The USDA's annual final seeded area and June 1st stocks reports were released this morning.
The most significant number was the final seeded area estimate for corn being only 92 mil ac compared to 97 mil in the March estimate and a survey range of 94 to 96 mil ac.
That significantly changes how sensitive the corn market and thus the grains overall will be to weather for the remainder of the crop year.
Using all of the previous USDA figures, such a seeded area would leave a carryover of 2.324 bil bu compared to the June estimate of 3.323 bil. That is using a yield of 178.5 bu/ac. For demonstration purposes, if the yield ends up the same as last years 167.8 bu/ac, the ending stocks will fall to just 1.390 bil bu. That would be the lowest since 2013/14 when prices traded in the $4-5/bu US range. It also shows why the increased sensitivity to weather developments ahead.
Another factor likely to come into play is the near record net short position of the money managed funds. They are net short 277,479 contracts or 1.387 bil bu (vs a record of -322,215) and they have just been informed their is a much smaller crop than they were trading on. Short covering on their part could result in a short term rally, especially if China does any significant buying for their phase 1 commitments.
In short, one should expect a short term rally on these developments. Anyone looking to make feed grain sales should monitor the situation closely for signs of it ending.
The most significant number was the final seeded area estimate for corn being only 92 mil ac compared to 97 mil in the March estimate and a survey range of 94 to 96 mil ac.
That significantly changes how sensitive the corn market and thus the grains overall will be to weather for the remainder of the crop year.
Using all of the previous USDA figures, such a seeded area would leave a carryover of 2.324 bil bu compared to the June estimate of 3.323 bil. That is using a yield of 178.5 bu/ac. For demonstration purposes, if the yield ends up the same as last years 167.8 bu/ac, the ending stocks will fall to just 1.390 bil bu. That would be the lowest since 2013/14 when prices traded in the $4-5/bu US range. It also shows why the increased sensitivity to weather developments ahead.
Another factor likely to come into play is the near record net short position of the money managed funds. They are net short 277,479 contracts or 1.387 bil bu (vs a record of -322,215) and they have just been informed their is a much smaller crop than they were trading on. Short covering on their part could result in a short term rally, especially if China does any significant buying for their phase 1 commitments.
In short, one should expect a short term rally on these developments. Anyone looking to make feed grain sales should monitor the situation closely for signs of it ending.
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