Chicago Board of Trade Market News
Outlook
USDA typically revises its estimate of the prior year’s corn and soybean crops when it releases its September stocks report. The current estimates are 4.165 billion bushels of soybeans were produced in the U.S. in 2023 and the trade average estimate for the revised number is 4.164 billion bushels with a range of 4.145 to 4.220 billion bushels. For corn, the current estimate for the 2023 U.S. corn crop is 15.342 billion bushels with a trade-average estimate of 15.290 billion bushels and a range of 14.880 to 15.394 billion bushels.
Trade estimates for U.S. September quarterly grain stocks are 1.844 billion bushels for corn which would represent a 4-year high and would be up 35.6% from a year ago and above the 1.812 “ending stocks” projected by USDA in its last monthly supply/demand report. The range of analyst estimates is from 1.794 billion bushels to 2.090 billion bushels. For soybeans the average estimate is 351 million bushels which would also be a 4-year high and would be up 32.9% from a year ago and above the 340 million bushels, ending stocks projected by USDA in the September 12th WASDE report. The range of analyst estimates is from a low of 323 million bushels to a high of 443 million bushels.
Final U.S. corn ending stocks in the range of 1.80 to 1.85 billion bushels will likely not be market moving. USDA’s 2023/24 average cash price of $4.65 is aligned with a stocks-to-use ratio of 12.1%. USDA’s current 2024/25 season average cash price of $4.10 sits at the low end of “fair value” based on the current balance sheet as it stands today with a 13.7% stocks-to-use ratio. The U.S. corn market is caught in a struggle between supply tightness and oversupply. U.S. stocks-to-use below 10% correlates to supply tightness and a need to ration stocks, whereas stocks-to-use above 14% correlates to oversupply.
Workers at the grain terminals in Vancouver, British Columbia went on strike this week. This work stoppage could disrupt exports of canola, wheat and barley. In the U.S., the International Longshoreman’s Union representing 45,000 port workers are at an impasse on labor contracts which could produce a strike as early as October 1st at eastern U.S. and U.S. Gulf ports. Although the union does not represent Gulf grain elevators, they do represent stevedores which could cause logistical slowdowns. Negotiations are ongoing but concerns about a pending strike are rising.
Harvest weather is mixed in the U.S. for the next 10 days. The Central U.S. forecast is consistent in projections that tropical storm Helene will reach hurricane status and make landfall in Florida on Thursday and then track northward with a slight westward angle producing soaking rains and regional flooding across the Southeastern U.S. into Saturday and lesser, but still substantial rains into the Southern Midwest late into the weekend. This will slow or stop harvest activities in the path of this storm for much of the next week. Further north in the Central U.S., dry and warmer than usual temperatures will persist and will be very favorable for harvest activities, especially in Iowa, Illinois, Nebraska, South Dakota and Minnesota. Drought and abnormal dryness are expanding across the U.S. Hard Red Wheat belt and negatively affecting early crop development.
The South American forecast is consistent and worrisomely dry in all but far Southeastern Brazil. There are some hints of scattered rainfall in northern Mato Grosso in early October, but extreme heat will limit any build up in soil moisture. There is no compelling evidence of a change in the drought-reinforcing weather pattern through the next two weeks. Argentina is also facing net moisture loss through the next two weeks. The outlier is Rio Grande do Sul, which is receiving meaningful precipitation.