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Home / Futures Blog / Turner’s Take Podcast: May WASDE Analysis

Turner’s Take Podcast: May WASDE Analysis

May 12, 2020 by Craig Turner

Turner's Take Podcast

Play Turner’s Take Podcast Episode 231

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In this week’s podcast we go over the May WASDE and what it means for new crop corn and soybeans. The report came in close to expectations and we saw some short covering at the end of the day.  We also saw spread unwinding as traders took profits.  The report confirmed our bearish view on corn this year.  It was neutral for soybeans and gives bulls hope for possible rallies this summer.  This WASDE sets the tone for the rest of the season.  We think it means sell the rallies in new crop corn and buy the dips in old crop soybeans.  We thought wheat was bearish across the board and selling the Dec contracts on rallies makes sense.  To find out more make sure you take a listen to Turner’s Take Podcast!

If you are not a subscriber to Turner’s Take Newsletter then text the message TURNER to number 33-777 to try it out for free!  You may also click here to register for Turner’s Take.

WASDE – CORN

Old crop corn ending stocks were better than expected as the USDA only reduced ethanol demand by 100 million bushels to 4.950 billion.  We think it should be at least another 250mm lower.  Based on the pace of corn for ethanol demand, energy prices, and the fact the marketing year ends Aug 31, we think the corn for ethanol demand number will be closer to 4.5 to 4.7 billion.  That means old crop corn carryout is most likely 2.3 billion without a big increase in exports or feed in the next few months.

New crop corn ending stocks were just over 3.3 billion and the stock/usage ratio is 22.4%.  Any time the stock/usage ratio is over 20% you have to figure new crop gets to at least $3 by harvest, if not lower.  In my table below I have corn acres at 95.5 million, which is 1.5 million lower than the USDA.  However, I also have ethanol demand lower.  The lower acres and the lower ethanol demand cancel each other out and we are still around 3.3 billion carryout.

Notice how new crop corn has very high feed at 6 billion.  Not good for feed wheat.  That is a lot of corn we now need to see go to feed.

With a 3.3 billion ending stock estimate, it takes a lot to move the markets.  A 1 bushel increase/decline in the national yield only adds/subtracts 90mm bushels of corn from the ending stocks.  Yields have to go to 175 (-3.5 bushels) to get the carryout below 3 billion. If we have a great crop and the yield is 182 then carryout is 3.6 billion.  When a +/- 3.5 bpa is the difference. between 3.0 and 3.6 billion carryout, that means the spring/summer weather rallies will be muted..

I still like selling deferred futures, selling calls on rallies, and bear spreading corn.  I’ll have some ideas in my client emails.  Those who want to get more involved please call me at 312-706-7610.

If you are interested in working with Craig Turner for hedging and marketing, then click here to open an account.  If you are a speculative or online trader then please click here. 

Corn Supply & Demand Table

WASDE – SOYBEANS

Old crop soybean exports were lowered 100mm bushel and that increased ending stocks to 580mm.  Not great but not the end of the world.  China is starting to buy more soybeans so there is a chance the old crop marketing year exports actually increase between now and Aug 31.

New crop soybean acres were 83.5mm and we see that increasing to 85mm.  We think there will be some switching from corn to soybeans.  The crush should be strong as always and exports are expected to be 400mm bushels better this coming marketing year due to normalized trade with China. Exports could even go higher depending on how well Phase 1 is implemented.

A 1 bpa change in soybeans this year is about 80mm bushels.  If we lose 1 bpa off the national average the ending stocks number could be projected to be sub 300.  Add in more demand from China and things could get interesting for soybeans later this spring and early summer.  I like buying the dips and spread beans against corn (and wheat).  I’ll have some ideas in my client email.  Clients who want to get more involved please call me at 312-706-7610.

If you are interested in working with Craig Turner for hedging and marketing, then click here to open an account.  If you are a speculative or online trader then please click here. 

Soybean Supply & Demand Estimates

About Turner’s Take Podcast and Newsletter

If you are having trouble listening to the podcast, please click here for Turner’s Take Podcast episodes!

Craig Turner – Commodity Futures Broker
Turner’s Take Ag Marketing: https://www.turnerstakeag.com
Turner’s Take Spec: https://www.turnerstake.com
Twitter: @Turners_Take

Contact Craig Turner

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Turner’s Take Newsletter & Podcast - Turner’s Take is a complimentary weekly market commentary newsletter that covers the Grain, Livestock and Energy futures spread markets using fundamental, technical and seasonal analysis.

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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, Turner's Take Podcast

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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