US/World S&Ds & 2024 US W, Wheat Production

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The USDA's US June Crop and US/World supply/Demand revisions didn't provide any big surprises in corn and soybeans as expected. The USDA's modest US wheat crop forecast was a positive for price, but their limited reduction in their world 2024/25 ending stocks kept this pit sluggish after today's overnight decline. The markets seem to be waiting to see the possible impact that the upcoming late June US heat wave might have on the US 2024/25 crop prospects.

Instead of 30-35 million bu rise in the US wheat crop this month, the USDA's W. winter forecast rose only 17 million to 1.295 billion. This month's HR output was upped by 21 mil to 726 while SR's size was sliced 2 million and white wheat's crop was 3 million lower.KS and OK were increased by 2 & 1 bu while IL & OH were down 1 bu and WS was sliced 1 bu. BTW, no change in the US wheat or other spring crop plantings and harvested acres were made today ahead of the June 28 US acreage report. Despite this month's higher US crop size, the USDA upped its US 24/25 export outlook by 25 million to 800 million prompting an 8 million bu lower US stock outlook of 758 million. This year'sstrong early US export demand and the Black Sea crop problems seem to be reasons behind the higher US export demand.

The World Board slashed its Russian and Ukrainian wheat estimates by 5 and 1.5 mmt to 83 and 19.5 mmt because of this past spring's freezes & drought conditions. They also sliced 1.5 mmt from the EU's outlook because of too much rainfall in this western region of Europe. Overall, this dropped the world wheat output by 8 mmt. However, the World Board raised its beginning stocks by 1.8 mmt & lowered its world domestic demand forecast by 4.3 mmt. These adjustments curtailed the USDA's world stocks decline to only 1.3 mmt and a June level of 252.3 mmtThis stock projection seems quite conservative given the sharp drop in the Black Sea crops and the relatively low price levels for this food grain at this time around the world.

As previously mentioned, the US corn and soybean balance sheets had no or limited adjustments.In corn, both its old and new crop demand and ending stocks were unchanged. The US weekly corn ethanol demand update today was a bit disappointing with 4.6% drop last week after the US Memorial Day holiday. However, a strong US summer driving season is expected this year.

In soybeans, the World Board sliced 10 million from their exports because of April's lower-than-expected US crush. This 10 million rise in old-crop ending stocks to 350 million bu was carried through to the USDA's 2024/25 ending stocks of 455 million when no new-crop demand changes were made today.

Given the flooding issues in Brazil's RGDS and Argentina's leafhopper problem during May, the World Board's lack of change in both countries crop output except for 1 mmt decline Brazil's bean crop to 153 mmt was quite surprising. Given the reduced sales & tight basis levels in both countries, this conservative approach seems a bit out of place given Brazil's LuLu's tax increase idea & Argentina's currency issues. These SA issues & the world weather pattern switching to La Nina this summer could make corn & soybeans prices volatile.

Overall, our US CBOT prices appear reluctant to press values ahead of next week's excessive heat wave that will be entering the Central US. Because of this situation, we will watching corn and soybeans overhead July resistance levels of $4.59-63 and $11.95-12.10 for possible price levels to half the remaining 10-15% of old-crop corn and soybeans. Looking to hold your new crop sales at 15-20% from the $4.95-$5.00 & $12.25-30 levels because of the possible extension of this upcoming heat and dryness to mid-summer. Holding the remaining 10% of old-crop wheat supplies and keeping our new crop sales 25-30%. Given the uncertainty of the 2024 US wheat crop and this year's Black Sea output already being slammed by weather, the size of world's output remains unknown.

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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 any futures brokerage firm or its ...

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