Written Commentary
CORN
Today’s USDA data was supportive for feed grains with June 1st stocks below expectations for both corn and wheat while wheat acres were well below expectations. Today’s reports were neutral for the soybean complex with both stocks and acres close to expectations. Bean oil was being pressured by speculative selling, heavy deliveries, and record canola acres in Canada. Principal crop acres in the US are down 1.9 mil. from YA to 309.6 mil. a 7-year low as US farmers face negative production margins across a host of commodities. Favorable US weather likely dampened the bullish impact for feed grains.
Corn: Prices closed $.05-$.07 higher after surging to double digit gains shortly after the USDA data was released. June 1st stocks at 5.295 bil. bu. would imply March through May usage at a record 3.738 bil. bu. up 6.5% from YA. It would not surprise me if we ultimately see last year’s production lowered a touch. The tighter stocks should work to raise the price floor however with acres still above 95 mil. will likely limit the upside unless US weather becomes more threatening or demand from China emerges.
- June 1st stocks 5.295 bil. bu. was an 8-year high, however was 115 mil. below expectations
- Stocks slightly below the range of estimates
- Planted acres little changed at 95.343 mil., 350k above expectations
- Acres lowered 150k in TX, down 100k in IA, MO, OH, and TN
- Acres increased 200k in IL and NE, up 150k in ND, and 100k in WI
- Sept corn near $4.17 is fairly valued historically with June 1st stocks / Sept through May usage at 39.8%.
SOYBEANS
Mixed across the complex with beans prices up $.05-$.08, meal was steady to $1 higher while oil prices plunged 130-230 points. Crush margins were pounded, down another $.34 to $2.87 ½ bu. a 3-month low, while bean oil PV fell to a 2-month low at 52.3%. Also weighing on bean oil was EIA data that showed usage to produce green diesel fell 4.6% in April to 1.224 bil. lbs. falling well behind the pace to reach the USDA forecast of 14.550 bil. lbs. for the 25/26 MY. To reach this forecast usage May through Sept will need to average 1.442 bil. lbs. US weather and Chinese demand will likely dictate whether Nov-26 can break through resistance at $11.60 or violate support near $11.20.
- June 1st stocks 1.061 bil. bu. were a 6-year high and 15 mil. above expectations however within range of expectations
- Sept-26 futures near $11.30 also appears reasonable with stocks / Sept thru May usage at 30%, also a 6-year high
- Planted acres up 665k to 85.365 mil. however, were 35 mil. below expectations
- Acres lowered 300k in MS and WI, down 200k in MN, and down 100k in NE
- Acres increased 400k in KS, 300k in OH, 200k in IL and 100k in IN, IA, MO, and ND
WHEAT
Prices ranged from $.06-$.11 higher led by KC and CGO futures. Strength was driven by a huge downward revision to planted acres.
- June 1st stocks 920 mil. bu. were a 6-year high however 15 mil. below expectations
- All wheat acres at 42.74 mil. were down 1.035 mil. vs, expectations of rising 85k acres
- Winter wheat acres were slashed another 890k to 31.52 mil., harvested acres were cut 805k to 21.21 mil. Winter acres are a 6-year low
- Using today’s updated acreage data and the state-by-state yield forecasts from earlier this month imply winter production dropping 28 mil. bu. to 1.002 bil.
- Most of the acreage reduction came from HRW producing areas with OK down 300k acres, TX down 200k, KS down 100k and MT down 50k
- Spring wheat acres were cut 25k vs. expectations for an 80k increase. At 9.39 mil. acres they are the lowest in 56 years.
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