is near contract lows, we are improving our hedges buying back our upside when cheap to do so.
Hedge means to take risk off the table, not add to it. How is it possible for hedge service to recommend buying back your corn when above $4.00, please tell me how that is a hedge? We were hedging and improving our hedges then.
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WHEAT: The 2018/19 U.S. wheat crop is projected at 1,821 million bushels, up 5 percent from the prior year. The year-over-year increase is due to greater harvested area and slightly higher yield. Reduced beginning stocks and imports bring total supplies down 49 million bushels from the previous year. The all wheat yield is projected at 46.8 bushels per acre, up slightly from 2017/18. Winter wheat yields are below average in the drought affected states of Kansas, Oklahoma, and Texas. Combined spring wheat and Durum production for 2018/19 is projected to increase 34 percent from the previous years low, which is due to both increased area and yield. Total 2018/19 use is projected up 3 percent on higher food, feed and residual, and exports. Food use is projected at a record 965 million bushels, up 2.0 million bushels from the previous years revised estimate. U.S. feed and residual use is projected at 120 million bushels, up 50 million bushels from last years low level but still below the 5-year-average.
Exports are projected at 925 million bushels, up 15 million bushels from the revised 2017/18 total. Ending stocks for 2018/19 are projected down 115 million bushels to 955 million, which if realized would be a 4-year-low. The season-average farm price is projected at a range of $4.50 to $5.50 per bushel. The midpoint of this range is up $0.30 per bushel from the previous year and the highest since 2014/15. Global wheat supplies for 2018/19 are projected to increase fractionally as higher beginning stocks are partially offset by a production decline following last years record. Global wheat production is projected at 747.8 million tons, down 10.6 million from the previous years record. Most of the year-over-year production decline stems from a 13.0-million-ton reduction for Russia. Global wheat consumption is projected at a record 753.9 million tons, up 10.1 million from 2017/18. Global imports are expected to increase 3.5 million tons in 2018/19 for the sixth consecutive record. With total use rising faster than supplies, global ending stocks are projected to decline 6.1 million tons to 264.3 million.
COARSE GRAINS: The U.S. feed-grain outlook for 2018/19 is for lower production, domestic use, exports and ending stocks. The corn crop is projected at 14.0 billion bushels, down from last year with a lower forecast area and yield. The yield projection of 174.0 bushels per acre is based on a weather-adjusted trend assuming normal planting progress and summer growing season weather, estimated using the 1988-2017 time period. With beginning stocks down from a year ago, total corn supplies at 16.3 billion bushels, if realized would be down 675 million from the prior year. Total U.S. corn use in 2018/19 is forecast to decline modestly from a year ago on reductions in domestic use and exports. Food, seed, and industrial (FSI) use is projected to rise 75 million bushels to 7.1 billion, driven by an expected increase in the amount of corn used to produce ethanol for fuel and growth in nonethanol FSI.
Corn used to produce ethanol is up 50 million bushels mostly reflecting expectations of gasoline consumption growth. Sorghum FSI is up 55 million bushels on an expected increase in the amount of sorghum used to produce ethanol. Feed and residual use for corn is projected lower as a smaller crop, increased use of ethanol by-products, and higher expected prices more than offset growth in grain consuming animal units.
U.S. corn exports are forecast to decline 125 million bushels in 2018/19. Reduced exports out of Argentina and Brazil during 2017/18 (local marketing years beginning March 2018) are expected to boost U.S. exports during the first half of 2018/19. However, a nearly 265-million-bushel increase in the combined corn exports for Ukraine and Russia in 2018/19 will likely increase competition for the United States, reducing the forecast U.S. share of global corn trade from a year ago. With total U.S. corn supply falling faster than use, 2018/19 U.S. ending stocks are down 500 million bushels from last year to 1.7 billion. The season-average farm price is projected at $3.30 to $4.30 per bushel, up 40 cents at the midpoint from 2017/18. The global coarse grain outlook for 2018/19 is for higher production, increased use and lower ending stocks.
Corn production is forecast up from a year ago, with the largest increases for China, Brazil, Argentina, Ukraine, and Russia. Global corn use is expected to grow 2 percent, while global corn imports are projected to increase 5 percent. Notable forecast increases in corn imports include Vietnam, China, Bangladesh, Iran, Malaysia, Mexico, and Saudi Arabia. Global corn ending stocks are down 35.8 million tons from a year ago, and if realized would be the lowest since 2012/13. For China, total corn supply is down 11 million tons in 2018/19, as larger production and imports are more than offset by lower beginning stocks. Corn area is projected higher based on current cash and futures prices that are above a year ago. Total coarse grain imports are forecast at 16.1 million tons, down 1.1 million from 2017/18, but still the fourth largest in the world behind Mexico, Japan, and the EU. World market prices for coarse grains are expected to remain below Chinas domestic corn prices, particularly in the feed deficit south, thus driving expected demand for imported feedstuffs in 2018/19.
RICE: The 2018/19 outlook for U.S. rice is for higher supplies, exports, domestic use, and ending stocks. U.S. all rice production is projected at 203.2 million cwt, up 14 percent from the previous year, primarily on a larger expected long-grain crop. Total rice supplies are projected to increase 5 percent to 263.5 million cwt, mainly on long-grain. U.S. 2018/19 total use is projected at 223.0 million cwt, up 3 percent from 2017/18 with both domestic and residual use and exports higher. Long-grain exports are projected up 4 percent to 72.0 million cwt on improved price competitiveness with increased exportable supplies. Medium- and short-grain exports are projected 7 percent higher to 29.0 million cwt on expanding exports to the Mediterranean region with reduced Egyptian competition. All rice ending stocks are projected at 40.5 million cwt, up 18 percent from 2017/18 with most of the increase for long-grain. The 2018/19 all rice season-average farm price is projected at $11.90 to $12.90 per cwt, down $0.20 from last years revised midpoint. The 2018/19 global rice outlook is for record-high production, consumption, and trade. World rice production is projected at 489.5 million tons, up slightly from 2017/18 primarily on larger crops for Bangladesh, Thailand, and the United States more than offsetting reductions for China and India. Global rice consumption is projected at 488.6 million tons, up 2 percent from 2017/18 and led by China. Global exports are projected at 49.3 million tons, up modestly from 2017/18 but continuing the multi-year trend of expanding exports. World 2018/19 ending stocks are projected at 144.7 million tons, up marginally from 2017/18. China is projected to hold the majority of stocks at 67 percent of the total.
OILSEEDS: The 2018/19 outlook for U.S. soybeans is for higher supplies, crush, exports, and lower ending stocks compared to 2017/18. The soybean crop is projected at 4,280 million bushels, down 112 million from last years record crop on lower harvested area and trend yields. With higher beginning stocks, soybean supplies are projected at 4,835 million bushels, up 2 percent from 2017/18. Total U.S. oilseed production for 2018/19 is forecast at 127.3 million tons, down 3.7 million from 2017/18 mainly on lower soybean production. Production forecasts are also lower for peanuts, cottonseed, and sunflowerseed, but higher for canola. The U.S. soybean crush for 2018/19 is projected at 1,995 million bushels, up slightly from the revised 2017/18 forecast with higher soybean meal disappearance offset by lower projected soybean meal exports. Soybean meal exports are forecast lower as Argentinas export share recovers from the effects
of drought in 2017/18. U.S. soybean exports are forecast at 2,290 million bushels for 2018/19, up 225 million from 2017/18. With forecast global soybean import growth of 5 percent, the U.S. soybean export share is projected at 39 percent, up from 2017/18 but otherwise the lowest since 2012/13. Reduced stocks in South America this fall will limit export competition during the first half of the 2018/19 marketing year. U.S. ending stocks for 2018/19 are projected at 415 million bushels, down 115 million from the revised 2017/18 forecast. The 2018/19 U.S. season-average soybean price range is forecast at $8.75 to $11.25 per bushel compared with $9.35 per bushel in 2017/18. Soybean meal prices are forecast at $330 to $370 per short ton, compared with $360 per ton for 2017/18. Soybean oil prices are forecast at 29.5 to 33.5 cents per pound compared with 30.5 cents for 2017/18.
The 2018/19 global oilseed supply and demand forecasts include higher production, crush, exports, and lower ending stocks compared to 2017/18. Global oilseed production is projected up 20.9 million tons to 593.7 million, with higher soybean, sunflower, rapeseed, palm kernel, and copra partly offset by lower peanuts and cottonseed. Global soybean production is projected up 17.8 million tons to 354.5 million mostly due to recovery from drought in Argentina. Soybean production for Argentina is projected up 17.0 million tons to 56.0 million. Production for Brazil is flat with the revised 2017/18 crop at 117 million tons as a 4 percent increase in harvested area is offset with a return to trend yields.
The 2018/19 soybean crop for China is down 0.1 million tons to 14.1 million with a lower yield and flat harvested area as producers expand area in more profitable crops. Global protein meal consumption is projected to increase 4 percent in 2018/19, with China accounting for the largest share of the increase despite below-average growth in protein meal consumption. As a result of higher protein meal demand, global crush is projected up 19.9 million tons to 509.4 million and protein meal exports are up 1.7 million tons to 90.4 million. Global vegetable oil consumption is projected at 198.6 million tons, up 7.1 million led by increases for China, India, and Indonesia. Soybean oil production gains are forecast for China and palm oil gains for Indonesia and Malaysia. Global vegetable oil ending stocks are projected up 2.0 million tons and nearing levels seen prior to the impact of El Nio on vegetable oil production in 2015/16.
Global oilseed exports are up 11.2 million tons to 186.4 million in 2018/19, with soybeans accounting for most of the increase. Soybean exports for Argentina and the United States are expected to regain global market share after declining in 2017/18. China soybean imports are forecast to reach a record 103 million tons, up 6 million from 2017/18. With higher soybean crush and exports, global soybean ending stocks are down 5.5 million tons to 86.7 million.
SUGAR: U.S. beet sugar production for the 2018/19 August/July crop year is forecast at 4.980 million short tons, raw value (STRV) based on prospective plantings from NASS, recent year trends in yields, and the pace of plantings through early May. Adjustments for production in August/September result in fiscal year (FY) 2017/18 production at 5.221 million STRV and FY 2018/19 production at 5.036 million. U.S. cane sugar production for 2018/19 is projected at 3.945 million STRV based on yield trends and expected area harvested. Imports for 2018/19 are projected at 3.365 million STRV and are comprised of TRQ imports of 1.355 million; re-export imports of 350,000; imports from Mexico of 1.645 million; and high-tier tariff imports of 15,000. Projected 2018/19 TRQ imports of specialty sugar include only the WTO minimum quantity as additional quantities have not been announced by the Secretary of Agriculture.
Exports for 2018/19 are projected at 50,000 STRV and deliveries to domestic users are projected at 12.655 million. Ending stocks are residually projected at 1.542 million STRV, implying a stocks-to-use ratio of 12.1 percent. Mexico sugar production for 2017/18 is estimated at 5.970 million metric tons (MT) based on lower estimated area harvested. Deliveries for human consumption for 2017/18 are reduced by 159,035 MT based on the slow pace in the first half of the year that is to be only partially offset by an expected increase in pace during the second half. Ending stocks are estimated at 1.243 million for domestic consumption in 2018/19 before the start of the campaign and for refined sugar that can be exported to the United States in 2018/19 at a higher return than expected in the world market. Exports for 2017/18 to non-U.S. destinations are residually reduced by 155,388 MT.
Mexico sugar production for 2018/19 is projected at 6.025 million MT assuming area harvested at 780,000 hectares, cane yield of 68.8 MT per hectare, and industrial recovery of 11.23 percent. Relatively higher per capita 2018/19 sweetener consumption, at 48.5 kilograms, reflects lower domestic sugar prices than witnessed in 2017/08. With high fructose corn syrup consumption at the same level as in 2017/18, sugar deliveries for human consumption are projected at 4.562 million MT. Exports include shipments to the U.S. market-projected at the expected level of U.S. Needs as defined in the amended Suspension Agreements-plus 10,000 MT to non-U.S. destinations. Ending stocks are projected residually at 983,073 MT.
LIVESTOCK, POULTRY, AND DAIRY: Total U.S. red meat and poultry production for 2019 is forecast above 2018. Beef production is forecast above 2018 on higher slaughter and heavier carcass weights. Pork production in 2019 is forecast to increase as expected growth in farrowings and pigs per litter will support larger pig crops. Hog weights are also forecast higher in 2019. Broiler production is expected to surpass 2018 as the industry responds to favorable broiler prices. Turkey production is forecast to slowly increase as prices move above year-earlier levels beginning in late 2018. Egg production is forecast higher as the sector continues to respond to favorable prices during much of 2018.
The total red meat and poultry production forecast for 2018 is lowered from last month. Cattle slaughter in the second quarter has been slower than anticipated, and the pace of marketings in the second half of the year is slowed. However, carcass weights are increased for second half of the year, partly offsetting the reduction in the slaughter forecast. The second-quarter pork production forecast is reduced on the current pace of slaughter, but the forecast for the second half of the year is unchanged. Broiler production is adjusted for March slaughter data, the forecast is unchanged. Turkey production forecasts are reduced from the previous month on slowrecovery in demand and lower first-quarter-production. Egg production for 2018 is reduced slightly on first-quarter-production data; no change is made to the outlying quarters. For 2019, larger beef supplies and firm global demand are expected to support stronger U.S. beef exports relative to 2018. Pork exports are forecast to increase next year as expanding supplies and competitive prices support demand for U.S. pork. Beef and pork imports are forecast higher in 2019. Broiler exports are forecast higher on expected continued gains in foreign demand. Changes to the 2018 red meat and poultry exports reflect March trade data, with no change to the outlying forecast.
No change is made to the forecasts for beef imports for the outlying quarters, but pork imports are raised from the previous month on the current pace of trade. Egg supply and use tables are revised to reflect changes in egg trade and stock numbers. Information on the changes and historical supply and use data can be found at:https://www.usda.gov/oce/commodity/wasde/historical.htm For 2019, fed cattle and hog prices are forecast above 2018 as relatively strong demand absorbs expected increases in supplies. The 2019 broiler price is forecast lower than the previous year on increasing supplies and competition from expanding red meat supplies. Turkey prices are forecast to increase with slow growth in supply and strengthening demand. Egg prices are reduced in 2019 with slow growth in strengthening the spikes in early 2018 prices are not expected to be repeated in 2019.
However, demand is expected to remain robust, in the face of increased production. The 2018 cattle price is little changed from last month, but the hog price is reduced. Broiler prices are raised on demand strength. The 2018 egg price forecast is reduced on current second-quarter prices, no change is made to outlying quarters. Turkey prices are lowered as the market continues to balance supplies with weaker-than-expected demand. Milk production for 2019 is forecast higher on gradual recovery in milk per cow. Cow numbers are expected to remain near 2018 levels. Commercial exports on both a fat and skim-solids basis are forecast higher than the previous year on robust global demand. Fat and skim-solids basis imports are unchanged from 2018. With stronger expected domestic and export demand, cheese, nonfat dry milk (NDM), and whey prices are forecast higher for 2019. Butter prices are forecast slightly lower. The Class III price is forecast higher on stronger
cheese and whey prices. The Class IV price is forecast higher also as a stronger expected NDM price more than offsets the lower butter price. The 2019 all milk price is forecast at $16.25 to $17.25 per cwt, slightly higher than 2018. The 2018 milk production forecast is reduced from the previous month on lowered milk cow numbers and slow growth in milk per cow. Exports are raised from the previous month on both a fat and skim-solids basis on strong global demand. Imports are lowered on a fat and skim-solids basis. Cheese, butter, NDM and whey prices are raised from the previous month resulting in both Class III and Class IV prices being raised. The 2018 all milk price is increased to $16.20 to $16.70 per cwt.
COTTON: The U.S. cotton projections for 2018/19 include smaller production, unchanged exports, and slightly higher ending stocks compared with 2017/18. Production is forecast at 19.5 million bales, based on 13.5 million planted acres as indicated in the March Prospective Plantings report. While planted area is expected higher in 2018/19, reduced precipitation to date in the Southwest suggests abandonment will likely rise from 2017/18s below-average level. With higher abandonment and the U.S. yield falling from the previous years record-high, production is projected 7 percent lower than in 2017/18. Domestic mill use in 2018/19 is projected slightly higher at 3.4 million bales, while exports are expected to remain unchanged at 15.5 million. At 5.2 million bales, 2018/19 ending stocks are projected 500,000 bales higher than the year before, and equivalent to 28 percent of total use. The range for the marketing year average price received by producers is 55.0 to 75.0 cents per pound. For 2017/18, U.S. cotton production is reduced marginally from last month. The export forecast is increased 500,000 bales to 15.5 million bales as the expected U.S. share of world trade rises, with ending stocks lowered accordingly.
The world 2018/19 cotton projections show a decline in stocks of 4.5 million bales, as consumption once again exceeds production. Global production is expected to fall marginally, as area declines 1 percent. Expected production in Indiathe worlds largest produceris unchanged from 2017/18. Lower production in the United States, Australia, and China is nearly offset by higher expected crops in Pakistan, Turkey, and Brazil. Global consumption is projected to rise 3.9 percent to a new record high, as a growing world economy drives mill use higher around the world. Projected world trade is raised from 2017/18, as import-oriented consumers such as Vietnam and Bangladesh are accounting for a larger share of world consumption, and Chinas imports rise. Ending stocks are projected down 4.5 million bales year to year, at 83.8 million bales, 67 percent of world consumption. An even larger decline is expected in Chinas stocks, and stocks outside of China are expected to rise for the third consecutive year.
For 2017/18, both world production and consumption is increased about 300,000 bales from last month, leaving ending stocks virtually unchanged. Production is higher in Uzbekistan and Australia and consumption ishigher in Turkey and Uzbekistan. Australias expected exports are 300,000 bales lower, while higher exports are now expected for the United States, Chad, Benin, and Uzbekistan.
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