Forecasts Back in Focus After USDA Report

Published on: 10:40AM Jun 13, 2016

Good Morning! Paul Georgy with the early morning commentary for June 13, 2016

Grain markets are higher as South American conditions cause supply concerns and add to the bullish sentiment. Outside markets look to see if stocks and oil can rebound from Friday's losses.

US Weather has some above normal temperatures in the forecast. As Drew Lerner of World Weather, Inc. points out, however, "It is only mid-June and there is much summer weather that still lies ahead making rainfall extremely important over the next few weeks."

USDA's Supply & Demand report was viewed mostly bullish on Friday. Old crop corn ending stocks were lowered from 1.803 billion to 1.708, higher than the trade expectation of 1.766. New crop stocks were lowered from 2.153 billion to now 2.008. The trade expectation was 2.058

Soybean ending stocks were lowered from 400 million bushels down to 370 for old crop. The trade expectation was 381. New crop stocks were revised down as well from 305 million to 260, under the 300 trade guess.

Wheat ending stocks were increased from 978 to 980 for old crop. The trade guess was 985. The final old crop stocks will be released on the June 30 quarterly Grain Stocks report. We will cover expectations for the Grain Stocks report in our next webinar June 28th at 8:00 PM. Register here, free. New crop stocks were revised higher from 1.029 billion to 1.050, right on the trade guess of 1.053.

World stocks numbers had old crop corn stocks lowered from 207.9 million tonnes to 206.5. New crop stocks were lowered slightly from 207.0 mt to 205.1.

Brazil soybean  production was lowered from 99 million tonnes to now 97. No change was made for Argentina. Old crop world soybean stocks were lowered from 74.3 million tonnes to 72.3. New crop was lowered from 68.2 to 66.3 mt. Full report coverage is available here.

Crop conditions will be out at 3:00 PM CT this afternoon.

Malaysian palm oil stocks were reported at their lowest level in over five years as May stocks fell 8.8% to 1.65 million tonnes on Friday's Malaysian Palm Oil Board report.

Ukraine exports were reported at 37.3 million tonnes of grain so far in the 2015/16 season according to the Ukrainian agriculture ministry.

India's wheat imports could climb to a ten year high, which might force the country to cut their import taxes. The rise in imports comes after back to back droughts has reduced India's wheat production.

CFTC's Commitments of Traders report showed funds bought 77,169 contracts of corn, 1,355 soybeans, 37,671 wheat, and 9,682 hogs in trades through Tuesday June 7th. They were sellers of 4,169 cattle contracts.

Funds during Friday's trade were estimated buyers of 9,000 contracts of soybeans, and 3,500 soymeal. They were estimated sellers of 9,000 corn, 7,500 wheat, and 3,500 soyoil contracts.

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Macro Markets won't have any major reports to trade today, though the economic calendar will be busy the rest of the week. Instead, today markets will focus on the FOMC meeting which begins tomorrow and will conclude Wednesday. Markets are not expecting a rate hike for this month at this time.

Cash cattle traded at $128 in Kansas on Friday.

USDA's 2016 beef production estimate was cut 135 million pounds to 24.739 billion for all beef production, 4.1% over last year. Beef exports were reduced by 15 million.

Pork production was lowered by 30 million pounds due to expectations of lower weights due to feed costs. USDA still estimates a 1.9% increase in this year's production. Next year's production was also lowered by 30 million, now 2.6% over this year.

Dressed beef values were higher with choice up .82 and select up 1.46. Pork cutout values were down 1.18.

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