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Home / Futures Blog / Turner’s Take Ag Marketing: July WASDE Bullish HRW Wheat – July 12, 2019

Turner’s Take Ag Marketing: July WASDE Bullish HRW Wheat – July 12, 2019

July 11, 2019 by Craig Turner

Below are the July WASDE results and my updated Supply & Demand tables.  You can also access the full report by clicking here.

The report was bullish for HRW wheat (KC).  Russian wheat production was cut, US HRW exports were increased, and feed use was increased.  Year-over-year HRW stocks are projected to be 15% lower.  KC wheat finished 20 higher today and lead all markets.

Corn was up 8 and soybeans up 3.  Old crop corn ending stocks are now 2.34 billion and could be closer to 2.5 billion when it is all said and done.  US exports are being hurt by the his price of US corn combined with large global stocks.  Wheat is also taking away feed demand for corn.

New crop corn yield was unchanged at 166 and acres were 91.7mm.  Ending stocks are just over 2 billion.  The market clearly does not believe this number or Dec Corn would be sub $4.00.  Summer weather and speculation about the Aug WASDE will drive the markets between now and August 12th.

Soybean yields came down 1 bpa to 48.5 and acres were 80mm.  Ending stocks are now 795mm.  A lot better than 1 billion but still a large carryout number.  

Corn S&D:

I think old crop ending stocks might reach 2.5 billion but I also think acres come down to 3 to 6mm and yield comes down 5 to 10bpa.  Below are some scenarios.  At 88.7mm acres and a 160 yield we have 1.3 billion ending stocks and we have some price rationing.  At 85.7mm and a 155 yield we have significant price rationing.  In the first scenario we probably make new highs and test $5.  In the most bullish scenario we most likely trade through $5.  

Corn Supply & Demand Chart

Soybeans S&D:

I want to believe soybean acres stay at 80mm but I can see them going higher by 1 or 2mm.  Bean acres seem like such a wild card right now.  I do think the yields are lower but we still have a lot of soybeans on the balance sheet.  Ending stocks of 600mm to 800mm still argues for soybeans in low $9s to mid $8s.  For soybeans to make a run at $10 we need to see 80mm acre (or lower) and a 45 national bpa (or lower)

Soybeans Supply & Demand Chart

WASDE Results:

U.S. Yield 2019/20

USDA July Avg. Trade Est. Trade Range USDA June Est.
Corn 166.0 165.0 162.0-167.0 166.00
Soybeans 48.5 48.6 47.0 – 51.0 49.5

 

U.S. Production 2019/20 (billion bushels)

  USDA July Avg. Trade Est. Trade Range USDA June
Corn 13.875 13.664 13.100-13.960 13.68
Soybeans 3.845 3.833 3.783-4.100 4.15

 

U.S. Ending Stocks 2018/19 (billion bushels)

  USDA July Avg. Trade Est. Trade Range USDA June Est.  
Corn 2.340 2.211 2.065 – 2.385 2.195
Soybeans 1.050 1.053 0.935 – 1.137 1.070
Wheat 1.072 1.073 1.025 – 1.102 1.102

 

U.S. Ending Stocks 2019/20 (billion bushels)

  USDA July Avg. Trade Est. Trade Range USDA June Est.  
Corn 2.010 1.692 1.072 – 1.975 1.675
Soybeans 0.795 0.812 0.558 – 1.111 1.045
Wheat 1.000 1.043 950 – 1.092 1.072

 

US Wheat Production (billion bushels)

  USDA July Avg. Trade Est. Trade Range Previous USDA
All Wheat 1.921 1.911 1.851 – 1.950 1.903
Winter Wheat 1.290 1.279 1.231 – 1.314 1.274
HardRed Winter 0.804 0.798 0.726 – 0.835 0.794
Soft Red Winter 0.259 0.257 0.240 – 0.297 0.258
White Winter 0.227 0.224 0.220 – 0.234 0.222

 

World Ending Stocks 2018/19 (million metric tons)

USDA July Avg. Trade Est. Trade Range USDA June Est.
Corn 328.75 327.3 322.7 – 355.7 325.38
Soybeans 112.98 113.0 111.6 – 117.6 112.80
Wheat 275.15 275.7 273.0 – 277.0 276.57

 

World Ending Stocks 2019/20 (million metric tons)

USDA July Avg. Trade Est. Trade Range USDA June Est.
Corn 298.92 291.7 282.40 – 300.00 290.52
Soybeans 104.53 109.6 103.00 – 124.10 112.66
Wheat 286.46 291.3 279.90 – 295.00 294.34

 

South American Production (million metric tons)

USDA July Avg. Trade Est. Trade Range USDA June Est.
Brazil Corn 101.0 99.86 96.0 – 101.00 101.0
Brazil Soybeans 117.0 117.22 116.0 – 118.50 117.0
Argentina Corn 51.0 49.28 48.00 – 50.00 49.0
Argentina Soybeans 56.0 56.09 55.50 – 57.00 56.0

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Turner’s Take Ag Marketing: https://www.turnerstakeag.com
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Risk Disclosure

This material is conveyed as a solicitation for entering into a derivatives transaction.

This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.

Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.

Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.

You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.

Filed Under: Turner's Take

About Craig Turner

Craig Turner is a Senior Broker at Daniels Trading, author of Turner’s Take newsletter, and a Contributing Editor for Grain Analyst. Craig is often quoted in the Wall Street Journal, Reuters, Dow Jones Newswire, Corn & Soybean Digest, and also makes appearances on SiriusXM – Rural Radio Channel 80 providing commentary for the Grain and Livestock markets. Craig has also been featured in FutureSource’s Fast Break series, Futures Magazine Online, and INO.com. Mr. Turner has a Bachelors from the Rensselaer Polytechnic Institute (RPI) where he graduated with honors and has worked at the NYSE and Goldman Sachs. While at Goldman, Craig earned his MBA in the NYU Stern executive program. Learn more about Craig Turner.

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Risk Disclosure

This material is conveyed as a solicitation for entering into a derivatives transaction.

This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.

Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.

Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.

You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.

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