By admin       2018-06-18

In its June WASDE report, the USDA reduced its projection of aggregate world and domestic ending stocks for 2018/19 to approximately 83M and 4.7M bales, respectively. Projected carryout outside of China was near unchanged versus May at 49.9M bales. World production was projected lower (as expected) on international weather issues while consumption was projected slightly lower, most likely on supply concerns and demand rationing. Domestically, the USDA enhanced its projection of 2017/18 exports by 500K bales versus May to 16M bales. This was expected and will likely prove to be a significantly insufficient forecast. US new crop production was again projected at 19.5M bales, and we must say that we are dismayed. This projection has remained unchanged since the initial projection in February at the Agricultural Outlook Forum. The refusal to reduce the projection occurred despite the persistence of a severe drought across West Texas. Overall, we think the report was mostly neutral, but it is becoming increasingly obvious that the market is not trading the USDA’s prognostications; Dec trading in the mid-90s is not reflective of the USDA’s projected carryout levels, no matter how anyone endeavors to slice/dice them.

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