By Doug Tenney, Leist Mercantile
With no surprises in the reports today, the market continues to look at trade with China as well as weather.
Amid one of the biggest days statistical days from USDA, at the end of today the close could be very little about the USDA numbers. While all eyes are on the multiple reports being published by USDA today that include June 1 acreage as well as stocks, also as of June 1, will the reports be a market mover at 12 noon? Today is not a USDA Supply and Demand Report, nor are world production and demand numbers being published today.
USDA estimated U.S. corn acres at 89.1 million acres, soybeans at 89.6 million acres, and all wheat at 47.8 million acres. U.S. corn stocks were 5.306 billion bushels, soybeans of 1.222 billion bushels, and wheat at 1.1 billion bushels.
Just before the report all grains were higher with corn up 6 cents, soybeans up 7 cents, and wheat up 20 cents. Shortly after the report corn was up 5 cents, soybeans up 11 cents, with wheat up 18 cents. Wheat is the strongest gainer today with concerns over production in Europe.
Daily trade volumes for grains have been on the decline since the end of May. Daily ranges for corn and soybeans have been narrow the past week as traders still see the ongoing U.S./China trade talks as a very volatile scenario while continuing to be the major market mover.
Trade estimates ahead of the report had U.S. 2018 corn acres at 88.5 million acres while the March 29 USDA report had corn acres at 88.0 million acres. The average trade estimate for US soybean acres is 89.6 million acres and the March 29 number was 88.9 million acres All wheat acres were pegged by the trade at 47.1 million acres with the March number 47.3 million acres. Assuming soybean acres are higher than corn would mark only the second time since 1983 for that event to take place.
Trader estimates for U.S. grains as of June 1 were: U.S. corn stocks 5.268 billion bushels, soybean stocks of 1.225 billion bushels, and wheat stocks of 1.091 billion bushels.
Grains have been down for the past month with huge amounts of uncertainty on the U.S./China trade talks. China seems serious about the tariffs they could impose on U.S. goods. The intellectual property rights issue is a non-starter for them and don’t want that issue part of ongoing talks. They have been very determined on this point having discussions with 20 to 30 CEO’s of U.S. companies within the last 10 days to detail their side of the equation.
On the close last night, corn was down 12 cents for the week, 49 cents for the month; soybeans down 33 cents for the week, $1.57 for the month; wheat down 12 cents for the week, down 47 cents for the month.
Bottom line, the U.S. farmer is squarely in the crosshairs of a trade dispute that could linger far longer than expected. No one wins in a trade war. July 6 continues to be the drop dead date when the U.S. tariffs against China will be taking place. At this time, $50 billion of U.S. tariffs are scheduled to be imposed upon China goods on that date. Mid-week there appeared to be an easing from U.S. negotiators but mixed messages thereafter has traders and producers on edge. The edge is where producers have been since the Memorial Day holiday as November CBOT soybeans closed early in that week at $10.42. On June 19 they collapsed to $8.65 as China and the U.S. suggested tariffs of $200 billion on each other. Earlier today November soybeans were $8.90, up six cents for the day. December CBOT corn closed at $4.19 on May 29. December corn also collapsed on June 19, falling to $3.60. Earlier today December corn was $3.72, up six cents.
Corn demand continues to be strong with the weekly ethanol report detailing corn usage of 111.7 million bushels, at or a new record. The quarterly hog report had US numbers at record levels since the report started in 1964. Those strong numbers should be reflected in the July 12 USDA monthly Supply and Demand Report.
Ohio and the eastern Corn Belt will experience above normal temperatures in the next week. Much of Ohio will have daily highs of 90 plus almost all next week.
At some point the market will return to focus on weather and growing conditions. Some Ohio producers are already pointing out they will have corn pollinating in the heat extremes of next week.
Month end, week end, quarter end takes place today for the grains.