Feed grain users need to understand the seriousness of the corn production issues

[TechAnalyst]

The planting delays in the US Midwest and the cold, wet spring's impact on crop condition is well documented. I would like to put into context what that may mean and the risks involved if you buy feed grains.

The US is likely to produce close to 100 million MT Less corn than it predicted in early May. That compares to the total Canadian Barley production of under 10 MMT. That would be a game changer.

The May USDA report had 92.8 mil ac of corn planted (85.4 mil harvested) at 176 bu/ac = 15.030 bil bu.

Prevent plant claims are estimated to be as high as 10 mil ac leaving a potential for 83 mil ac seeded (about 76.3 mil ac harvested).

The USDA already lowered yield estimates to 166 bu/ac based on the horrible start but since then, early private estimates are in the 135 to 150 bu/ac range.

It is far too early to say but to demonstrate the urgency of the situation, using 150 bu/ac you end up with production at 11.445 bil bu, 3.585 bil bu below the May USDA estimate (or 91 MMT).

Using the May demand estimates, there would be 1.1 bil bu more demand than total supply.

Using the reduced June demand estimates, that would fall to 560 mil bu more demand than total supply.

The only solution if that were to develop is for prices to rally to ration demand.

Over the last 10 years, corn has been in a range from $3/bu to $8.45/bu US$. At $4.50, there is still plenty of room for prices to rally from here.

After almost 6 years of a flat market, ones begins to get complacent. Given the setup, it may be a good time for feed grain buyers to consider being more aggressive.

[ajl]

Feed wheat bids in Lethbridge already compete with #1 cwrs so all wheat is feed wheat in 2019. Exports of grain off the NA will essentially be zero as overseas buyers can't compete with the US consumer. Looks like the market has already taken care of the situation for this year. The longer term problem will come when we need to export surplus again. Will take some amazingly low prices to get offshore markets going again. The result will be much higher levels of food insecurity for many. Famine 2019

[TechAnalyst]

Well that certainly was one of the old surprising USDA reports (acreage and stocks).

Basically the stocks of corn, soybeans and wheat as of June 1st were all below pre report estimates with prices initially moving higher.

The surprising part was the 4.7 mil ac more corn and less soybeans than the market expected going into the report. The numbers were significantly out of the pre report range of expectations.

Soybeans rallied slightly but corn and wheat sold off with such a surprising outcome.

Time will tell but the initial idea of this thread has not changed. Feed grain users should consider using this price setback to protect themselves.

The prevent plant insurance claims will be processed over the summer and the August USDA report would reflect the lower acres based on the claims (should they be filed). The trade still feels 6-10 mil ac of corn prevent plant claims could be filed.

With the lower June 1st stocks, a surprisingly low 80 mil ac of soybeans planted, the potential for corn acres to be revised lower (to under 82 mil ac if prevent plant claims reach 10 mil ac) and likely lower yields to come given the late seeding and cool, wet spring - there could be very strong grain and oilseed markets yet this year.

Time will tell....

[MBgrower]

Feed wheat bids in Lethbridge already compete with #1 cwrs so all wheat is feed wheat in 2019. Exports of grain off the NA will essentially be zero as overseas buyers can't compete with the US consumer. Looks like the market has already taken care of the situation for this year. The longer term problem will come when we need to export surplus again. Will take some amazingly low prices to get offshore markets going again. The result will be much higher levels of food insecurity for many. Famine 2019

i agree, our much hyped top quality milling wheat price not much better than feed bids when you factor in payment on gross for feed, and fob farm pricing.

[Guest]

But we need a seed tax so we can get increased production.

[Oliver88]

But we need a seed tax so we can get increased production.

LOL....or nicer company vehicles and perks for the seed industry bureaucrats.

[beaverdam]

So,
Chicago wheat down 19.25cents USD
Kansas wheat down 19-20cents USD
Minn Wheat down 7.25cents USD
Corn down 19.25cents USD
any of those are a lot of Canadians cents!

Is all this selling today just repositioning, and we'll be heading higher Monday(in U.S. markets)???

BTW, where will the ChiComs get their supply of grains now?
Won't be any available to (third nation), if the shortage is real.

Early planted spring wheat heading here today, I've never seen wheat so short, mid shin with short heads. Rule of thumb is that it doubles it's height, so would make it to the top of my knee. And we started the year as a moist area.

[malleefarmer]

See heat and dry in EU is the crop potentially facing downgrade there and black sea etc what the go there?

Australia my take for what its worth salt grains perhaps, reckon Most of southern cropping regions will come in just average, parts of northern cropping areas still way below average and west australia playing catch up weather wise but they can pull huge crops of without much rain absence of frost but they could still be ranked average to below.

Big swings with weather coming for EU record heat in france to be replaced with record cold spell in about 4 days time.