Grain Stocks Report Shows Lower Numbers in Corn, Beans, Wheat

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The USDA’s National Ag Statistics Service released its Grain Stocks Report that showed a significant drop in corn and soybean stocks compared to last year. Joe Vaclavik, President of Standard Grain in Nashville, Tennessee, says the numbers were sharply lower compared to 2020.

“They were sharply lower versus a year ago in the case of corn and soybean and still below a year ago by a fairly wide margin regarding wheat. Now that doesn’t mean that the report was friendly. In fact, the corn and soybean numbers were bearish relative to expectations. We were a good 80 million above the average trade guess regarding September 1 corn stocks. We were about the same, about 80 million, above the average trade gets in regard to soybean stock, which is a bigger deal in beans.”

He says USDA made some retroactive changes to 2020 corn and soybean harvest results.

“They decreased the size of the 2020 corn crop by 71 million bushels, which is not a huge difference. So, in the case of corn, the larger than expected stocks will likely be attributed to feeding and residual use, less usage there. Soybeans, we saw the opposite; we saw an 81 million bushel increase to the size of last year’s crop, which accounts for almost the entire discrepancy between the average trade guess and what got printed. So, you’ve got, essentially, the trade or traders here ahead of this report, they were very good at estimating usage of soybeans, and they were not so good at estimating usage of corn. And corn is always difficult: we don’t get a report every week or every month regarding feed demand like we do in ethanol or exports or soybean crush. It’s just harder to gauge.”

While the corn and bean numbers came in lower than expected, Vaclavik says the fact that they dropped wasn’t a surprise.

“No, not, not a surprise at all that we’re lower than a year ago, this is exactly what was expected. There’s a reason that corns above five bucks and beans are above 12, I mean, it’s because the stocks are much lower than they were a year ago. And a year ago, we were just in the process of starting this rally up to this price level, or kind of in the middle of the process, I guess, but now there’s a more mature bull market that has accounted for a lot of this stuff, and of course, a lot of the year-over-year decline in corn and soybean stock is priced into the market.

While the wheat stocks were lower, he says it was a different story.

“Totally a different story than the corn and soybeans. The wheat number was lower than expected. Whereas in the case of corn and soybeans, the stock numbers were higher than expected, which is largely the result of lower production numbers the HRW wheat crop came in at 749 million bushels, down sharply from August and 31 million bushels below the average trade guess. SRW production was just marginally below what the trade had expected and marginally below August. And the spring wheat number was down another 12 million bushels versus last month and pretty close to trade expectations there. So,  in spring wheat, I think the smaller crop is the big culprit there.”