- The September USDA Stocks in all Positions and Final 2020 US Small Grains report was bullish with US corn stocks falling to 1,995 million bu while US wheat 2020 production was trimmed to 1,825 million bu. Chicago futures soared on the news as S American and Russian weather condition become more important going forward. December corn and December wheat are at new rally highs while soybeans are 10 cents short of their September peak.
- The USDA estimated 2019/20 US corn end stocks at 1,995 million bu with the June-August feed residual use being a new record high of 928 million bu. This unexpectedly large feed use implied fourth quarter US corn demand rose to a record 3,028 million bu. This demand was 800 million bu larger than last year, despite a sizeable fall in US ethanol consumption. Compared to the September WASDE, such stocks are 233 million bu lower with a good portion of the stock loss occurring in Illinois.
- NASS estimated the 2019 US corn crop at 13,619 million bu, up by 2 million bu from the final with a yield of 167.5 million acres.
- US 2019/20 soybean stocks were pegged at 523.5 million bu, down 52 million from the September WASDE report. The loss of 52 million bu of US soybeans due to the residual factor was one of the largest in years. The loss of the old crop will tighten 2020/21 US soybean end stocks close to 400 million bu without a change in US soybean export demand or the loss of yield through early September dryness. The US soybean balance sheet is tightening with future Chinese demand and Brazilian weather becoming more important.
- NASS estimated the 2019 US soybean crop at 3,551 million bu with a yield of 47.4 bushels/acre. This is down 1 bushel/acre from their final estimate with the vast major of the stocks loss to be explained through the residual figure. WASDE had indicated a negative residual of -45 million bu in prior monthly balance tables, but the residual ended up being a positive 8 million bu. This was the first positive fourth quarter residual in 25 years and goes against prior NASS quarterly soybean stocks data.
- US wheat production was lowered to 1,825 million bu, a drop of 13 million. The decline was anticipated by the industry. The US winter wheat crop was lowered to 1,171 million bu (down 27 million bu), while the spring wheat crop was raised 9 million bu to 586 million. The US white wheat crop was raised 20 million bu with cuts in US HRW to 659 million bu and 266 million bu for 2020 US SRW production.
- US Q1 wheat feed/residual is estimated at 215 million bu which if included with corn, accounts for record feed use of US feed grains. This is the largest US feeding of wheat since 2016 when 266 million bu were fed. The adjustment in US corn stocks derives from the feed/residual category. It is shocking that US livestock feeders fed a record 928 million bu of US corn in Q4 of the 2019/20 crop year.
- US September 1 wheat stocks came in at 2,159 million bu, the lowest since 2015. Such stocks are down 187 million bu from last year and continue a declining stocks trend that now goes back to 2018. The lower US wheat stocks amplifies the dryness that is occurring throughout much of SW Russia for the second consecutive year. Rains will be needed to aid the next exportable Russian wheat crop.
- NASS Quarterly Stocks estimates are one of the most volatile data sets for US agriculture. Low confidence has been expressed in prior and recent data. Yet at face value, there was nothing bearish about the Sept estimates released today. The fall in old crop com/soybean and wheat stocks places a larger burden on US 2020 com/soybean production and the coming growing seasons in Latin America and SW Russia. Yet, the data leaves more questions than answers.
- Fund managers will pile into an even larger net long Chicago grain/soy position heading into the October WASDE and Crop Production report. The midday weather forecast maintains the chance of rain for N and C Brazil after October 9 with limited precipitation for SW Russia in the next 2 weeks.
- Chicago markets will be volatile in the weeks and months ahead. Chinese demand becomes more important and whether they return with new buy orders following their week long holiday will be closely monitored. This is no place to make new purchases, but support will be found on any corrections until large 2021 S American crops are known in early 2021. Daily highs are likely in place with brokers reporting an increase in US producer selling at midday.