Glacier FarmMedia COVID-19 & the Farm

Wittal: USDA raises wheat, corn, bean stocks

Jan. 12 — Surprise, surprise! Well, the U.S. Department of Agriculture reports came out this morning and there were a few surprises, to say the least, mostly to do with larger-than-anticipated inventories for corn, beans and wheat.

This caused an immediate selloff on the futures markets due to the now-larger-than-anticipated carryout of these grains that needs to be dealt with somehow.

It was expected that soybean stocks would be reduced from 205 million bushels down to 185 million bushels but instead inventories were increased to 225 million. This came from an increase in production, a decrease in crushing and a slight increase in export demand.

Corn ending stock numbers came in at 10.084 billion bushels, about 86 million bushels above the industry’s high-end estimate. This was due to an increase in production and a reduction in domestic feed and ethanol usage in the U.S.

World wheat ending stocks were increased by one million bushels as well, due to a slowdown in export demand worldwide.

U.S. seeded acres for wheat were dropped, as was expected, but this will have little effect on the nearby markets as there is plenty of supply to get us through to new crop.

The reduction in acres could certainly be beneficial to new-crop prices if we have weather concerns or if world production experiences any major problems over the next year.

For more details on the various reports, you can use the following links to access USDA data for supply and demand estimates, quarterly stocks and the annual crop production summary.

This is going to change market sentiment for some time and no doubt grain futures will remain under pressure as the markets try to figure out how to get rid of the excess stocks that are out there.

This will not help to encourage a spring seeding rally of any kind as current world stocks are comfortably sufficient to take us well into next year, and with an average or below-average new-crop yield there will be adequate stocks for the following year as well.

Time to re-evaluate your old crop and new crop pricing strategies, based on this new reality of sufficient supplies.

That’s all for today. — Brian

Brian Wittal has spent over 27 years in the grain industry, including as an elevator manager and producer services representative for Alberta Wheat Pool, a regional sales manager for AgPro Grain and farm business representative for the Canadian Wheat Board, where he helped design some of the new pricing programs. He also operates his own company providing marketing and risk management advice for Prairie grain producers. Brian’s daily commentaries focus on how domestic and world market conditions affect you directly as a grain producers. He welcomes feedback and information on market conditions in your area, such as current offering prices, basis levels, trucking premiums and special crops contracts.

COPA Medallion COPA finalist in 2012, 2014 and 2015.
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