September Corn & Bean Stocks - Alert For Stronger Corn Feeding & Larger US Soybean Crop

Market Analysis

Over the years, September’s US grain stocks were non-events. These reports generally confirmed the USDA’s corn and soybeans old-crop ending stocks ideas that were posted earlier that month. However, this began changing about 10 years ago with crop quality, crop size, and shifting feeding levels impacting these final stocks vs. earlier ideas. This led to last year’s biggest corn & soybean stock short-falls of the last 25 years prompting the USDA to reduce each crop’s output after their crop season was completed. Modest changes in soybean output aren’t uncommon given the need to cover bean’s hard demand dispersals with enough supply to balance the S&D levels. Corn changes are unusual, but a larger 2019/20 bean crop is likely next week.
Last year, the USDA sliced 80 bu from the 2018/19 corn crop when the final US stocks dropped 314 million & 207 million below the trade. We don’t expect an output change, but an-other strong summer feeding period is possible. This year’s slowed COVID slaughter rates increasing cattle and hog weights, reduced ethanol by-product supplies, and higher relative wheat prices suggest corn’s summer feed demand could be similar to 2019 when crop fears drove strong corn buying from feedlots & pork producers. Some Derecho bin losses could be included, too. Overall, corn’s Sept 30 stocks could slip 48 million to 2.205 billion vs. earlier with some minor export & food increases included.
Instead of a drop, the USDA is likely to up last year’s bean crop given the extremely narrow quarterly residual levels on the previous 3 reports. A combination of a ½ bu higher yield (38 mil output) & some 5 million crush & ex-ports shortfalls from the USDA’s Sept levels could produce a 570 mil bu. 2019/20 ending stocks. (5 million bu. lower than earlier this month)
This year’s US Small Grain wheat crop maybe 4 million higher than August. However, a small HRW crop (reduced seedings & freeze damage) & a smaller carry-in are the reasons why this year’s Sept 1 stocks are lower at 2.226 billion bu.

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Disclaimer: The information contained in this report reflects the opinion of the author and should not be interpreted in any way to represent the thoughts of any futures brokerage firm or its ...

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