October Supply-Demand Summary

Corn: Today’s corn report would seem to have gotten most of its bullish reaction from the soybean complex. Ending stocks of 2.167 bbu for 20-21 were 47 million above the trade average although the production estimate of 14.722 billion fell about 100 million shy of the trade average. The national average yield was reduced just 1/10 to 178.4 (trade: 177.9) while harvested acres fell 1 million to 82.5 (trade: 83.3). The USDA did reduce feed/residual by 50 and FSI/ethanol grind by 50 as well. Exports remain forecast at 2.325 bbu. Uncertainties continue to surround the USDA’s assessment of the Chinese situation as imports were left unchanged at 7 MMT even though confirmed sales to China from the U.S. now total 10 MMT. Go figure. Difficult to get very negative at this point… corn sales remain robust; the trade will argue the USDA is too optimistic on the Ukraine crop and worries are mounting about the potential of next summer’s safrinha crop.

Soybeans: Bullish right out of the box. Production fell 45 mbu from last month and this was 20 below the trade average. Combine that with a 52 mbu reduction in carry-over stocks from the Sep 1 report and supplies are nearly 100 mbu lower. Record early season bean sales led the USDA to boost its export forecast by 75 million and with no change to crush, ending stocks fell a whopping 173 mbu from last month to 290 with the latter 73 million BELOW the average trade forecast. South American weather/planting progress will be closely watched in the coming weeks along with any new daily sales announcements.

Wheat: Slightly bearish but losses are being amplified by spillover weakness from sharp declines in corn. World ending stocks of wheat were slightly above expectations, while U.S. carry-out was also above the average trade estimate. Australia crop size was lowered 1.0 MMT and Russia output was unchanged. There are ideas Australia crop could decline further, perhaps significantly. Nothing bullish in the wheat numbers overall, with the market likely to take its cue from trends in corn short-term.