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Old crop carryout comes in lower than expected

Bryce Knorr, Contributing market analyst

September 30, 2019

3 Min Read
Ripening soybeans in southeast Minnesota on Sept. 30, 2019.
Janet Kubat Willette

Grain futures moved sharply higher following bullish Sept. 1 stocks data for corn and soybeans and lower wheat production.

USDA put Sept. 1 corn carryout at 2.114 billion bushels, 331 million below its last estimate Sept. 12. The update suggests extremely strong feed usage over the summer, despite abundant supplies of cheap feed wheat and sorghum. In addition to adjusting statistical errors from previous reports, the shockingly low stocks total could also mean the 2018 crop was smaller than previously reported by USDA.

The government won’t update its corn production estimate until after the next ag census. But the soybean production estimate is revised in these end of September reports, and USDA cut the 2018 by 116 million bushels. That trimmed 92 million bushels off the agency’s Sept. estimate. Both the corn and soybean forecasts were below the low end of trade guesses, causing futures to jump higher.

USDA had mixed news for wheat. Sept. 1 wheat stocks were put at 2.385 billion bushels, down just 5 million from last year and near the top end of trade guesses. The data suggest weaker than expected summer feed usage, perhaps due to the relatively late harvest of the crop of the Plains.

USDA also failed to confirm fears of smaller spring wheat production, despite heavy moisture that’s delayed harvest on the northern Plains and raised concerns about quality. USDA put total spring wheat production at 600 million bushels, up 3 million from its last estimate and near the top end of trade guesses. Still, Minneapolis futures held on to small gains as today’s report is likely not the last word on the crop.

All wheat production still fell 18 million bushels in the smaller grains summary due to lower winter wheat output. USDA lowered production of hard and soft red winter wheat production but increased its estimate for white wheat.

November soybeans posted double digit gains in the wake of the reports, rallying up to the resistance line drawn off summer highs. December corn tested its 50-day moving average, drawing closer to confirming a head-and-shoulders bottom on its chart.

USDA’s updated production estimate for soybeans lowered harvested acreage by 516,000 and knocked a full bushel per acre off last year’s yield, which fell to 50.6 bpa. Only a handful of states saw steady to higher yields and production with the size of the crop dropped 14.4 million bushels in Iowa, 14.5 million in Minnesota and 32 million in Illinois.

Still, weak demand in 2018 due to the trade war with China helped to more than double Sept. 1 inventories from year-ago levels. All major reporting states showed increases.

The drop in Sept. 1 corn stocks was most notable in the eastern Midwest, which suffered multiple years of disappointing crops. Stocks also fell in Iowa, Wisconsin and North Dakota.






About the Author(s)

Bryce Knorr

Contributing market analyst, Farm Futures

Bryce Knorr first joined Farm Futures Magazine in 1987. In addition to analyzing and writing about the commodity markets, he is a former futures introducing broker and Commodity Trading Advisor. A journalist with more than 45 years of experience, he received the Master Writers Award from the American Agricultural Editors Association.

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