Volatile day following USDA reports

By Doug Tenney, Leist Mercantile

With the USDA report today for grain stocks numbers on Sept. 1, 2020, corn stocks of 2.0 billion bushels, soybeans 523 million bushels, and wheat 2.16 billion bushels.

Corn, soybeans, and wheat stocks were all below trader estimates, that is the bullish news today. Grains stocks trade estimates were: corn 2.250 billion bushels; soybeans 576 million bushels; wheat 2.242 billion bushels. Last year at this time, stocks were: corn 2.221 billion bushels; soybeans 909 million bushels; wheat 2.346 billion bushels.

In addition, traders had expected changes to the 2019 corn and soybean production numbers. Shortly after the noon release, corn was up 9 cents, soybeans up 22 cents, and wheat up 20 cents. Just before the report, corn was unchanged, soybeans up 9 cents, and wheat up 11 cents.

The stocks report today had been expected to be boring. However, to put the numbers in perspective and examining reports back to 2005, traders have missed the corn number compared to USDA as much as 17%. Soybeans have been missed by as much 36%.

Remember, this report will not detail supply and demand tables or ending stocks for corn, soybeans, and wheat. However, the trade will be quick to fast forward to projecting corn and soybean production estimates and ending stocks for the Oct. 9 WASDE Report.

The funds are near a record long for grains with the grand total of positions for corn, soybeans, and wheat. Current estimates have the funds long 90,000 corn contracts, long 187,000 soybean contracts, and long 5,000 soft red wheat contracts.

Last week on Thursday ended the consecutive daily streak of nearly two weeks for the U.S. selling soybeans to China. Current estimates suggest they will buy 32 million tons of US soybeans in the current marketing year. To date, China has bought 19 million tons of U.S. soybeans with another 10 million tons secured in the unknown destinations category, thought to be China. Adding those two numbers together puts the total China purchase of U.S. soybeans at 29 million tons. The market has been concerned for over a week that the daily purchase pace has come to an end.

U.S. corn and soybean harvest progress, U.S. harvest weather forecasts, as well as planting weather forecasts for Brazil, Argentina, and Russia will dominate grain news and prices in the weeks ahead. Currently, Russia and Ukraine are parched, which will drastically affect winter wheat plantings and germinations in October. However, for Russia and winter wheat plantings, the last two weeks of October will be much more important weather wise than forecasts of the next two weeks.

Ohio harvest activity has picked up dramatically in recent days. However, the rains on Monday brought a halt to harvest. For Ohio, mostly soybeans have been harvested to date. Reports suggest that corn harvest for many Ohio producers could still be 5-14 days away with moisture levels near 30% or even higher.

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