Market Analysis

Traditionally, the June 10 US balance sheet changes are modest after the USDA issues its initial US & World new crop supply/demand tables in May. Adding to the World Board’s stay the course approach are the upcoming June 30 acreage & third-quarter grain stock reports. These two reports are highly important to the size of 2021 crops and help determine corn & wheat’s past quarter’s feed demand.

Given these past tendencies, the upcoming US corn balance sheet will likely follow this pattern. Despite China’s recent new-crop corn purchases & April’s jump in US feedlot cattle placements, the USDA probably won’t make any changes in these demands as they wait to see corn’s June stocks to determine this spring’s feed demand. Corn’s ethanol utilization through April & the expansion of automobile travel as US vaccinations move to 70% suggests biofuel output could return to 2019 levels. This suggests the USDA will up this usage by 50 million bu. This could slip corn’s old -crop stocks to 1.207 billion bu which we and the trade are now expecting. A similar 50 million decline 2021/22’s ending stocks is also anticipated (CORN).

US old-crop soybean ending stocks are expected to stay at 120 million. However, US crush demand has slipped below its seasonal pace. This could prompt a 10 million drop in this demand. But, the USDA could up exports by similar amount given US sales are only 19 million below the USDA forecast with 3 months left in this crop year (SOYB).

Wheat’s US old-crop balance sheet could see a slight increase in its export demand after a recent surge in shipments. Reports of strong feedlot wheat usage have surfaced, but this might not impact the 2020/21 balance sheet until June 30 quarterly stocks are known. S Plains rains will likely up hard red wheat’s contribution to the US winter wheat output by 39 million to 770 million. Soft red’s crop maybe up 2 million to 334 million while heat & dryness could dip the PNW output to 211 million (-9 million). Overall, a 1.315 billion bu June WW crop is expected, up 32 million and a total US 2021 output of 1.904 billion bu (WEAT).

What’s Ahead:

The impact of weather on S America’s crops & building Central US drought concerns for the 2021 corn & soybean outputs have rebounded prices. The trade’s Brazilian corn ideas range from 92-97 mmt vs USDA’s 102 mmt last month but further July cuts are possible.

Its early for a lasting weather impact on US crops but uncertainty is high. Hold old-crop corn & bean sales at 90-95% & new-crop at 20-25%.