By Doug Tenney, Leist MercantileShortly before the report corn was up four cents, soybeans and wheat were both up two cents. After the report, corn was up 8 cents, soybeans were up 6 cents, with wheat up 15 cents.
This USDA report was expected to see US wheat production increase while world wheat production was expected to decline. Brazil’s corn production was also expected to decline. The report today had US wheat production at 1.827, billion bushels, increased by six million bushels. This was a small surprise but not price breaking. World wheat production was 242.37 million tons, up almost two million tons. Corn production in Brazil was 85 million tons, down 2 million tons. Russia wheat production was cut 3.5 million tons, a bullish push for wheat.
Some of the numbers today include, US old corn ending stocks 2.102 billion bushels, US old soybeans ending stocks 415 million bushels, US wheat ending stocks 1.080 billion bushels. US new corn ending stocks were 1.577 billion bushels, a decline of 105 million bushels. US new soybean ending stocks 385 million bushels, a decline of 30 million bushels.US new wheat ending stocks were 946 million bushels.
Administration discussions with North Korea have already concluded with the signing of a comprehensive document that would produce peace on the Korean peninsula. The cancellation of US military drills on the Korean peninsula that were scheduled in the days ahead provided surprising headlines this morning. Most are probably surprised to see the summit end so quickly in comparison to previous summits that produced lots of photo opportunities and rhetoric from both sides. This week’s summit has the potential to be epic while reducing tensions that have been decades in the making, and erasing tensions many thought could never be tamped down. It could easily take many months to see the full potential of this summit.
Grains have been in a huge free fall since the Memorial Day holiday last month. The sharp break two week decline for both corn and soybeans results from US/China trade issues that have not been resolved long term. US tariffs against China could take affect this Friday. Intellectual property rights continue to be a sore point that could easily take many discussions and months to resolve. In addition, fantastic crop ratings and excellent growing conditions have been a factor as well. Soybeans were 15 cents lower yesterday, marking the ninth day lower out of the last ten trading sessions. Commodity funds have sharply reduced their long soybean positions the last two weeks. They are currently long 30,000 contracts of soybeans. Three weeks ago their long position was 150,000 contracts. In that three week period November CBOT declined 83 cents from their May 29 high of $10.60 ½. Looking at corn funds are long 53,000 contracts. Mid-May there were long 200,000 contracts of corn. December CBOT corn reached $4.295 on May 24. Yesterday, December touched $3.87 3/4.
Crop ratings with the weekly crop progress report last night were 77% good and excellent for corn while soybeans were 74% good and excellent. Both were down slightly from last week, both are above the ratings at this time last year. Shell-shocked bulls point to the high crop ratings that often begin to decline in June as longer term friendly news down the road. Non-threatening US weather gives hope to bears who expect prices to decline into the fall harvest. Don’t be surprised in the weeks ahead to see some forecasts that the US corn yield could reach 180 bushels per acre, marking a record yield for the third year in a row. We are not there yet.
Numerous areas across Ohio had significant rainfalls last weekend that reached 4-7 inches. Producers are struggling to replant with corn and soybeans. They find little comfort to know replant acres in Ohio are down drastically in many areas compared to last year.