WASDE REPORT FOR 8/10/18
Howard Tyllas of www.futuresflight.com - InsideFutures.com - Fri Aug 10, 3:10PM CDT

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This service mission is to make producers and end users self-directed, and not need information provided by any service. All of my subscribers were seeking to hedge in a better way than all the services they had in the past were providing. When I bought my membership/seat in 1976, nobody would help or educate metowhat works for them, and what does not. I learned from the losers what does not work by listening to what they said and how they traded. They taught me what NOT to do. You, like my subscribers, have already learned what not to do, now you want to learn what works well for you, no matter up, down, or sideways market.

As I have said every year "Think what you want but always have a hedge on". Bull or bear, we use the same strategies, but each self-directed person reflects what they think in the strike prices they select and use. No herd following here. It is the opposite, when everyone is buying and the price is near significant resistance, we are improving our hedge by capturing more income when cheap to do so, and on price breaks when everyone is selling and the market is near contract lows, we are improving our hedges buying back our upside when cheap to do so.

Hedge means to take risk off the table, not add to it. How is it possible for hedge service to recommend buying back your corn when above $4.00, please tell me how that is a hedge? We were hedging and improving our hedges then.

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COARSE GRAINS:This months 2018/19 U.S. corn outlook is for larger supplies, greater feed and residual use, increased exports, and larger ending stocks. Corn production is forecast at 14.6 billion bushels, up 356 million from the July projection. The seasons first survey-based corn yield forecast, at a record 178.4 bushels per acre, is 4.4 bushels higher than last months trend-based projection. Todays Crop Production report indicates that Illinois, Indiana, Nebraska, Ohio, North Dakota, and South Dakota are forecast to have yields above a year ago. The yield for Iowa is unchanged relative to last year, while Missouri, Minnesota, and Kansas are forecast below a year ago.

Feed and residual useisup based mostly on a larger crop and lower expected prices. Exports are raised reflecting U.S. export competitiveness and expectations of reduced competition from Brazil. With supply rising faster than use, ending stocks are raised 132 million bushels to 1.7 billion. The season-average corn price received by producers is down 20 cents at the midpoint at a range of $3.10 to $4.10 per bushel.

Sorghum production is forecast 19 million bushels higher with the forecast yield 3.6 bushels per acre above last months projection. Sorghum food, seed, and industrial useisraised reflecting an increase in the amount of sorghum used to produce ethanol. This months 2018/19 foreign coarse grain outlook is for lower production, reduced trade, and slightly lower stocks relative to last month. EU corn production is lowered, mostly reflecting reductions for France and Germany that are partially offset by increases for Romania and Bulgaria. Brazil corn production is lowered based on updated expectations for second-crop corn area that will be plantedbeginningearly 2019. Ukraine corn production is forecast higher, as timely rainfall and lack of excessive heat during reproduction boost yield prospects. Other notable corn production changes include projected increases for Zimbabwe, Serbia, and Moldova, with reductions for Zambia and South Africa. Barley production is lowered for theEU,but raised for Ukraine.

Major foreign coarse grain trade changes for 2018/19 include corn export reductions for Brazil, Zambia, and South Africa that are partially offset by increases for Serbia, Ukraine, and Moldova. Brazils corn exports are lowered for 2017/18 based on lower-than-expected shipments observed for the local marketing year beginning in March 2018. Global corn imports for 2018/19 are raised reflecting expectations of record-high imports for the EU that are partially offset by reductions for Vietnam and Zimbabwe. Foreign corn ending stocks are slightly higher relative to last month, mostly reflecting increases for Brazil and Zimbabwe that are largely offset by reductions for Zambia, South Africa, Canada, and Russia.

WHEAT:The outlook for 2018/19 U.S. wheat this month is lower supplies, greater use, and reduced stocks. Wheat production is lowered 4 million bushels to 1,877 million on a slight reduction in winter wheat, durum, and other spring wheat production as indicated by the NASS August Crop Production report. Projected food use is increased by 5 million bushels to 970 million based on the latest NASS Flour Milling Products report. This wouldbe recordfood use, surpassing 2017/18, which was also revised higher. Projected wheat exports are raised 50 million bushels to 1,025 million on substantially lower exportable supplies for the EU and limited additional export capacity of several other major competitors.

Projected 2018/19 ending stocks are reduced 50 million bushels to 935 million, down 15 percent from last year. The projected season-average farm price is up $0.10 per bushel at the midpoint with the range at $4.60 to $5.60. World 2018/19 wheat supplies are reduced this month by 7.1 million tons, primarily on lower EU production. Continued drought conditions in several northern

European countries, most notably Germany, resulted in lower production, down 7.5 million tons to 137.5 million. This would be the lowest EU wheat production since 2012/13. Russias wheat production is increased 1.0 million tons to 68.0 million on continued favorable conditions for spring wheat. Projected global 2018/19 trade is lower, mainly on reduced EU exports, which are down 4.5 million tons to 23.0 million, the lowest in six years. Russias exports are increased 1.0 million tons to 35.0 million; Russia is projected to remain the leading world wheat exporter for the second consecutive year. Global imports are lowered for several countries with the largest reduction for Algeria. Projected 2018/19 world consumption is 5.1 million tons lower, primarily on reduced feed use in the EU and Russia. Global ending stocks are down 1.9 million tons to 259.0 million, down 5 percent from last years record.

RICE:Total U.S. rice supplies for 2018/19 are raised slightly from last month due to increased beginning stocks that were mostly offset by a smaller crop. Beginning stocks are raised 2.5 million cwt on a 3.5-million export reduction for the 2017/18 crop year that is partially offset by increased domestic and residual use. U.S. rice production is lowered 2.1 million cwt to 210.9 million on the first survey-based yield forecast of the 2018/19 season. Long-grain production islowered2.8 million cwt, while combined medium- and short-grain is raised 0.7 million cwt.

The all rice yield forecast is lowered 76 pounds per acre from the previous forecast to 7,523. Exports for the 2018/19 crop year are lowered 4 million cwt to 98 million on a lack of price competitiveness relative to both Asian and South American exporters. Ending stocks are raised 1.4 million cwt to 43.6 million and the 2018/19 all rice season-average farm price is lowered $0.20 per cwt at the midpoint to a range of $11.40 to $12.40. Global supplies for 2018/19 are lowered fractionally on reduced production for Madagascar and Iraq. World trade is raised slightly, led by higher Pakistan exports and Iraq imports. Global exportsremainrecord large. Global consumption and ending stocks are each lowered fractionally.

OILSEEDS:U.S. oilseed production for 2018/19 is projected at 135.6 million tons, up 7.7 million from last month mainly due to a higher soybean production forecast. Soybean production is forecast at 4,586 million bushels, up 276 million on higher yields. Harvested area is forecast at 88.9 million acres, unchanged from the July projection. The first survey-based soybean yield forecast of 51.6 bushels per acre is 3.1 bushels above last month and 2.5 bushels above last year. As higher production more than offsets lower beginning stocks, soybean supplies for 2018/19 are projected at a record 5,040 million bushels, 5 percent above last month. With larger supplies, crush and exports areraised15 and 20 million bushels,respectively. Ending stocks are projected at 785 million bushels, up 205 million from last month. The U.S. season-average soybean price for 2018/19 is forecast at $8.90 per bushel at the midpoint, down 35 cents from last month. The soybean meal price forecast at $295 to $335 per short ton, down $20 at the midpoint. The soybean oil price forecast is unchanged at 28.0 to 32.0 cents per pound. U.S. soybean changes for 2017/18 include higher exports, higher crush, and lower ending stocks.

Exports are raised 25 million bushels to 2,110 million on strong export sales and shipments through July. Crush is raised 10 million bushels to a record 2,040 million on strong soybean meal exports. With increased crush and exports, soybean ending stocks are reduced 35 million bushels to 430 million. Global oilseed 2018/19 supply and demand forecasts include higher production, exports, crush, and stocks compared to last month. Global oilseed production for 2018/19 is projected at 603.1 million tons, up 10.5 million with higher soybean,sunflowerseed, cottonseed, and peanut production partly offset by lower rapeseed. Global soybean, peanut, and cottonseed crops are raised on higher U.S. production.Sunflowerseedproduction is higher for the EU, benefitting from favorable weather conditions in southern and southeastern Europe. Conversely, hot, dry weather in northern Europe resulted in a 1-million-ton reduction to EU rapeseed production. Other oilseed production changes include highersunflowerseedand rapeseed production for Russia and Ukraine due to beneficial weather conditions over the past few weeks. Global oilseed exports for 2018/19 are projected at 182.5 million tons, up 1.2 million with higher soybean exports for the United States and higher rapeseed exports for Ukraine.

Global crush is raised 1.2 million tons to 501.8 million. Lower soybean crush for China and rapeseed crush for the EU are offset by higher rapeseed crush for Russia andsunflowerseedcrush for the EU, Russia, and Ukraine. With larger increases to supply than use, global oilseed stocks are raised 8.3 million tons to 119.9 million.

SUGAR:Beet sugar production for 2018/19 is projected up 71,000 short tons, raw value (STRV) to 5.107 million based on sugarbeet area and yield forecasts made by NASS in Crop Production. Beet sugar production for 2017/18 is reduced by 34,353 STRV to 5.241 million based on higher beet pile shrink estimated for the 2017/18 slicing campaign. Based on NASS sugarcane yield and area harvested, 2018/19 cane sugar production in Louisiana is increased by 191,000 STRV to 1.781 million and cane sugar production in Florida is increased by 50,000 STRV to 2.050 million.Deliveriesfor human consumption for 2017/18 are reduced by 135,000 STRV to 12.100 million based on pace to date and the corresponding projection for 2018/19 is reduced in line by 150,000 STRV to 12.250 million. Ending stocks for 2017/18 are estimated at 2.103 million STRV for a stocks-to-use ratio of 16.9 percent. Ending stocks for 2018/19 are projected at 2.261 million STRV for a stocks-to-use ratio of 18.1 percent. Sugar supply and use in Mexico are unchanged from last month.

LIVESTOCK, POULTRY, AND DAIRY:The forecast for total meat production in 2018 is raised from last month as increases in broiler production more than offset declines in beef, pork, and turkey production. Second-quarter broiler production is raised on June production data, while third-quarter production is raised on hatchery data and expected growth inbird weights. The decline in beef production largely reflects a slower pace of marketings in the third quarter. Cow slaughter is raised, but recent carcass weight data and a larger proportion of cows in the slaughter mix led to a reduction in expected carcass weights during the second half of the year. Pork production is reduced on a slower expected pace of slaughter during the last half of the year. Forecast turkey production is reduced slightly from the previous month on June production data. Egg production is increased on second-quarter production data.

For 2019, the pork production forecast is raised from the previous month on higher expected hog slaughter in the first part of the year and heavier carcass weights. The beef production forecast is raised on heavier carcass weights in 2019. Broiler production is also raised for 2019 on lower forecast feed prices. Annual turkey and egg production forecasts for 2019 are unchanged from the previous month. For 2018, second-quarter beef imports are reduced on June trade data; the forecasts for the outlying quarters and into 2019 are unchanged. Beef export forecasts are raised for both 2018 and 2019 on expectations of continued strong global demand. Second-quarter pork imports for 2018 are lowered slightly on recent trade data, but the forecasts for the outlying quarters and into 2019 are unchanged.

The second-quarter pork export forecast is adjusted for June data; the forecast for the remainder of 2018 and into 2019 is reduced slightly on expected competition in several markets. Broiler and turkey export forecasts are reduced for both 2018 and 2019 on weaker-than-expected demand. Cattle and turkey price forecasts are unchanged at the midpoint for 2018 and 2019. Hog and broiler price forecasts are lowered for 2018 and 2019. The egg price forecast for 2018 is raised on recent price strength; no changes are made to the 2019 egg price forecasts. The milk production forecast for 2018 is unchanged from last month. The milk production forecast for 2019 is raised from the previous month on slightly higher cow numbers and increased milk per cow. For 2018, fat basis exports are raised from the previous month on higher sales of butter and other fat-containing products.

The fat basis import forecast is also raised on higher expected imports of butterfat products. The skim-solids basis export forecast for 2018 is lowered on weaker sales of nonfat dry milk (NDM) and the imposition of tariffs by China on lactose and other dairy products. The import forecast is unchanged. For 2019, the fat basis import and export forecasts are unchanged from the previous month. Skim-solids basis exports are lowered on expected continued weak sales of lactose. The skim-solids import forecast for 2019 is reduced from the previous month on lower expected imports of milk protein concentrates. For 2018, cheese, butter, NDMandwhey price forecasts are raised for 2018.

Prices for cheese, NDM and whey are also raised for 2019 as demand strength is expected to carry into next year. However, the 2019 butter price forecast remains unchanged from the previous month. The 2018 Class III and Class IV price forecasts are raised from the previous month to reflect the higher dairy product price forecasts. For 2019, Class III price forecast is raised on higher forecast cheese and whey prices. The Class IV price forecast is raised on the stronger forecast NDM price. The all milk price is raised to $16.10 to $16.30 per cwt for2018,and is raised to $16.45 to $17.45 per cwt for 2019.

COTTON:This months 2018/19 U.S. cotton forecast includes higher beginning stocks, production, exports, and ending stocks relative to last month. Production for the 2018 crop is raised 4 percent to 19.2 million bales, on this seasons first survey-based production forecast.

NASSs survey indicates higher abandonment, but a higher average yield compared to last months expectations. Beginning stocks are raised 400,000 bales due to lower-than-expected 2017/18 exports and domestic consumption, and 2018/19 exports are 500,000 bales higher, at 15.5 million bales. Ending stocks are 600,000 bales higher this month. The midpoint of the marketing-year-average price is unchanged from last month, at 75 cents per pound.

Projected world 2018/19 ending stocks are down 1 percent this month, due to a combination of lower beginning stocks and higher consumption offsetting higher production. Beginning stocks are reduced 450,000 bales, reflecting both lower production and higher consumption estimates for 2017/18. Production in 2018/19 is increased 400,000 bales, with higher expected crops in the United States, Argentina, and Turkey offsetting reduced crops in Uzbekistan, Australia, and Turkmenistan. Consumption is raised 660,000 bales, led by a 300,000-bale increase for Pakistan, with smaller increases in Indonesia, Turkey, and other countries.

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