US Sept Stocks & Small Grains - 2018/19 Stocks Lower Than Trade, But S. Grains Being Rechecked

Market Analysis

This week’s US Quarterly Stocks & Small Grains re-ports provided some jolts in both corn and soybean final stocks while wheat’s 2019 US crop size was modestly lower than its August level. This year’s final corn and bean stocks were sharply lower than the USDA’s previous levels & the trade’s estimates. US all-wheat production was down just 18 million bu. to 1.962 billion bu.

Before the report, the trade was nervous about a higher final US corn stocks after 2018’s 130 million bu. surprise. Despite larger cattle-on-feed & hog/chicken numbers last summer, concerns about lackluster SW hard red wheat values hurting corn feeding surfaced. Instead, 2019’s US final stocks were sharply lower by 314 million to 2.114 billion bu. With ethanol & exports relatively known, corn’s feed & residual summer usage will be where the USDA’s demand level will change. However, this will push 2019’s summer feed usage over 1 billion bu. – a 68% rise over 2018. This suggests old-crop corn’s size was likely overestimated by 200-250 million bu. However, corn’s 2018/ 2019 size won’t change so its feed level will balloon to 5.6 billion bu. on the upcoming October 10 S&D update.
Soybeans stocks were also lower than expected by 69 million bu. Given this year’s very high quarterly residuals, the USDA slashed its 2018 crop size by 116 million bu. to 4.428 by dropping the US yield by 1 bu. & slicing harvest-ed area by 516,000 acres. The 913 million smaller carryover bu. vs. Sept. will also cut 2019/20’s stocks to be-low 550 million bu. without any Oct 10 crop changes.

Wheat’s total US supplies were lower because of reduced soft red (-18 mil) & hard red (-7 mil) crops on Monday's update while spring, durum & white wheat numbers were up 7 million bu. Given the large portions of N. Plains crops still in the field mid-month, the USDA announced a resurvey of spring wheat, durum, oats, and barley crops for the November crop report.

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What’s Ahead:

The conflict between cool & hot temperatures has produced heavy rains in the northern & western Midwest slowing 2019’s harvest. This year’s April to June plantings will add to the current sluggish harvest pace. Lower yields are likely, but field results may be unknown until late month. Producers should still have 40-45% of your corn & 50% of your bean sales completed basis $3.89-$3.95 & $9.18-$9.30 ranges.