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US planting and stocks predictions
Feature article
We highlight in this report our views of the forthcoming USDA June 30
plantings and stocks release. We expect the report to have a bullish tone for
the corn market, and be neutral to bearish for both wheat and soybeans. In
the last quarter March to May, corn demand has remained robust in the face
of record-high price levels, leading stocks to fall 21% YOY. From a plantings
perspective we expect corn area to reach 91m acres, slightly above the
USDA’s current estimate, but we forecast a larger abandonment level. At the
very least we expect the June 30 report to provide a level of price stability to
the markets, following the recent selloff, and a reassertion of grain
fundamentals on the markets agenda.
Latest market update
Corn: Corn prices have continued their rapid descent during June as macro
headwinds along with improving weather conditions leave the market
struggling to find support. Benchmark CBOT corn prices have fallen 12.6%
on the month to $6.6/bu. The fall in corn prices has seen a significant
improvement in margins for both ethanol and livestock producers, as both
ethanol and cattle prices have remained resilient in the face of the general fall
in the ags complex. Another highlight is the robust price of Chinese corn vs.
US origin; if this trend continues, US corn will be at a large enough discount to
be export-competitive into China.
Wheat: Wheat has been the bear-side leader in the recent fall, as improving
US winter wheat conditions and FSU competition drag on the market. CBOT
wheat futures are down 18.4% on the month, mirrored in the EU with Matif
milling wheat futures down 20.3%. The improving conditions in both Germany
and the UK have eased some of the concerns for the EU wheat crop, but yield
expectations remain significantly below last season. We forecast EU wheat
production at 134.3m tonnes, above the USDA at 131.5m tonnes. The US
winter wheat harvest has reached 44% complete, significantly above the
historical average for this date.
Soybean: Soybean prices have remained relatively strong in comparison to
the far larger selloff in the grains complex. Benchmark CBOT soybean prices
have fallen 4.1% to $13.29/bu. The fall in soybean prices has helped to
improve implied Chinese crush margins, specifically using Brazilian origin
imports, which is approaching neutral territory. We still see soybeans as one
of the laggards of the grain and oilseed complex, as near-term fundamentals
are comfortable and will continue to provide resistance to price rallies.
Rapeseed: The rapeseed market certainty hasn’t been immune to the agriwide selloff; Matif rapeseed futures have fallen 8.7% in June to
€433.75/tonne. The fundamentals remain delicately poised as problems
continue to hamper the world’s leading producers. To note is the significant
fall in the spread between Canadian and EU rapeseed prices, currently at a
level where potential exports will likely be cut off. As the French rapeseed
harvest begins, we would expect this spread to turn around from its current
decline if poor yield expectations are realised.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
US planting and stocks predictions
Feature article
We highlight in this report our views of the forthcoming USDA June 30
plantings and stocks release. We expect the report to have a bullish tone for
the corn market, and be neutral to bearish for both wheat and soybeans. In
the last quarter March to May, corn demand has remained robust in the face
of record-high price levels, leading stocks to fall 21% YOY. From a plantings
perspective we expect corn area to reach 91m acres, slightly above the
USDA’s current estimate, but we forecast a larger abandonment level. At the
very least we expect the June 30 report to provide a level of price stability to
the markets, following the recent selloff, and a reassertion of grain
fundamentals on the markets agenda.
Latest market update
Corn: Corn prices have continued their rapid descent during June as macro
headwinds along with improving weather conditions leave the market
struggling to find support. Benchmark CBOT corn prices have fallen 12.6%
on the month to $6.6/bu. The fall in corn prices has seen a significant
improvement in margins for both ethanol and livestock producers, as both
ethanol and cattle prices have remained resilient in the face of the general fall
in the ags complex. Another highlight is the robust price of Chinese corn vs.
US origin; if this trend continues, US corn will be at a large enough discount to
be export-competitive into China.
Wheat: Wheat has been the bear-side leader in the recent fall, as improving
US winter wheat conditions and FSU competition drag on the market. CBOT
wheat futures are down 18.4% on the month, mirrored in the EU with Matif
milling wheat futures down 20.3%. The improving conditions in both Germany
and the UK have eased some of the concerns for the EU wheat crop, but yield
expectations remain significantly below last season. We forecast EU wheat
production at 134.3m tonnes, above the USDA at 131.5m tonnes. The US
winter wheat harvest has reached 44% complete, significantly above the
historical average for this date.
Soybean: Soybean prices have remained relatively strong in comparison to
the far larger selloff in the grains complex. Benchmark CBOT soybean prices
have fallen 4.1% to $13.29/bu. The fall in soybean prices has helped to
improve implied Chinese crush margins, specifically using Brazilian origin
imports, which is approaching neutral territory. We still see soybeans as one
of the laggards of the grain and oilseed complex, as near-term fundamentals
are comfortable and will continue to provide resistance to price rallies.
Rapeseed: The rapeseed market certainty hasn’t been immune to the agriwide selloff; Matif rapeseed futures have fallen 8.7% in June to
€433.75/tonne. The fundamentals remain delicately poised as problems
continue to hamper the world’s leading producers. To note is the significant
fall in the spread between Canadian and EU rapeseed prices, currently at a
level where potential exports will likely be cut off. As the French rapeseed
harvest begins, we would expect this spread to turn around from its current
decline if poor yield expectations are realised.
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