USDA Stocks Report highlights

Thursday’s report was pretty bearish for soybeans due to substantially more supply still remaining in storage than the trade expected. Even so, the market only decreased 40 cents after two days of trading, which is encouraging.

Estimates were not bullish for corn, but after this summer’s massive market inverses, the final numbers were not out of line either. Even after the bean news, corn managed to close on Friday no lower than where it was the day before the report was published.

The report showed fewer wheat bushels than expected, and after two days of trading, prices increased more than 50 cents. This may suggest wheat replaced more corn in rations last spring than originally thought. And this makes sense, considering wheat prices were very close to corn values in April and May. However, now that the wheat/corn price spread is much wider, it is unlikely that very much wheat will be used for feed this upcoming marketing year.

If the wheat market has really turned a corner, it may be the catalyst needed to pull corn prices higher. And if corn is pulled along with wheat, there is a chance beans could reluctantly tag along too.

Looking forward, the focus will be on the national yield estimates published in the October report. Early information from fields south of I-80 across the Corn Belt suggests both corn and bean yields need to be increased. Drought areas north of I-80 and west of I-35 may not be as bad as everyone thought, and if these yield report patterns continue to hold true, it could keep a lid on prices through October.

Please email jon@superiorfeed.com with any questions or to learn more. Jon grew up raising corn and soybeans on a farm near Beatrice, NE. Upon graduation from The University of Nebraska in Lincoln, he became a grain merchandiser and has been trading corn, soybeans and other grains for the last 18 years, building relationships with end-users in the process. After successfully marketing his father’s grain and getting his MBA, 10 years ago he started helping farmer clients market their grain based upon his principals of farmer education, reducing risk, understanding storage potential and using basis strategy to maximize individual farm operation profits. A big believer in farmer education of futures trading, Jon writes a weekly commentary to farmers interested in learning more and growing their farm operations.

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