USDA releases two reports in June feed a grain market hungry for information. The primary, World Agricultural Provide and Demand out June 10, needs to be solely an appetizer to the principle course: quarterly Grain Shares and Acreage information due June 30.
The federal government isn’t seemingly to present something greater than a cursory juggle to Thursday’s forecast of 2020 crop corn and soybean ending shares. However the numbers launched on the finish of the month, simply as merchants peer into the pollination window for corn, are as unsure as they’re essential in a yr of tight shares.
Certainly, Thursday’s report could also be extra notable for what it doesn’t say. USDA usually doesn’t modify its estimate of recent crop manufacturing or yields in June, besides throughout years with irregular climate. Farmers put within the corn crop a bit quicker than regular this spring, however 1 / 4 of the fields are in drought-affected areas, with extra drying anticipated over the following two weeks. Neither metric appears excessive sufficient to warrant adjustment this early within the rising season.
Demand forecasts for 2020 crops additionally ought to see little in the way in which of change. Feed utilization of corn seemingly gained’t be adjusted till July, when shares information is might be labored into formulation. Ethanol demand is recovering because the nation opens up once more, simply in time for the height summer season driving season. However rising biofuel costs haven’t been sturdy sufficient to offset excessive corn feedstock prices, retaining margins for processors underneath stress. Exports are poised to set a brand new report and likewise appear on observe to satisfy the federal government’s lofty expectations. Projected ending shares may very well be a bit tighter than the 1.257 billion bushels USDA forecast in Could, however not by a big quantity.
Soybean carryout additionally ought to see little change from the 120 million bushels USDA printed final month. Exports are holding up because the promoting season winds down, and crush can also be near expectations. Processors are scrambling to seek out provides regardless of report soybean oil futures, retaining crush margins on the decrease finish of their vary for the previous 4 years.
Whereas Thursday’s report needs to be a snoozer for corn and soybeans, the June 30 information dump may very well be something however. Quarterly stock updates usually produce a shock or two. This time they’ll present clues about how a lot rationing could also be wanted to stretch provides till harvest.
Acreage, although, is the true wild card, following March planting intentions effectively under commerce guesses. Each corn and soybeans noticed enormous rallies after USDA accomplished its final acreage survey. My fashions counsel this might enhance last acreage considerably. Because of sturdy income, farmers could have added greater than 3 million corn acres, taking the full to 93.9 million, whereas soybean seedings might go from 87.6 million to 90 million.
USDA gained’t publish its first survey on yields till August. However already there are many numbers circulating within the commerce, offering one thing for each bulls and bears to chew on.
The second weekly situation rating for corn dropped this week, however nonetheless stays above common, with 72% of the crop rated good or wonderful. That interprets right into a U.S. yield of 187.6 bpa, although these early rankings nonetheless lack statistical significance. My index primarily based on key states is much extra conservative, however nonetheless places the nationwide yield at 180.8 bpa, in comparison with the 179.5 bpa USDA makes use of at the moment primarily based on regular climate.
Early readings from the Vegetation Well being Index present a stark distinction to this optimistic outlook. Although the VHI additionally gained’t achieve statistical significance for a pair extra weeks, the present nationwide studying is 9% under common, translating right into a projected yield of simply 170.4 bpa.
USDA put out its first situation report for soybeans Monday, and the 67% rated good or wonderful was additionally above common, although lower than anticipated. The nationwide ranking interprets right into a whopping yield of 54.1 bpa, whereas state-by-state evaluation suggests 53.4 bpa.
As with corn, the VHI is extra cautious. The index for key soybean states is sort of 20% under common for this time of yr, pointing to a yield of 49.1 bpa, in comparison with the 50.9 “normal” projection from USDA.
This disconnect between totally different fashions ought to keep the market on edge in June, as merchants attempt to gauge yields and expectations for Grain Shares and Acreage updates. It’s summertime, and which means climate guidelines.