One of the greatest hindrances for the commodity market is a lack of demand. Current year-to-date corn export sales stand at 495 million bu (mbu). This is a 6 percent reduction from last year while trade is projecting a 23 percent increase in sales. Year-to-date U.S. soybean sales currently total 652 mbu. This is 34 percent lower than last year’s sales at this time while the USDA is predicting just a 10 percent decline. This shows rationing is working and higher values are not needed now. Cumulative U.S. wheat exports for the year stand at 336 mbu. This is a 17 percent reduction from last year with the USDA expecting sales to decline just 8 percent. Until these spreads narrow, trade will question overall demand outlooks.

Another issue for the domestic market is the difference in inventory between our commodities and those of the global market. The current stocks to use estimate on corn is 15 percent domestically. This is the way the market measures ending stocks. A volume above 10 percent is considered an adequate corn reserve and does not require rationing. On soybeans, the stocks to use is currently 5.2 percent and does warrant elevated values to ration demand. Adequate soybean reserves are at or above 8 percent.

The global stocks to use picture is much different, especially on soybeans. The current stocks to use on soybeans in the world market is 22 percent and the highest it has been in five years. This is mainly from the record crops in Brazil and prospects for even larger production this year. A fading drought is expected to generate an additional 30 million metric tons of soybeans for global use. The global stocks to use on corn is projected at 12 percent which would be the largest in six years. These numbers have greatly reduced concern over the tight soybean ending stocks for the United States.

One commodity that is seeing some concern on the global market is wheat ending stocks. These are currently forecast at 13.4 percent, which would be the lowest volume in 10 years. This is mainly from the loss of wheat production in the Black Sea region and drought in Australia. One difference between wheat and the other markets is that wheat inventory is constantly being replenished which makes tighter stocks less of an issue.

The greatest weight on the U.S. soybean market is the difference between domestic balance sheets and those of the global market. Data from the International Grains Council indicates world soybean production will increase 30 million metric tons (mmt) this year, mainly from larger South American crops. World ending stocks are also forecast to rise to 62 mmt. These outlooks are starting to isolate the U.S. from the global market. Strong crush outlooks are supportive for the domestic market though and helping temper concerns over low exports.

When it comes to South American soybean production, most interest is currently on Brazil. The Brazilian research firm Safras is projecting a 2024 Brazil soybean crop of 169 mmt, well above this year’s 156 mmt crop. Soybean crush is being estimated at 55 mmt and exports at 99 mmt. These compare to USDA estimates for a 163 mmt crop and exports of 97 mmt. An even larger increase to Argentine soybean production though, with thoughts it will be 23 mmt larger than last year as the country recovers from long-standing drought conditions.

The U.S. cold storage report as of August 31 showed an increase in total red meat supplies of 1 percent from July 31, but a decrease of 15 percent from August 2022. Beef in freezers totaled 421.63 million pounds, a 3 percent increase from July but a large 18 percent decline on the year. Pork in cold storage totaled 471.09 million pounds at the end of August, a nearly steady volume from July but 13 percent less than last year. Pork belly inventory showed a seasonal decline of 28 percent from July to 36.87 million pounds, but this was still up 3 percent on the year.

A major story in recent trade was the release of the quarterly stocks data, which was more negative than trade expected. The U.S. corn inventory on September 1 totaled 1.361 billion bu (bbu), a 1 percent decline from last year and near the bottom of trade estimates. Of this, on farm stocks are up 19 percent on the year and off farm are down 13 percent. The September 1 soybean inventory came in at the top of trade guesses at 268 mbu, a 2 percent decline on the year. Of these soybeans, on farm reserves are up 14 percent and off farm is down 7 percent. The wheat inventory was close to trade estimates at 1.78 bbu.

In addition to this data, the USDA released updated production numbers as well. The most attention was on the 2023/24 wheat production figure of 1.81 bbu, a 10 percent increase from the 2022/23 crop. This was also 76 mbu more than the August estimate and 5 mbu over trade expectations. The USDA also lowered the 2022 soybean crop by 6 mbu and the corn crop by 15 mbu.

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is collected from a variety of sources and believed to be reliable but is not guaranteed to be accurate. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named.