June: Week 3 — USDA expects world feed grains to decline 23 million tons. Stock markets continue to assert a major influence over grain, oilseed and fiber market prices.

Planting delays for grain crops are expected to reduce yields. Soybean potential has yet to be assessed with planting unfinished.

World food production must double before 2030 to keep up with demand.

Fuel consumption is expected to exceed drilling capacity before that time.

USDA anticipated pork exports to increase substantially. This will increase feed grain demand. It takes about 10 pounds of grain to produce 1 pound of pork.

The National Weather Service reports an El Niño pattern developing in the Pacific Ocean.

Soybeans

Soybean supplies are tight and getting tighter. All carryover estimates are now below 300,000 million bushels near 110,000 million. Carryover estimates dropped 20 million bushels since last month’s report. Soybean export projections increase to a record 1.25 billion bushels. Increased Chinese imports and reduced Argentine exports are responsible for the situation. Export inspections declined 50 percent last week but Chinese imports remain steady. Fundamentally, demand is increasing faster than supply. Technical charts show a positive short term trend.

Corn

Ethanol profits declined but the rate of use is increasing as demand for gasoline rises. Farmer selling remains bullishly light. Demand is moderate but steady. China is rumored to be considering the sale of corn reserves. U.S. production is expected to drop 1.5 million tons. Corn carryover is reaching the magic number near 1 billion bushels. If supplies drop below 1 billion bushels, that is historically tight. The result will stimulate higher prices. Export sales of 863,000 tons were at the high end of market expectations.

Wheat

Feed wheat use dropped significantly as prices increased. Feed buyers switched to corn increasing corn exports. The only support for the current wheat price is lower dollar values that stimulate exports. World wheat production is expected to drop 1.5 million tons. Matching global consumption figures were 1 million tons. That pushes global ending stock estimates up 750,000 tons over 182 million. Wheat demand remains soft. Russia has a record 22 million tons for export this year. Wheat fundamental are bearish as supply exceeds demand. Technical indicators are also bearish. Exports did not meet market anticipations.

Rice

Rice exports dropped 60 percent in a week to 18.5 million tons. U.S. production estimates are down 4 million hundred weight with fewer acres planted and lower yields expected as a result of late planting. Supplies in Thailand and Vietnam remain ample and sell at prices lower than U.S. rice. Exports were predicted to drop 2 million hundred weight. Ending stock estimates of 23 million did not change. Market fundamentals are world supply exceeds world demand. Technical charts do not indicate the short term market direction because the signals are mixed up and down.

Cotton

Cotton demand remains surprisingly firm. Stock market pricing affects cotton more than grain and oilseed. Inflation, if it occurs will affect cotton quickly. Current supplies exceed current demand. Future demand will exceed supply. U. S. carry over is expected to drop to a historic low of 5.6 million bales. USDA predicted a small 200,000 bale increase for U. S. exports. Rumors say China will sell stored cotton. World ending stock estimates have dropped 1.5 million bales despite expected increased production from India. Consumption is expected to increase. Weekly cotton exports of 130,000 bales did not meet market expectations of 150,000 due to cancellations. Technical charts show a short term negative potential but long term demand will fundamentally exceed supply. Look for December prices to rise.