Q Stocks Creates Complex Problem for New Crop Supply Demand Tables

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Subject: convert Q stocks to Supply-Demand Table – WOW

 

In corn, reducing old crop stocks from 2.445 to 2.114 causes a chain reaction. Compare the USDA Sept S/D report column to the AgMarket.Net column

  1. We never agreed with USDA 2018 feed use reduction earlier this year. How could they reduce feed use with ~3% more GCAU and a rough winter requiring more feed use. So we think USDA finally got it right.
  2. When you reduce old stocks and carry those into this year, look at the good and avg columns of AgMarket 2019 numbers when we reduce harvested acres to 80.5 and reduce yield to either 165 or 162. With about 30% of the crop needing 30-45 days of good weather to finish, a drop in yield to these levels are very possible.
  3. Now we have to address feed use for 2019. With another 2-3% GCAU, feed use will have to go up. But if we revise it up from the 5525 that we expect USDA to have for 2018, there is no carry left to pull from. Using the good column, that would pull another 400 mil bu off and leave you with 900 mil bu stocks. It will be interesting to see how economics come into play to make this work
  4. You can see there is a real risk of stocks to use falling below 10%

 

Now look at beans – this is really interesting

  1. We adjusted the 2018 beans stock in our column to reflect today’s Quarterly stocks. Normally USDA WASDE will only revise demand – not old crop supply. But in today’s report, page 17 laid out actual changes they will make to 2018 production. All this time it has been wrong. If you look at AgMarket 2018, you will see these changes.
  2. Now this is really important. IF USDA WASDE does make today’s revisions by lowering 2018 production, then the 51.6 yield is really 50.6. And that would mean that this years poor crop is lower than we all are thinking. Nearly all yield reports coming in to date are disappointing and later planted are likely to be even worse.
  3. The probability the stocks to use will be below 10% has probably increased to near 85%. That typically is very supportive. We believe that there is a very good chance we will see the 9.40-9.60 resistance challenged

Bill Biedermann

AgMarket.Net

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