• HEADLINES: NASS raises the 2020 soybean crop by 81 million bu bearish surprise; Wheat stocks bullish; Corn neutral.

• The September Stocks Report was deemed as mixed. US wheat and corn stocks data was viewed as neutral to slightly bullish, while the soybean data was bearish. US 2020/21 soybean stocks were well above market expectations at 256 million bu and this will drive Chicago price direction into today’s close. Grain/soy spreads should rally into the October NASS crop report.

• NASS estimated final 2020/21 corn end stocks at 1,236 million bu, which was 81 million bu larger than the pre report trade estimate, but 683 million bu less than last year. The final 2020/21 US corn stocks were 49 million bu larger than what the USDA was using in September.

• The 2020 corn production was revised down 71 million bu with FSA data indicating that yield should be dropped to 171.4 bushels/acre. The smaller 2020 yield has bullish implications for 2021 US corn yields.

• The Q4 US corn feed/residual total is estimated at 608 million bu which is slightly less than what USDA had forecast. The additional old crop corn bushels will not have a big impact on the 2021/22 US corn balance sheet with new crop yields falling well below NASS expectations. December corn has support under $5.20 with resistance above $6.00. We calculate 2020/21 US annual corn feed/residual use at 5,605 million bu, down from the USDA forecast at 5,725 million bu.

• The bearish shocker was NASS finding any additional 81 million bu of 2020/21 US soybean stocks. NASS adjusted 2020 US soybean production up 81 million bu to account for all the increase. The 2020 US soybean harvested yield was adjusted up by 0.8 bushels/acre to 51.0 bushels/acre with harvested area at 82.6 million acres. The US soybean production gain was one of the largest in years with prior stocks report not reflecting such a production gain. The increase was a bearish surprise.

• The extra old crop stocks and better than expected W Midwest soybean yields opens the market to downside price risk to $12.00 November. Chicago is holding support against $12.50 November currently. Chinese pricing is resting below the market, which is offering scale down support, but there is no doubt that the finding of extra old crop soybeans opens the market to additional downside price risk. We calculate the Q4 US soybean residual at a negative -78 million bu compared to a positive 10 million bu for the quarter last year.

• September stocks are known for US corn/soybeans. The demand driver of renewable diesel will offer scale down support in vegoil prices. However, the bearish soybean stocks could be compounded by the better-than-expected soy yields from the W Midwest. Soy futures will be the bearish drag on Chicago. There is $0.50-0.75/bu of downside price risk based on today’s September Stocks data. Corn/soy and wheat/soybean spreads should perform in the coming weeks.

Sep 1 US Stocks (million bu)

2019        2020         2021

Corn            2,221        1,919        1,236

Soybeans     909          525           256

Wheat          2,346        2,158        1,780

• NASS wheat data was released generally as expected but is viewed as bullish, nonetheless. Final US wheat production is pegged at 1,646 million bu, vs. NASS’s prior estimate of 1,697 million. Sep 1 US stocks totalled 1,780 million bu, down 378 million from last year. Jun-Aug wheat feed/residual is calculated at 256 million bu, the highest since 2016/17. This helps explain that rapid recovery in values during summer, as record low exporter stocks/use triggered to market to halt elevated feed use altogether. Total Jun-Aug US wheat consumption totalled 732 million bu, vs. 726 million last year and also the highest since 2016.

• The USDA in its Oct report will lower US wheat end stocks by 40-50 million bu, and the lack of the US market’s access to imports will assure 2021/22 US wheat end stocks at or below 560 million bu. Wheat retains its status as the global ag market’s bullish leader. We note that world futures followed the US higher, with newer highs scored in Europe at midday. USDA will also lower its wheat exporter stocks/use to a record low 12.5%, vs. 15.3% in 20/21, based on coming adjustments to US and Canadian balance sheets.

• The 2021/22 US soybean balance sheet has loosened immediately amid larger carryover stocks. Corn’s balance sheet remains tight and end stocks fall to pipeline minimum if yield is lowered just 2 bushels/acre in the Oct or Nov reports. Additionally, we look for end users to use this break in soybeans to add to autumn/winter supply coverage, with China still very short bought.