Corn, wheat stocks higher than trade expectations

KANSAS CITY, Mo. — There were some big swings and misses from traders with their projections leading up to the latest quarterly grain stocks report.

Arlan Suderman, StoneX chief commodities economist, broke down the Sept. 30 numbers in the U.S. Department of Agriculture’s quarterly stocks and small grains summary reports.

Let’s start with the quarterly grain stocks. What stands out to you?

Suderman: The corn and soybean numbers are as of Sept. 1. So, this becomes the ending stocks number for the old marketing year, which becomes the new beginning stocks number for the new marketing year. So, that has big implications for both marketing years.

For corn quarterly stocks, at 1.532 billion bushels, that was almost 200 million bushels above the average trade estimate. What that suggests is exports are largely known.

Ethanol usage is largely known. It also suggests that feed usage was not as aggressive as USDA thought in the old crop here and it means that feed usage is not as aggressive as USDA thought in the new crop year, as well.

I anticipate the next World Agricultural Supply and Demand Estimates report we get, whether that be in October or pending a government shutdown, it may be November or later, that we’ll see USDA cut feed usage numbers. So, it gives us a larger carry-in with implications for lower feed usage than what was first thought.

On the soybeans, not a lot of change there. We did see modest production estimate changes for both corn and soybeans for last year, but that was rather minor.

Overall, soybean stocks came in 7 million bushels below what the average trade guess was — not a big factor for soybeans at all.

The wheat crop came in notably larger than what was anticipated, about 60 million bushels, larger than what was anticipated, and that explained much of the higher stocks numbers (at 2.12 billion bushels).

So, now we’re going to look to see, can we feed the wheat? Can wheat feed itself into the feed stream? That has negative implications for corn? I think the markets will adjust to this.

We’ve got strong corn demand on the export front. We have strong wheat demand on the export front, as well. But right now we’re absorbing these numbers and we’re seeing some negatives across the board, and we just need to try to stabilize before we do too much chart damage.

The small grains summary indicated an increase in winter wheat production, right?

Suderman: Spring wheat numbers were just a little bit higher than the average guesses and durum wheat was pretty much right on the average trade guess. So, it seems like higher winter wheat production is the culprit here to a higher wheat production number overall.

Hard red winter wheat came in about 36 million bushels above expectations. Soft red winter coming in about 13 million above expectations. All winter coming in at about 48 million bushels above expectations.

As the numbers were rolled out Sept. 30, a federal government shutdown was pending. What are some of the impacts the shutdown will have on the agriculture market?

Suderman: The markets don’t necessarily care about that except for the fact that it removes the regular government reports that give us indications of fundamentals. For example, the weekly crop progress reports we would expect to be suspended if the government’s in a partial shutdown.

Weekly exports sales in shipments numbers would be suspended. The October WASDE report could be delayed or suspended.

So, all of those things just leave more uncertainty in the marketplace as we’re moving forward. That can be positive or negative, depending on how the market wants to interpret it.