MINNEAPOLIS — The bulls and the bears united in the latest
world agricultural supply and demand estimates report as old- and new-crop corn
and soybean ending stocks went in opposite directions.
“The corn number was probably the one that stands out most
on this report,” said Peter Georgantones, Roy E. Abbott Futures market analyst,
in a Minneapolis Grain Exchanged-hosted teleconference after the U.S. Department
of Agriculture’s report.
The USDA reduced its old-crop ending stocks estimate from
1.331 billion bushels in last month’s estimate to a supportive 1.146 billion
bushels on May 9.
Figuring in an average yield of 165.3 bushels per acre for
corn planted this year, USDA jumped the 2014-2015 ending stocks to 1.726 billion
“So they’re using a really large yield. That kind of caught
the market off-guard. They weren’t looking for something that big,” Georgantones
“They haven’t even added in more acres, and I think the
acreage numbers next year are probably going to be 1.5 or 2 million acres more
than what we’re seeing from USDA. We’ll find that out in late June.
“The corn number is constructive here, but they’re using a
165.3 bushels yield, so if we do have any problems and they take 10 bushels off
that yield, real quick there could really be some tightness in that
Ethanol demand was increased by 50 million bushels, and
export sales were increased by 100 million bushels.
“All those numbers make sense to me. We’ve been seeing real
good corn sales, real good demand in all of the sectors right now,” Georgantones
The USDA also increased Brazilian corn from 72 million to 75
million tons, and China remained at 217 million tons.
“China hasn’t had a real drought in several years. If
something happens on that front, that could really change the supply-demand
situation and the market price action significantly and very quickly,”
“I can’t get bullish on new-crop corn, but we have a long
growing season ahead of us. I’m selling into rallies in new crop.”
The USDA projected old-crop soybean ending stocks to 130
million bushels, down 5 million from the April report.
“That’s a pretty neutral number. There were some people who
thought we might find some beans from last year crop and take the soybean
carryout up, so 130 is a constructive number,” Georgantones said.
The U.S. soybean ending stocks for 2014-2015 are estimated
at 330 million bushels.
“That’s the one that I think is eventually going to do-in
the bean market,” Georgantones said.
“We’re at $12.25 November soybeans right now, and 330
million bushels implies we could pretty easily fall $1.50 to $2 on the board.
“We’re going to be buried in beans next fall if we have a
good crop this year.
“There are a lot of soybean acres out there. We have a lot
of acres coming again in South America where they had a big crop this year, and
they’re holding inventory. We’re going to have a large crop with our acreage
increase, so I’m very bearish on new-crop beans.
“The problem is I’m bullish on old-crop beans, which is the
July contract, and things are still very tight on the old-crop front and they’re
going to be over the next 60 days.
“Once we get into a situation where the old crop has played
itself out, then they’re really going to start unloading on the new-crop
Georgantones foresees wheat as a market follower due to the
large world ending stocks estimate of 187 million metric tons, more than 6
million above last month’s estimate.
“We may have room to rally maybe another 30 cents, but I
don’t think we can go a heck of a lot higher based on what I’m seeing right now
with demand in the world numbers,” he said.
“However, wheat is the one market that’s real skittish with
the Russian situation.
“Just the fact that everybody in the world is always
planting wheat sometime or another, all it takes is one or two of the largest
countries to run into a little bit of trouble and that could change the balance
sheets real quickly.”