Last night, the USDA released their long anticipated quarterly stocks report. Most of the action has been in the corn and wheat pits this week as speculation of lower stocks fuelled buying action. It is interesting quirk of the market that the rumour can provide more heat than the actual fact, and so to with this report.

In short, US stocks are indeed lower than the corresponding year.  To put a figure on it, corn stocks are down 36%, soybean stocks are down 51% and wheat stocks down 18%.  However, the immediate aftermath of the release saw wholesale heavy selling.  Corn and beans recovered a little but continued to grind lower as the stocks report didn’t have the cuts that most in the trade were expecting.

Wheat stocks however, were at the low end of trade estimates and rallied under their own steam.  Surprisingly, HRW and WW stocks were adjusted lower, while HRS was higher than the August estimate – albeit coming from a low base.

You could argue, that the substantial erosion of corn and bean stocks would be bullish for the market.  However, the market had largely factored in even tighter stocks and was trading lower numbers.  When they came in higher than expected, it became evident the market was oversold and needed to correct.

Looking forward, the market will re-evaluate these stock numbers with forecast demand.  There is mounting concern that soybean demand in particular will not materialise with China less reliant on US beans.  If the dip in prices provides a catalyst for a round of Chinese purchases, maybe the trend is reversed.  For now, soybeans, despite their paper thin tightness, appear to have a bearish feel.

Corn to will continue to fluctuate with trade demand and any supply issues.  It would not take a yield adjustment lower or a production hiccup to throw corn into the fire.

Wheat will focus on tight major exporter stocks and seeding progress of winter wheats in the Northern Hemisphere. Strong demand for wheat should see prices supported for some time to come.

The week ahead….

Wheat appears to be in control of its own destiny and is not reliant on the dominant row crops for direction.  As demand emerges and stocks are drawn down, pricing should remain positive for US futures and global cash markets.

Have any questions or comments?

We love to hear from you!
Print This Post

Click on graph to expand

Click on graph to expand

Click on graph to expand

Data sources: USDA, Reuters, Dartboard Commodities

Make decisions with confidence- ask about our board packs, bespoke forecasting and risk management services

Have any questions or comments?

We love to hear from you!
wheat paddock
Grains & Oilseeds

Demand in the balance

This week the market has been focused on the demand side of the equation. Some robust sales into China have been the catalyst for a

Read More »
Percentiles with a background image of hay bales
Cattle

Percentiles – October 2021

Mecardo’s Percentiles update for October 2021. Click below to view the latest report Grains Oilseeds Sheep and lambs Cattle Wool Dairy Fuel Percentiles are an important

Read More »

Don’t have an account with us? Join free.

You can have full premium access to all of our content with a monthly or annual subscription. 

Alternatively, create a free account to access our Insights blog and two free premium article a month!

Independent analysis and outlook for wool, livestock and grain markets delivered to you as it’s published

Commodity conversations podcast cover image, a illustration of a sheep standing on a cow's back with grain either side
Listen to the podcast

Join the Mecardo team for the Commodity Conversations podcast, where we provide short weekly market recaps and longer conversations with guests to discuss the drivers and trends in livestock, grain and fibre markets.

Photo of a farmer surrounded by Merino sheep in dusty yards
Research: Analysis of the Australian sheep flock

In this report for LiveCorp and MLA, we analysed the historical trends in the demographics of the Australian sheep flock, examining domestic factors that influence farm-level enterprise decision making. 

Image of harvested grain pouring into a chaser bin
SERVICES AND CAPABILITIES STATEMENT BROCHURE

We don’t just bring you the most up to date market insights. Find out more about Mecardo’s services including risk management advisory, modelling, benchmarking, research & consultancy.