Pre-May US/World Corn Update - Higher US & S. American Outputs Could Loosen Both Old & New Crop Stocks
Market Analysis
Corn’s focus has been split between US planting season and the ongoing US/China trade talks which could be resolved in the near future. 2019’s larger-than-expected 92.79 million planting intentions was 1.46 million higher than trade ideas weakening prices. However, below normal temperatures (snows in some areas) and above normal rainfall across much of eastern 2/3rds of US has significantly delayed this year’s US corn plantings. Through April 29, the USDA reported only 15% of US crop had been planted; 12% below the 5-year average & 2% behind last year. Some progress occurred in W IA and other scattered WCB fields last week while the ECB had very limited progress. Overall, the US corn plantings are likely 23-25% this first week in May. This would be below 2013’s 28% rate and the lowest in the USDA’s planting data back to 1975. With rain forecast for the Central US in the coming week, seedings will likely remain sharply below corn’s 5-year 62% average and 2013’s 2nd-week planting paces.
This situation suggests a significant jump in prevent plant acres vs. corn’s 1 million acres that have been left fallow each of the past 3 years. A 100-150% jump in these idled acres doesn’t seem impossible given the 3.5 million acres farmers took reduced insurance payments to not plant corn in 2013. Late plantings also reduces corn’s yield potential by 5-20% (university estimates) depending on lateness after May 10. These impacts won’t be known until the June 29 acreage report and field yield checks late this summer. However, late crops can be a smaller crop.
The USDA may leave their old-crop usage unchanged on the upcoming May 10 update after the USDA made some big adjustments in corn’s demand forecasts last month, March 29’s 200 million higher 2018/19 stocks and 2019’s higher planting of 3.66 million acres than last year suggests an initial 2019-20 corn S&D table will have 2.2 billion bu. or higher ending stocks later this week.
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What’s Ahead
President Trump announced on Twitter on the weekend that the US would advance the current 10% tariffs on $200 billion of Chinese import to 25% on Friday if no deal is consummated. This news has pres-sure prices across the board despite the concerns over of 2019’s US corn crop size from late plantings. We are looking to sell 20-25% of 2018/19 crop in $3.73-$3.80 July range on a post-report bounce.
Disclaimer: The information contained in this report reflects the opinion of the author and should not be interpreted in any way to represent the thoughts of The PRICE Futures Group, any of its ...
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