MarketsFarm — Tighter-than-expected quarterly wheat and corn stocks in last Friday’s report from the U.S. Department of Agriculture provided the biggest influence on the futures markets over the past week, with larger soybean stocks putting some nearby pressure on that market.
Corn stocks in the U.S., as of Sept. 1, came in at 1.377 billion bushels, which was at least 100 million bushels below trade estimates. Wheat stocks, at 1.776 billion bushels, were also at the low end of expectations.
“The numbers for all wheat classes were well below what the trade was expecting for estimates,” Tom Lilja of Progressive Ag at Fargo, N.D. said.
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He said the corn supply numbers were also supportive, while the initial reaction to larger-than-expected soybean stocks was bearish.
“The Sept. 30 report confirmed that we have a lower stocks-to-use ratio for corn, wheat and soybeans — so overall things are tighter… and the markets are well supported,” Lilja said, adding “there is less of a danger that there will be a washout of prices because of the tighter stocks-to-use ratios.”
Wheat has the fundamentals to go higher, although Lilja added that strength in the U.S. dollar was a limiting factor.
Of note in wheat, the typical premium that Minneapolis spring wheat holds over the winter wheats has eroded over the past few weeks, with spring wheat now trading at a discount to Kansas City hard red winter wheat.
Lilja linked that adjustment to a combination of a better spring wheat crop after the 2021 drought with dryness concerns for winter wheat in the southern U.S. Plains.
Winter wheat prices typically find some support in September/October, he added, as end users work to entice acres.
“Until there’s a decent rain that comes into Kansas, Oklahoma, and Texas you could see the Kansas City contracts stay above Minneapolis,” Lilja said, adding “we need some rain in the southern Plains to get some nervousness out of the Kansas City complex.”
For soybeans and corn, monthly supply/demand estimates will be released by USDA on Oct. 12 that could provide some direction. Lilja said the October report was not usually a large market-mover, but updated yield estimates for both crops will still be followed closely.
— Phil Franz-Warkentin reports for MarketsFarm from Winnipeg.
