Milling & Baking News - April 9, 2019 - 28

Ingredient Market Insight

things," but adding that it's devastating
for individual farmers who have been
flooded out, lost stored grain and/or livestock and may not be able to plant this
year's crops.
"On April 2 the market doesn't care
(about planting delays)," Mr. Freed said,
noting that planting also
was delayed last year, but
"we had great yields."
per bu
Mr. Freed and Mr. Mey$4.20
ers agreed that the market
won't be concerned about
corn planting delays until
$3.95
May.
Mr. Meyers noted that
$3.70
in the U.S.D.A. Prospective Plantings report, total
$3.45
intended principal crop
area planted was forecast
at 315,352,000 acres, down
$3.20
April
more than 4 million from
2018
2018 and down nearly 3
million from 2017. Even if
only 3 million of those acres are "found"
by the June U.S.D.A. Acreage report,
some of those will be corn, which likely
will offset acres lost to floods, Mr. Meyers said. As a result, acreage could be
at the U.S.D.A.'s planting intention
forecast of 92.8 million acres "or even a
little bit higher," equating to a 2019 corn
crop near 15 billion bus (harvested area
at 85.3 million acres with a 175-bu-per

©BITS AND SPLITS - STOCK.ADOBE.COM

Corn futures

June

Aug.

Oct.

Dec.

Feb.
2019

U.S.D.A. forecast for 2018-19 due to poor
margins and time lost during the March
floods. As a result, 2018-19 ending stocks
could be pushed above 2 billion bus from
the U.S.D.A.'s March forecast of 1.8 billion bus, and 2019-20 ending stocks could
be near 2.4 billion bus.
Mr. Freed was somewhat less bearish, noting that ethanol plants had recovered from the floods and taking into

consideration that farmers have no incentive to sell corn at the $3.40 per bu
insurance level, which serves as a type
of free "put" (technically an options contract that allows for the sale of a futures
contract at a predetermined price). Further, the record net short in corn futures,
largely the result of a tight
global corn market, provides
potential for a rally, but funds
want to see a deal with China
or a weather problem before
they cover, he said. Finally,
because of ethanol, corn also
tends to follow crude oil prices, which hit 2019 highs early
last week.
Mr. Meyers expects newcrop December corn futures
from late summer into harvest
to fall to the $3.30-to-$3.40-perApril
bu range, down as much as 50c
to 60c from last week.
Mr. Freed also said December corn futures could fall to $3.40 per bu,
"if there are no problems," but that they
also could go to $4.40 per bu "if weather
is an issue."
Finally, Mr. Meyers noted that farmers can plant corn until the end of May,
depending on area, adding that they will
plant even if prices are low and only cover variable costs. MBN
- Ron Sterk

Record stocks add pressure
to soybean market

ower-than-expected planting intentions and a record March 1 stocks
estimate from the U.S. Department
of Agriculture on March 29 gave mixed
signals to the soybean market, which has
faced the tremendously bearish reality
of losing its largest foreign buyer amid a
U.S. trade war with China.
The U.S.D.A., in its annual Prospective Plantings report, said farmers indicated they would plant 84.6 million
acres of soybeans in 2019, down 5%
from 89.2 million acres in 2018 and compared with 85 million acres projected by
28 / April 9, 2019

acre yield), which would add to stocks
for next year.
In painting the bearish canvas for corn,
Mr. Meyers also noted that domestic feed
and residual use of corn was down, exports were down and corn used to manufacture ethanol may be below the latest

Milling & Baking News

the U.S.D.A. at its February Agricultural Outlook Forum. Acreage is expected
to be down or unchanged in 26 of the
29 estimating states. Except for Kansas,
where acreage was expected to be up
4%, intentions were down 1% to 8% in
the top 10 states.
The U.S.D.A. estimated March 1 soybean stocks in all positions at a record
for the date at 2,716 million bus, up
29% from a year earlier. On-farm stocks
were 1,270 million bus, or 47% of the
total, compared with 855 million bus,
or 41%, on March 1, 2018. Estimated

disappearance of soybeans during the
December-February period was 1.03
billion bus, down 2% from the same period a year earlier.
The U.S.D.A. soybean planting intention number was near the low end of the
range of trade expectations and was well
below the trade average of 86.2 million
acres. The U.S.D.A. March 1 stocks estimate, though, was near the high end of
the range of trade guestimates and was
above the average of 2,683 million bus.
CME Group soy complex futures traded lower on the day the reports were
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Milling & Baking News - April 9, 2019

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