Market Analysis

The USDA latest monthly winter wheat production report and US supply/demand revisions for the major crops had minimal changes on Friday’s update. Despite some changes within the trade’s acreage ideas because of this year’s erratic planting season, the government left its planted and harvested levels unchanged waiting for the upcoming June 30 Acreage Survey to provide this information. US domestic demand levels for corn and wheat were also left unchanged for both their old and new-crop balance sheets as the USDA deferred to the upcoming 3rd quarter stocks update before adjusting these levels.

As expected, this month’s US corn supply/demand tables were untouched by the USDA. The trade remains concerned about 2016/17 crop being underestimated or our feed demand being lower than the current estimate because of previous quarterly updates. We anticipate 2017’s stronger livestock and poultry numbers to provide a higher 3rd quarter feed level later this month. Strong third-quarter export sales and solid corn usage for ethanol should keep these demand paces on target for steady to higher old-crop demand levels this crop year.

The USDA kept its US bean exports unchanged despite current sales 97 million bu. above their forecast. Higher S. American bean output of 3.2 mmt (Brazil-2.4 mmt and Argentina-.8 mmt) was the reason. They did reduce beans’ 2016/17 domestic crush by 15 million bu. after the past two months slowdown. This prompted a 15 million bu. higher ending stocks that were also carried thru to new-crop.

In wheat, June’s old-crop demand levels were left unchanged, but imports were upped by 2 million. June’s 2nd US winter wheat output however was a bit of surprise, up 4 million bu. Despite declines in HRW ratings, higher KS and CO yields compensated for steady Southern and lower Northern Plains’ yields. This month’s SRW’s output was up 1 million and WW was off 3 million bu. from June.