February 2019 WASDE Preview

U.S. Corn Supply & Demand

Possible February U.S. Corn Supply & Demand Adjustments for 2018/2019

January versus November U.S. Corn Yield Adjustment

In 4 out of the last 5 years the USDA has LOWERED the U.S. corn yield by an average of 1.4 BPA from November to January; keep in mind the USDA already lowered the U.S. corn yield -0.6 BPA from September to October and -1.uary8 BPA from October to November. 

U.S. Corn Carryin Stocks Forecast for 2019/20 (won't be released until 5/10/2019)

If the 2018/19 U.S. corn yield is lowered 1 BPA in the FEB WASDE report, 2019/20 U.S. corn carrying stocks could feasibly fall tot heir lowest level since 2014/15.
 

2019/20 U.S. Baseline Ending Stocks Projection = 1.492 Bil. Bu. / Stocks-to-Use Ration = 9.8%

If the 2018/19 U.S. corn yield is lowered 1 BPA in the FEB WASDE report; 2019/20 U.S. corn stocks-to-use ration falls to 9.8%; lowest since 2013/14
 

USDA Forecasting +2.9 Million More Corn Acres in 2019 & -6.6 Million Soybean Acres

Since November 2018 the "economic" advantage of adding sizably more corn acres in 2019 at the expense of planting soybeans has diminished significantly on the CME...

2019/20 U.S. Corn Supply & Demand What Ifs...

Key Futures U.S. Corn Supply & Demand Considerations...

1. USDA's final January production revisions for the 2018/19 U.S. corn/soybean growing seasons will be released in the February 8th WASDE report due to the government shutdown.  Expecting a yield decrese in corn...
2. Assuming a 1 BPA U.S. corn yield reduction and no decerases to demand... 2019/20 U.S. corn carrying stocks are projected to be the lowest they have been since 2014/15 (please not first 2019/20 U.S. corn S & D won't be released until May 2019)
3. Even with +2.9 million more corn acres in 2019 and a trend-line yield of 176.5 BPA (USDA's baseline estimates), U.S. corn ending stocks could fall below 1.5 billion bushels in 2019/20
4. This type of U.S. corn S & D forecast could provide rallies up to $4.50 in December 2019 corn futures (similar to 2016); the outlier at the moment remains the massive U.S. soybean carryout and the negative influence this is having on the soybean futures price (and by default the conr futures price; pulling corn down)
5. Current new-crop soybeans (SX19)/ Corn (CZ19) price ration of 2.39 does not necessarily support adding 2 to 3 million corn acres in 2019; suggests CZ19 is currently underpriced or SX19 is overpriced... some adjustment will be necessary to create the needed acreage response in corn

Corn Futures Considerations

December Corn Futures 2018 Trading Range Extremely Narrow

 

Price Action in 2016/17; Featured U.S. carryin stocks of 1.737 Bil. Bu. 

 

Current Price Action in 2019/20... December 2019 Corn Futures

 

Old Crop MAR 5-Year Seasonal; bottoms on February 4th...

 

Old Crop JUL 10-Year Seasonal; Bottoms on February 5th...

 

History CZ Futures 2015-2018

December 2018 Futures Proved to be an Outlier

U.S. Soybean Supply & Demand

Possible February U.S. Soybean Supply & Demand Adjustments for 2018/19

 

U.S. Soybean Carrying Stocks Forecast for 2019/20 (won't be released until 5/10/2019)

Even if the 2018/19 U.S. soybean yield is lowered 0.5 BPA in the FEB WASDE report, 2019/20 U.S. soybeans carrying stocks will remain more twice as large as a year ago

2019/20 U.S. Baseline Ending Stocks Projection = 0.750 Bil. Bu. / Stocks-to-Use Ratio = 17.5%

If the 2018/19 U.S. soybean yield is lowered 0.5 BPA in the FEB WASDE report, 2019/20 U.S. soybean stocks-to-use ration falls to 17.5%; second highest ever
 

USDA Forecasting -6.6 Million Soybean Acres...CME Economics Do NOT Support this Decrease

Since the USDA released their baseline estimates for 2019/20 several private analysts have issued 2019/20 planted soybeans acreage reductions signifcantly less than the USDA's forecast

2019/20 U.S. Soybean Supply & Demand What If's...



Key Future U.S. Soybean Supply & Demand Considerations

1. USDA's final January production revisions for the 2018/19 U.S. corn/soybean growing seasons will be released in the February 8th WSADE report due to the government shutdown.  Expecting a yield decrease in soybeans...
2. Assuming a 0.5 BPA U.S. soybean yield reduction and no adjustments to demand... 2019/20 U.S. soybean carryin stocks are still projected to be a record high at 912 million bushels (previous record high was 574 million bushels in 2007/08)
3. Even with -6.6 million less soybeans acres in 2019 and a trend-line yield of 50.0 BPA (USDA's baseline estimates), U.S. soybean ending stocks will remain the 2nd highest ever at 750 million bushels
4. Current new-crop soybeans (SX19) / Corn (CZ19) price ration of 2.39 does not support losing 6 to 7 million soybeans acres in 2019; private analysts are projecting approximately a 4 million U.S. soybean planted acreafe decline in 2019
5. If U.S. soybean acreage only decreases 4 million acres in 2019, 2019 U.S. soybean endig stocks on paper move back up to 880 million bushels.  However if, in addition, U.S. soybean exports don't fully recover in 2019/20 U.S. soybean ending stocks actually end up higher than 2018/19

Soybean Futures Considerations

Current Price Action in 2019/20.. November 2019 Soybean Futures

 

Old Crop MAR 5-Year Seasonal; Bottoms on February 5th...

 

Old Crop JUL 10-Year Seasonal; Bottoms on February 6th...

This information contained herein, or as in attachment, is gathered from sources we beleive to be reliable, but cannot be guaranteed and should not be relied upon as such.  Opinions expressed are subject to change without notice.  TRading in commodity futures or options involves substainial risk of loss.  Past results are not indicative of future results.