USDA’s September Quarterly Stocks Report shocked the corn market pegging the stocks in all positions at 2.095 billion bu. That’s up 35% from last year or 544 million bu.
That is also an increase of 173 million bu. compared to the ending stocks in the September WASDE, despite USDA lowering old crop production to 16.963 billion bu.
The push back above 2.0 billion bushels was bearish for the market and could offset some of the lower new crop yield expectations in the October WASDE and push the stocks to use ratio back above 10% according to Jim McCormick with AgMarket.Net.
“They did lower the crop from a year ago but plain and simple the net effect though even with a revised crop from lower they found more carry out and that means the snugness of this projected new crop balance sheet is not quite as snug as the trade was thinking.”
Where Did the Corn Come From?
McCormick says where the additional corn inventory came from won’t be known for sure until the October WASDE.
“My knee jerk reaction is they’re going to make adjustments on that feeding residual remember that category the demand number of that category always looked incredibly high compared to recent history,” he explains.
That’s due to the smaller livestock inventory, even with cattle being fed to record weight.
But it means new crop corn carryout will also not be as tight.
“You’re going to carry that forward into this new crop balance sheet and that could offset maybe some of the fear of losing some yield due to the poor quality or poor standability of some of the crops out there,” he adds.
Soybeans the Bright Spot
For soybeans quarterly stocks came in at 315 million bu. which was 10 million bu. below last year and the September ending stocks number. Production was nearly unchanged at 4.261 billion bu. McCormick says this is slightly friendly.
“That crop was revised a little bit lower. So it would show you that the total supply was down a little bit. The other thing, I wouldn’t be surprised if they had to upward revise maybe the crush number a little bit. We know the industry has been running crazy on the crush number with the diesel market doing what it’s doing. The profitability is there.”
Smaller Wheat Crop Confirmed
On wheat quarterly stocks were pegged at 1.846 billion bu. which is was below estimates and 288 million bu. below last year.
However, wheat production was slightly above estimates at 1.534 billion bu. The slight increase came from winter wheat at 1.02 billion bu. which was up 29 million from September. That was slightly offset by other spring wheat production at 450 million bu. which was down 24 million from last month.
McCormick says, “thee stocks number is a little bit friendly. The production number overall was a little bit bearish, hence the wheat market’s under pressure.”
However, total wheat production is still down nearly a half billion bu. from last year and a 56 year low.
