.jpg)
The CBOT® had mixed response to the latest USDA production and supply/demand revisions released today. A lower-than-expected U.S. winter wheat crop and generally anticipated 2004/05 U.S. corn numbers prompted higher values, but cut-backs in old-crop bean and meal imports led to weakness in the soy complex.
Despite a 58 million bu jump U.S. spring wheat output to 588 million, winter wheat’s drop of 61 million bu to 1.47 billion because of yield reductions across most hard red states in the Plains and soft red states in the south central U.S. left this year’s total supplies virtually unchanged from last month & 30 million bu less-than-trade expectations.
As expected, the USDA kept its corn yield at 145 bu for a record 10.64 billion 2004/05 crop, but their increase in new-crop feed demand because of strong livestock profitability kept new-crop’s carryover below the psychologically bearish 1 billion level despite cutting 2003/04 exports by 100 million bu & raising the carry-in for 2004/05.
In soybeans, the USDA cut both old- and new-crop ending stocks by 10 million to 105 & 210, respectively, but their 2 mil bu & 175,000 ton reductions in bean and meal imports prompted some old-crop liquidation ahead of July’s expiration on Wednesday. However, the overall tightness of old-crop because of strong crush demand (up 25 million to 1.5 billion) still suggest near-by processor support in beans is likely to source enough supplies for the next 6-8 weeks. Wednesday’s June NOPA crush report is the next update on this demand with 99.4 mil expected.
Despite a modest increase in the USDA’s world supplies because of larger EU, FSU and Chinese wheat crops, we suggest holding wheat sales for a seasonal recovery. With U.S. winter wheat harvest pressure abating (69% done thru 7/10), use September rallies to $3.70 area in Chicago and $3.95 area in KC to increase sales to 50%.
With this year’s corn pollination & crop ratings ahead of normal at 32% and 74% (good/excellent), use nearby strength to clean-up old sales & have 35-40% of your new-crop covered on December rallies to the $2.60 area. Old-crop crusher demand may give one final push to $8.25-$8.50 range, basis August, for finalizing 2003/04 sales. Use November recoveries in the $6.70-$6.90 range to have 40-50% of new–crop sold.
Futures and commodity trading involves significant risk of loss and may not be suitable for all investors.
Information contained herein is for informational purposes only and is in no way to be construed as an offer to buy or solicitation to sell any commodity or security mentioned herein.
Related Documents
- 
