U.S. corn, soybean piles get smaller, USDA says

Soybean market rockets 30¢ higher.

U.S. farmers are sitting on less corn and soybeans than previously thought, according to the USDA.

On Wednesday, the USDA released its Quarterly Grain Stocks Report.

As a result, the CME Group’s farm markets jumped up sharply. Corn moved up 9¢, soybeans up 21¢, and wheat up 17¢.

At the close, the Dec. corn futures finished 14¼¢ higher at $3.79. March corn futures settled 14½¢ higher at $3.88¼.
 
Nov. soybean futures settled 30½¢ higher at $10.23¾. January soybean futures closed 30¼¢ higher at $10.27¼.

Dec. wheat futures finished 28½¢ higher at $5.78. 

Dec. soymeal futures closed $10.90 per short ton higher at $342.80. Dec. soy oil futures settled 0.44¢ higher at 33.13¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.59 per barrel higher at $39.88. The U.S. dollar is higher, and the Dow Jones Industrials are 221 points higher.

2020 Quarterly Grain Stocks

These are total U.S. on-farm and off-farm stocks as of Sept. 1. 

In today’s report, the USDA pegged the U.S. corn stocks at 1.99 billion bushels vs. the avg. trade estimate of 2.25 billion and the June 1, 2020 estimate of 5.22 billion. 

For soybeans, the USDA estimated Sept. 1 stocks at 523 million bushels vs. the trade expectations of 576 million bushels and the June 1 stocks of 1.04 billion.

The USDA pegged Sept. 1 stocks of U.S. wheat at 2.16 billion bushels vs. the trade’s expectation of 2.24 billion.

2020/21 Wheat Production

On Wednesday, the USDA pegged the U.S. all wheat production at 1.83 billion bushels vs. the trade’s estimate of 1.84 billion and its August estimate of 1.83 billion.

Trade Reaction

Britt O'Connell, Cash Advisor for Commodity Risk Management Group, agrees that today's report is very bullish for corn and soybeans.  

"The USDA pegged corn stocks as of September 1st at 1.995 billion bushels, much lower than a trade estimate of 2.250 billion bushels. Soybeans stocks were also reported lower than expected at .523 billion bushels vs a trade estimate of .576 billion bushels. And finally, wheat stocks were reported at 2.159 billion bushels vs a trade estimate of 2.245 billion bushels.

She added, "Plugging these numbers into the new crop balance sheet, assuming demand and production unchanged from last month’s WASDE, would reduce the 2020 crop corn ending stocks to 2.250 billion bushels and soybeans to 406 million bushels. Certainly less grain predicted to be in the country after this harvest than earlier in the year," O'Connell says.

Jack Scoville, PRICE Futures Group, says that the stocks reports are bullish corn and beans and that is all you need to know. 

“A little less wheat production than expected made up by increased soft winter production. But the beans and the corn are running things here and the data is bullish and below the lowest trade guess. We have harvest dead ahead of us, so the rally can be short-lived, but the rally is big now and might get a little bigger before the harvest hits the market,” Scoville says.

Sal Gilbertie, Teucrium Trading, says that today’s report shows the tightness in the soybean supplies.

“Today’s report completely readjusts the balance sheet for the big grains, especially for corn, and it puts even more pressure on the tightness we have been expecting in the soybean balance sheet. The market reaction to wheat reflects both the unexpected level of tightening and disappearance plus probably the lack of rain in Russia right now which has any shorts in the market running scared right now,” Gilbertie says.

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