The U.S. Department of Agriculture had a big week. To the lay-person, the government agency made headlines for announcing a move of key departments (the Economic Research Service and the National Institute of Food and Agriculture) to Kansas City from Washington D.C. Employees turned their back on Secretary Sonny Perdue in silent protest at a meeting this week. But of greater, near-term consequence to agriculture markets were the changes made to the corn balance sheet for new crop.
In an unusual move in an unusual spring, the production estimates for new crop corn were adjusted. Planted area came down 3 million acres from the previous report and March intentions. As planting is technically still going on, this reduction could have been bigger (with some in the market expecting 10 million acres to eventually be lost from intentions).
Yield also was reduced, falling from a trend estimate of 176 bushels per acre to 166.
While these reductions may eventually come to be, it is incredibly rare for USDA to make production changes in June. Acreage is not usually changed until planted acreage is reported at the end of the month. Yield is only sometimes changed in July, but usually in the August report. But this is not a normal year, with corn planting historically delayed due to rain, so normal gets thrown out the window.
Spring wheat prices have kept moving higher since early May, though the rally may have cooled a bit this week after reaching a high mark since March.
The World Agriculture Supply and Demand Estimates Report showed smaller old crop supplies (down 25 million bushels from the May report) which took down stocks in the 2019/20 season, even though production was revised higher. Additionally, new crop feed and residual demand was increased 50 million bushels. Even with these adjustments, U.S. ending stocks remain above 1 billion bushels.
The Minneapolis durum market firmed up another nickel. While this is another small move, at least it is moving in the upward direction after more than a year of flat to lower pricing.
USDA did not make any changes to the national durum balance sheet for 2018/19, but new crop estimates by class have not yet been released to provide the market a good forward look. In North Dakota, the durum crop is 93 percent planted, and ratings showed 86 percent of the crop as good/excellent.
The support in the canola market has hit technical resistance at $460, a mark that was support for a time during the decline in the spring. On the supportive side is the weather in Canadian Prairies that has been too dry to start the spring (a stark contrast to the U.S. Corn Belt and Central Plains).
But keeping the rally in check is the fact that export demand to China is nonexistent due to diplomatic tensions. Look for the market to continue to follow the weather, as the demand side of the equation has seen little movement in the last several months.
The U.S. barley crop is planted, for all intents and purposes, at 97 percent is done compared to 99 percent for the five-year average pace, with 86 percent of the crop emerged. USDA also showed that crop ratings were below a week ago due to dry conditions in the Northern Plains, with 84 percent rated good or excellent compared to 88 percent a week ago. The World Agriculture Supply and Demand Estimates Report showed no changes for old crop or new crop balance sheets for U.S. barley in Tuesday's report.
Mustard seed prices have been mixed, with oriental continuing to firm while other varieties have been trading mostly flat.
Export demand has been good for field peas, cutting into old crop stocks. India's slow planting and drought in some areas points to strong future demand for Canadian pulse exports if India's domestic production sees a shortfall.