Market Analysis

Over the years, September’s US grain stocks have been non-events. These reports generally confirmed the USDA’s corn and soybeans old-crop ending stocks ideas that were posted earlier this month. However, this began changing over the last decade with US crop quality, crop size and shifting feeding levels impacting the US final stocks. This has led to some dramatic corn & soybean ending stock shortfalls in the last 2 years. The US corn’s final carryovers have been reduced by over 200 million bu and soybeans stocks by 50 million bu or more vs the trade’s expectations. Modest upward changes in the US soybean output aren’t uncommon given the need to cover soybean’s hard demand dispersals & a small residual in the past. Corn crop changes are unusual and aren’t expected this year.

After some crop quality issues in 2019/20, we expect a return to corn’s traditional front-loaded yearly feeding pattern this year because of higher DDG availability, a better quality 2020 crop & sharply higher cash prices prompting feeders to use inventory & wait for harvest supplies. Friday’s Quarterly US Hog & Pigs revealing only a 94% summer pig crop which dropped US market hog numbers by 4.1% from 2020 suggests less livestock feed demand. This sliced our 2021 summer quarterly demand forecast by 340 million to 651 million bu & 2020/21 demand to 5.7 billion bu. Overall, corn’s Sept 30 stocks could rise to 1.203 billion with minor export & ethanol changes vs the USDA Sept 10 adjusted levels. The trade’s 2020/21 average the US ending stocks estimate is 1.155 billion bu, off 32 million from the USDA’s current projection.

A chance for an increase in 2020/21’s US soybean crop remains because of this year’s previous small quarterly residuals. However, this year’s 60 million decline in US bean crush from its 2.2 billion forecast in the spring leaves room for a higher ending residual this year. Similar to corn, limited US crush and exports adjustments are likely from the USDA’s September changes. With a 10 million larger residual, soybean’s 2021 ending stocks could be 170 million vs the trade’s 174 million average estimate.

What’s Ahead

Despite modest ending stocks changes, the biggest impact of 2020/21’s final US corn & soybean stocks are their declines to 2013/14 levels. These sharply lower carryovers will tighten 2021/22’s available supplies making this fall’s US yields highly important to the markets. The impact of the possible La Nina in the Pacific Ocean on S America’s crops should also be watched closely. Hold sales at this time.