On the Grains
Welcome to the kickoff of summer! I hope everyone has a safe and enjoyable weekend. Corn sales reported yesterday were at 46.9 MBU and have averaged 50.3 MBU over the last 8 weeks, compared to last year’s 31.4 MBU. Exports need another upward adjustment, 100 MBU, on top of what the USDA recently released. EIA ethanol data also looks on par, if not fractionally too low. We feared that we would see decreased feed numbers in the upcoming reports. Yet, currently, it’s almost impossible to imagine that the USDA doesn’t reduce carryout by at least 75 MBU conservatively. Even with a record 25/26 corn crop of 181.5 BPA we likely have seen the highest carryout posted at the 1.8 BBU. Before the horns get too long, it is key to remember that demand isn’t guaranteed to run the same pace next year, and one bushel less of yield only accounts for about ½ to ¾ of a bushel off the carryout. There is a lot of summer geopolitical time to play out, so we are going with the short-dated puts to protect against a bearish acres news at the end of June.