The highly anticipated quarterly stocks data was released with friendly numbers. As of Sept. 1, the United States had 1.76 billion bu of corn in storage, just beneath the average trade guess, but 400 million bu more than Sept. 1, 2023. The Sept. 1 soybean inventory was 342 mbu, also under trade expectations, but 80 mbu above last September’s inventory. The U.S. wheat inventory was 1.985 bbu on Sept. 1, equal to the average trade guess, and 220 mbu more than a year ago.

What the cash market tends to focus on in stocks data is how much inventory is still being held on-farm. Data shows that on-farm stocks of all three contracts were up on the year. On-farm corn stocks on Sept. 1 were up 29 percent from last year at 780 mbu. Soybean stocks on-farm came in at 111 mbu, a 54 percent increase from last year. Farm stored wheat totaled 664 mbu, a year-to-year increase of 11 percent. The question now is if this means farm storage has increased this much, or if heavy fall deliveries should be expected.

While the Sept. 1 stocks were up on the year, it was not from a lack of demand. Corn usage for the quarter totaled 3.24 bu, a 22 percent growth from the same period last year. Soybean usage was 628 mbu over the period, an 18 percent increase from last year. Wheat demand increase 12 percent from last year to 682 mbu. Given this rise in demand it will not take much of a production loss this year and we could easily be back into a rationing position, especially on corn and soybeans.

Net farm income in the United States is forecast to decline in 2024, but not as much as earlier predicted. Net farm income for the U.S. is projected at $140 billion this year, a decline of 4.4 percent from 2023. This is much better than February’s estimate for a 27 percent year-to-year decline in revenue. Even with this decline, 2024 net farm income is still 15.2 percent above the 20-year average.

Cash receipts for ag products are expected to finish this year with a $9.8 billion loss from 2023. This puts the 2024 estimate at $516.5 billion. Cash grain receipts are expected to be down $27.7 billion this year, mainly from lower corn and soybean values. This is expected to be partially offset by a $17.8 billion increase in livestock values.

The U.S. ag economy has been pressured in recent months, and Brazil is starting to see the same negativity in its economy. Brazilian export revenue in August totaled $14.13 billion, a 9.5 percent decline from August 2023. The 2024 calendar year export income for Brazil is reported at $111.76 billion, a decline of 0.6 percent from last year. Brazil will likely see additional losses in revenue as its old crop shipping window starts to close.

There is a major difference in opinion forming on current weather conditions in Brazil as soybean planting commences. A lack of moisture is preventing most farmers from starting fieldwork, but some analysts feel this is not a concern, yet. Their opinion is that the bulk of Brazil’s soybeans are seeded in October, and weather will improve before month end. While 75 percent of Brazil’s soybean crop is seeded in October, the concern is on the remaining 25 percent. If these acres are planted outside the optimum window their production will be questioned all growing season.

We also need to look at the big picture in Brazil. The current soil moisture levels in the states of Matto Gasso and Parana, two of the country’s three largest soybean producing states, are at their lowest level in the past 30 years. This means normal rainfall in Brazil this year will not be enough to sustain production that is being projected. The country will need above normal precipitation to correct the current deficit, then added moisture to grow a crop. Given increasing odds of a drought related La Nina building this year, the chances of Brazil seeing adequate moisture this year are being doubted.

This delay to the start of the soybean planting season in Brazil is also a factor for the corn market. Many of the safrinha corn acres in Brazil are double cropped on soybean fields. If soybean harvest is delayed, we will likely see fewer corn plantings as Brazil has strict rules on what dates planting can take place.

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