Quarterly Grain Stocks Report Adds Further Pressure To Markets

September 28, 2018 02:32 PM

In their Friday report, USDA noted that as of September 1 corn stocks were up 130 million bushels more than the average trade guess. Soybeans were 37 million bushels more and wheat stocks were 37 million bushels more than pre-report trade expectations. Those figures were negative news to an already pressured commodity market. Immediately following the release of the report, corn fell 7 cents and soybeans fell 10 cents.

“There's more grain in the bin on September one than what the market expected,” explains AgriTalk host Chip Flory. “On soybeans, to get there [USDA] had to go back and adjust the 2017 soybean crop.”

USDA pushed the 2017 soybean crop up 19 million bushels, adding 0.2 bushels per acre. While they didn’t change planted or harvested acres they did revise yield because otherwise the report would have shown a huge negative residual use, something USDA tries to avoid, Flory explains.

What Will It Mean For Markets?

“Look at [these September 1 stocks] as the supply side cushion for the 2018-19 marketing year,” Flory explains. “Now we're already harvesting that new crop supply, but we just added 130 million bushels of corn to total supplies. We just added 40 million bushels of soybeans to total supplies for the 2018-19 marketing year.”

While additional supply for soybeans is negative, adding 130 million bushels of corn can change some attitudes, Flory says.

“It makes it easier for us to get to a 2 billion bushel carry at the end of the 18-19 marketing year, so, they're negative for the market there's no question,” he says.

According to Flory, the market will continue to tell farmers to plant more corn acres and a few less soybean acres next year.

“I would love it if there had to be competition for those acres,” Flory says. “If corn actually had to bid to get those acres that it needs for 2019. Unfortunately, soybeans are just kind of standing off to the sideline and saying go ahead and have those acres now.”

Wheat could also see a resurgence of acres for next year’s growing season. Extremely poor soybean basis combined with improved seeding conditions will likely mean more wheat throughout the Northern plains, Flory says.  

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Spell Check

PJ Jahn
Ptown, IL
9/29/2018 08:11 AM

  Seems we have finally arrived at the point that we will be able to raise a record crop without even planting the crop. Last years crop larger than previously thought??? It took a whole year to come to that conclusion??? With all the high tech info/analytics at the hands of USDA/NASS, give me a brake. Reminds me of years back, as they would wait a year to admit that they had over estimated the previous crop. All the while the basis told us something different than what the CBOT wanted. So happy to see Trump support the farmers he lied to over, and over while campaigning. The lost domestic ethanol demand/market, and the Trump administration doing nothing to correct it, (thanks Chuck Grassley) proves Trump, and the Republicans took us for the fools we are. The illegally issued RIN waivers by POS Scott Pruitt, as to the RFS law, is a big deal to our corn market. And has nothing to do with the E15 issue, period!!! Ya, good luck with E15 deal also. The tariff on beans is rapidly running out of time to be resolved without huge long term demand damage. Getting very close to GAME OVER!!!!!

Douglas Street
Newton, KS
9/30/2018 07:31 PM

  PJ, cut production, reduce carryover, increase profits.