September Bean & Corn Stocks - Recent Demand Adjustments Reduce Changes In Old-Crop Stocks

Market Analysis

Historically, September’s grain stocks have been non-events. These reports normally have confirmed the USDA’s old-crop corn & soybean ending stocks ideas that were posted earlier this month. This began changing in the late 2000s with crop quality, crop size & crop development impacting these final stocks. However, after the USDA’s numerous demand shifts earlier this month, the upcoming September 30 stock changes will likely be modest given 2019’s large stocks. Only, a sizable old-crop bean crop drop or a big change in corn’s feed de-mand could shrift these ending stocks very much.

Earlier this month, the USDA upped its overseas bean demand by 45 million bu. capturing a part of China’s large August shipments with its 1.745 billion bu. update. NOPA’s recent August crush was 6 million higher than the trade’s average suggesting October’s next US crush will rise to 2.092 billion bu. from 2.085 billion even after a 20 million increase earlier this month. Overall, this year’s quarterly residual disappearance levels have been unusually high. This suggests the 2018/19 US bean crop could be overestimated by 30-45 million bu. This could result in 960 million bu. Sept 1 US bean stocks vs. the USDA’s current 1.005 bil. level.

2018/19 US corn exports were sliced 40 million bu. this month despite hefty rail shipments to Mexico. The USDA also reduced corn’s old-crop industrial demand by 50 million bu because of sluggish ethanol exports and EPA’s expanded waiver program this summer. Despite stronger livestock & poultry numbers this summer, talk has surfaced of reduced corn feeding on hard red wheat’s late summer price break. However, feed sales normally don’t occur quickly after wheat moves into storage; plus lower ethanol output means less DDGs supplies. Corn’s stocks may drop by 25-40 million from higher feed usage, but 2018/19’s stocks will remain a robust 2.41 billion bu.

(Click on image to enlarge)

What’s Ahead

After an initial reaction to the September 30 quarterly stocks report, the focus will likely return to US country yield reports, the status of US/China trade talks & Brazil’s rainfall forecast. Mato Grasso, the largest province, planting progress is off to a slow start because of limited rainfall. Utilize pushes to $3.80-85 in Dec Corn and $9-$9.10 in Nov Beans to advance sales 10% to the 35-40% and 40-50% for 2019/20 crops.