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USDA's Quarterly Grain Stocks underwhelms

A report that comes out four times a year from the U.S. Department of Agriculture has historically brought huge sparks to the market. The Quarterly Grain Stocks report gives a real look at how much supply of major commodities is on hand. This report has been notoriously difficult for the market to predict, which has led to major surprises (both bullish and bearish) and major price moves.

This year, wheat stocks were larger than average trade estimates, while the corn and soybean stock levels were below expected. But the market did not react with any significant moves. The reason for the subdued market action was historically large stocks for corn and soybeans.

Corn stocks are at a 30-year high for ending stocks for the crop year and soybeans are at a 10-year high. Wheat supplies are also comfortable, and the lack of a significant corn rally kept the markets calm.

Wheat

Wheat markets have ticked lower but remain in the established range. The aforementioned stocks report helped push the market downward. Additionally, the Environmental Protection Agency is taking comments and considering allowing exported ethanol to count against the blending mandate. This move has pressured corn and wheat has had spill-over pressure.

Durum

Durum prices have held steady in the last week. The USDA reported U.S. durum production at 55 million bushels for the 2017-18 crop. This exceeded the average trade estimate of 50 million bushels. However, stocks were reported to total 63.9 million bushels compared to 91.9 million bushels a year ago.

Canola

There is little change for the canola market. Demand remains strong, and some harvest delays are being reported. However, supplies are likely better than initially feared and soybean oil prices have been pressured over the last few weeks.

Peas and lentils

Reports out of Saskatchewan are suggesting better than expected yields for field peas and lentils. Overall, yields are about average with a lot of variation based on planting time and moisture received. But given the adverse weather for much of the summer, average yields are a bearish surprise. Total production is not yet known, but output may tick higher in future reports from Statistics Canada. Some pressure has been seen in the market as harvest is coming to a close in Canada.

Mustard

The market continues to see slow export movement. The Canadian Grains Commission reported 300 metric tons of mustard seed cleared through reporting elevators and terminals in the previous week. Total exports to date are now at 2,800 metric tons compared to 2,400 metric tons a year ago. Deliveries to reporting terminals is well above a year ago, with 8,300 metric tons delivered compared to 4,600 metric tons in 2016.

Barley

The USDA reported quarterly barley stocks in the U.S. at 180 million bushels on Sept. 1. This is a significant, 22 percent decline from a year ago. This stock level implies disappearance from the start of June was 68.7 million bushels (4 percent below the previous year).

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