USDA Surprises With Yield Drop
Jun 12, 2019
Good Morning from Allendale, Inc. with the early morning commentary for June 12, 2019.
Grain markets are lower with corn down 4, soybeans soybeans down 5, and wheat down 2 after USDA surprised with a lower than expected corn yield number. Acreage will remain a question as millions of acres remain unplanted, but traders will have to wait until the end of the month's USDA Planted Acreage report.
A few clues about this year's acreage may be found in a comparison to 1995. Allendale's Rich Nelson explored this possibility in a free webinar, here. Take a look.
USDA's Supply and Demand numbers reported 2019/20 corn ending stocks at 1.675 billion bushel, wheat 1.072, and soybeans 1.045. They wheat and corn numbers were lower than analyst expectations.
The big surprise on the report was new crop corn yield being lowered by 10 bushels per acre to 166.0, a 5.7% decline in yield from May, and the largest May to June decline in history. On top of that, acreage was lowered by 3.0 million bringing total corn production to the lowest number in four years.
CONAB estimates Brazil's 2018/19 corn crop at 97.010 million tonnes, an increase from last month's estimate of 95.254, and well above last year's 80.709. They see the soybean crop at 114.843, also an increase from last month's 114.313, but below last year's 119.282.
SovEcon has lowered their estimate of the 2019 Russian wheat crop from 82.6 million tonnes, down to 82.2 million as dryness spreads through some of the country's wheat regions.
ABARES lowered it's estimate of Australia's wheat production from 23.9 million tonnes to 21.2 million citing an ongoing drought for decrease. If realized, this would be the third year in a row of lower than average production for the country.
Managed money funds were estimated buyers of 36,500 corn contracts, 2,500 soybeans, 11,000 wheat, and 3,500 soymeal in yesterday's trade. They were sellers of 3,500 soyoil.
CPI and Core CPI are due this morning at 7:30 AM CDT. EIA Crude Oil Inventories and well as Ethanol Production will be out at 9:30, and Treasury Budget will be released at 1:00.
In the back of today's monthly supply/demand report USDA cut 2019 beef production by a moderate 65 million lbs. Now at 27.204 billion, this is 1.2% over last year. For next year, their newly lowered production estimates come to 0.8% over last year.
A minor 35 million lb. decline was noted for USDA's 2019 pork production estimate on today's supply/demand report. At 27.288 billion, they are 3.7% over 2018. They are calling for another 3.4% in production for next year. With the growing production this year and next the market is clearly focused on demand. On a positive note they raised the 2019 export estimate this month by 200 million lbs. At 6.466 billion they now have exports 10.2% over last year. This is likely still a bit too low. The weekly FAS numbers each Thursday have year to date export sales at 27.5%.
Dressed beef values were mixed with choice up 0.73 and select down .54. The CME feeder index is 132.91. Pork cut-out values were down. 30.