U.S. corn futures slid more than 4% to a five-month low, while soybean futures
dropped to the lowest in more than three months. Wheat prices followed those
commodities lower, slipping to an almost five-month low.
Soybeans
The soybean market saw a double-whammy today with June 1 stocks coming in well above market expectations, while new crop planted acreage shocked to the upside, as well. With last year's soybean crop now apparently confirmed as being understated, and the perception that there will be enough old crop supplies to get through marketing year, the 2013/14 fundamental "bullish story" has essentially be closed. While there could/likely will be localized cash issues still, given the combination of reports today there may simply be a "washing of the hands" of the old crop thought-process in quick fashion.
USDA reported June 1 soybean stocks at 405 million bushels, above the average trade estimate of 378 million bushels, and implied a 3rd quarter residual of an all-time record negative of -110 million bushels. As seen in the two following charts, today's reported June 1 stocks represented on of the largest bearish surprises on record relative to trade expectations and a negative 3rd quarter residual beyond anything ever reflected in the U.S. soybean balance sheet.
Corn
After two quarters of USDA indicating very good, and surprisingly strong, U.S. corn feed/residual usage, and putting the market in a sense of clarity that cheap prices do indeed create impressive levels of domestic demand - even with historically poor livestock numbers - the rug was pulled out from under that scenario today as June 1 stocks were reported 3.854 billion bushels, 132 million bushels above expectations. This was the 2nd largest "bearish surprise" in history for June 1 stocks. Heading into the report this morning, the average trade estimate implied the market was looking for 3rd quarter feed/residual usage to be up 8% from last year, after 1st quarter was up nearly 16% and 2nd quarter was up 34% statistically, but 3rd quarter feed/residual usage was implied at just 864 million bushels, down more than 6% from last year. Once again, we witnessed a very unlikely realistic occurrence as somehow we went from 2nd quarter usage up 34% to 3rd quart er being down 6+%. However, the negative feed/residual implications do not stop with just today's 3rd quarter situation.
Source: Telequote & rjomrt.com