MINNEAPOLIS — The U.S. Department of Agriculture’s quarterly stocks report Sept. 30 provided a rare bullish surprise for the corn and soybean markets.
The end-of-the-marketing-year supplies were lower than the average pre-report trade guesses, moving corn and soybean prices up.
Brian Hoops, Midwest Market Solutions president, dissected the new numbers from the grain stocks and the small grains annual reports in a Minneapolis Grain Exchange-hosted teleconference.
One move of note in the quarterly stocks report was a revision in the 2018-2019 soybean crop.
“The USDA gives us a final production number each year in January. However, they do revise that number from time to time, and we had a revision of the 2018-2019 soybean crop. They revised it to 116 million bushels less than last January at 4.428 billion bushels.
“The previous number was 4.544 billion bushels, so it is a pretty major revision as we don’t have quite as much inventory on hand, and you will find that from time to time when we do these stocks inventory numbers and that’s what USDA showed us. The stocks numbers were much tighter than expected.”
What was the big surprise in the quarterly stocks corn number?
“The 2.114 billion bushels stocks on hand is over 315 million bushels less than the average trade guess, and this would be the largest miss by the trade in history going back to my data base in 1990.
“Normally, corn ending stocks will be within a range of about 50 million to maybe 100 million bushels different than what the trade expected. So, this is three times the normal variance that the trade would uncover.”
What was the highlight on the soybean stocks side?
“Soybean stocks at 913 million bushels was well below the average trade guess of 982 million bushels and down from the previous numbers.
“Last year it was 438 million bushels. So, the corn and the soybean numbers are both larger than the levels a year ago but down from what the trade had expected.
“This soybean number is the largest miss by the trade in history and it implies that we had better feed usage and better demand than the trade had been factoring in.
“Like corn, the soybean differential is usually 20 million to 30 million bushels. That’s the average or the mean going back to 1990. We’re a good 2 1/2 to 3 times variance compared to the average trade guess, and I think that’s why we’re seeing such a sharp reaction.”
The USDA had quarterly wheat stocks at 2.385 billion bushels.
“That is above the average trade estimates due to some larger production figures and maybe a little softer demand. It was within the trade guess range.
“This is almost exactly similar to last year when we had 2.38 billion bushels of stocks on hand. There was a little bit of negative news for the wheat market.”
All wheat production was up 4% from the revised 2018 total of 1.89 billion bushels. What did the small grains annual report indicate?
“All winter wheat was down from the average trade guess and down from last month at 1.304 billion bushels, and all wheat at 1.962 billion bushels is also down from last month and the average trade guess. Soft red winter was also below the average trade guess at 239 million bushels.
“The small grains annual report initially weighed on wheat prices but because corn and soybeans are seeing some active buying in short covering we’ve seen that spill over to the wheat market and given us higher prices so far in the Sept. 30 trading session. But the small grains numbers came in a little bit bearish.”