Some volatility returns to the markets

Wheat

The U.S. Department of Agriculture estimates U.S. all wheat production at 1.9 billion bushels, which was at the high end of trade estimates. The average trade guess was 1.883 billion bushels. Winter wheat production is forecast at 1.27 billion bushels with a national average yield of 50.5 bushels per acre. Hard red winter wheat production at 794 million bushels is up 2% from last month while soft red wheat production declined 2% to 258 million bushels. White wheat production is estimated at 222 million bushels.

U.S. ending stocks for 2019/20 are estimated at 1.07 billion bushels, a 69 million bushel reduction which was due to higher exports in the 2018/19 marketing year. World stocks increased slightly for both 2018/19 and 2019/20 to 276.57 million metric tons and 294.3 million metric tons, respectively.

Weekly crop progress reports show spring wheat plantings at 97%, which was right at expectations, and 85% of the crop is emerged versus 93% for the five-year average. Spring wheat conditions declined 2% in the past week but are still rated relatively high at 81% good to excellent.

Winter wheat conditions remained unchanged from the previous week at 64% good to excellent, 27% fair and 9% poor to very poor. Winter wheat headed is 83% versus 91% average. Winter wheat harvest has started in areas of Texas and Arkansas. Winter wheat harvested is at 4% versus 10% for the five year average.

Drier and warmer weather is expected through the Ukraine and southwestern Russia over the next 10 days. Canada remains dry, with weather models disagreeing on potential rainfall in their southern prairie region. Rainfall this week in northern Indiana, northern Ohio and Michigan gave the Chicago market more support on thoughts of deteriorating wheat quality. The 16- to 30-day forecasts show cooler and wetter weather returning to the southern plains, which is also supporting the Kansas City market. The Minneapolis market has somewhat stalled out with recent rainfall in North Dakota, but does have underlying support from continued dry conditions in the Canadian wheat producing areas.

Export Inspections for the start of the 2019/20 marketing year were in line with expectations coming in at 465,000 metric tons (17.1 million bushels). Weekly export sales of 325,000 metric tons (12 million bushels) were in line with expectations.

The U.S. dollar trended sideways for the week as the June contract rolls to September. September has been at a discount to the June contract and is forming a range from $95.89 to $96.92.

Current support for July Minneapolis is $5.46 with the March 22nd high of $5.76 as resistance. For the week ending June 6, July contracts for Minneapolis wheat were down 2.5 cents at $5.6625, up 31 cents at $5.355 for Chicago wheat, and up 19.25 cents at $4.6825 for Kansas City wheat.

Corn

Corn futures ran to new highs for the move this week as USDA shocked the trade with a 10 bushel per acre cut in expected ending US yield to 166 bushels per acre versus 176.0 bushels per acre in the May report. This combined with a 3 million acre cut to 89.8 million planted acres cuts total production estimates by a staggering 1.35 billion bushels. Corn production for 2019 is now estimated at 13.68 billion bushels. Trade was expecting a 3.6 bushel per acre cut.

Ending stocks for 2019/20 are now pegged at 1.675 billion bushels, down from 2.485 billion bushels in the May report. To partially offset the 1.35 billion bushel production cut, 2019/20 exports were decreased 125 million bushels and feed usage was cut 300 million bushels. Ending stocks to use ratio for 2019/20 is now estimated at 11.8% with farm gate prices expected to be in the $3.80 per bushel range, 50 cents higher than last month.

USDA did find another 100 million bushels of old crop, increasing 2018/19 ending stocks to 2.195 billion bushels. Brazil corn production was increased 1 million metric tons to 101 million metric tons and Argentina production remained unchanged from last month at 49 million metric tons. With the large reduction expected in U.S. production, world ending stocks for 2019/20 declined 24.21 million metric tons.

Initial weekly planting reports had the central part of Illinois making good progress this past week, although northern portions of Illinois, Indiana and Ohio continued to struggle with rainfall. The overall bottom line was there will still be a significant amount of prevented planting acres, just not quite as much as some projected a week ago.

Corn conditions were among the lowest in history to start the year at 59% good to excellent. The lowest rating of the last 7 years was 63% good to excellent in 2013. 32% of the crop is rated fair and 9% is rated poor to very poor. Planting progress was 83% with trade expectations of 80-85% complete. Corn emerged is at 62% versus the five-year average of 93%. That equates to 15.8 million corn acres remaining to plant versus the March intentions report.

Ethanol production for the week ending June 7th totaled 7.672 million barrels, up 4.98% from the previous week and up 4.08% versus last year. Ethanol stocks were recorded at 21.802, which is down 3.33% from last week and down 1.68% versus last year. The trade was expecting a 1% drop in production and stocks to stay unchanged. Corn used in last week's production is estimated at 113.18 million bushels. Corn use needs to average 98.292 million bushels to meet this year's USDA estimates of 5.45 billion bushels

The market dropped to $4.2725 in December in June 11 trade. Last week, the December contract reached $4.25, so the market seems well supported in this area and appears to be carving out a 30 cent trading range. December reached $4.5675 in June 13 trade. A second close above $4.54 December would signal more market upside potential.

Export inspections were at the high end of expectations at 851,000 metric tons (33.5 million bushels). Export sales were below expectations at 169,000 metric tons (6.6 million bushels) as it appears foreign buyers aware of a potential US shortage and higher US prices are making their purchases from South America.

Soybeans

Soybean futures saw a nice week of gains as rains across the eastern half of the Corn Belt are causing concerns that there may be a substantial amount of acres not able to be planted this year.

This is turning more serious every day as the USDA reported that there were still 33 million acres yet to be planted as of June 9. Soybeans planted for the week ending June 9 was 60% complete vs 92% last year and 88% for the 5-year average. Many of those acres potentially affected by continuing rains are in the states of Illinois, Missouri, Indiana, and Ohio; the states that are the furthest behind in planted acres.

The USDA kept soybean acres and the yield unchanged in the June report, which could make the June 28 acreage report that much more important. But it is more likely the USDA will wait to make significant changes until the July 11 USDA report as they should have more solid numbers by then. It seems like almost a certainty that the USDA will have to lower acres, but by how much is the question.

Acres were left unchanged at 84.6 million acres. Trend yield at 49.5 busels per acre also was left unchanged. The USDA raised 2018-19 ending stocks 12 million bushels to 1.07 billion bushels, at the high end of average pre-report estimates. Pre-report estimates ranged from 920 million bushels to 1.079 billion bushels. This is the first-time old crop ending stocks have been over a billion bushels. 2019-20 U.S. ending stocks are at 1.045 billion bushels versus May USDA expectations of 970 million bushels. USDA lowered 2018-19 exports another 75 million bushels to 1.7 billion bushels. World stocks were left unchanged at 112.8 million metric tons.

The USDA is in the mindset that there is still enough uncertainty that some corn acres may have gotten switched to soybean acres, or may yet get switched. States in this discussion are the southern two-thirds of Illinois, Indiana, and Ohio that have a last planting date of June 20. To us, it seems unlikely that 33 million acres across the U.S. can get planted regardless of last plant dates as unideal conditions plague farmers and may have convinced farmers to give up and take prevented planting. USDA officials don't seem convinced yet. I guess we will see who is right in a month.

The forecast continues to show cool and wet weather for the next two weeks. It is getting more likely each week we could have 10 million unplanted acres (or more) in the U.S. this year.

Major resistance is looking like $9.3125 on the weekly charts and also happens to be close to the 100-day moving average. On the daily charts, resistance is $9.34 and then the 10-month high of $9.71 for new crop soybeans that was set Dec. 12.

First support is the bottom end of the gap left in November soybean futures at $8.58 - $8.645 on May 25. The November contract low of $8.155 set on May 13 recovery is major support. The front month contract July low of $7.91 set on May 13 is the lowest futures price since $7.76 that was set in December 2008.

Canola

For the week ending June 13, July Canola futures were up $3.50 at $456.5 Canadian per metric ton. The July Canadian dollar was at 0.7500. This brings the U.S. price to $15.53 U.S. per hundredweight.

Velva, N.D., $15.25 per hundredweight; September $14.86

Enderlin, N.D. $15.25 per hundredweight; September $15.54

Hallock, Minn., $15.10 per hundredweight; September $15.23

Fargo, N.D., no bid; June 16th $15.60

Barley

Cash feed barley bids in Minneapolis were at $3.25, while malting barley received no quote. Berthold, N.D., bid is $2.75 and CHS Southwest New Salem, N.D., bid is $3.

Durum

Cash bids for milling quality durum are $5 in Berthold and at

$4.90 in Dickinson, N.D.

Sunflowers

Cash sunflower bids in Fargo were at $17.60; July at $17.25.

For the week ending June 13, soybean oil was up 64 cents at $28.02 on the July contract.