USDA Grain Stocks Come in Higher, Raising New Questions
Arlan Suderman, Chief Commodities Economist at StoneX, breaks down the USDA’s September stocks report in his Quarterly Market Outlook. He explains why corn and wheat supplies came in higher than expected and why soybean demand remains the bigger question.
Click here to watch the full recording and catch up on more commodity market analysis from Arlan.
Key Takeaways
- USDA reports larger wheat and corn stocks than trade expected
- Suderman says China’s absence leaves soybean exports well below normal
- Tariffs, uncertain rains in Brazil, and stalled biofuel guidance present ongoing risks for market
USDA Stocks Report Shows Larger Wheat and Corn Supplies
The September 1 USDA stocks report showed bigger wheat and corn supplies than expected. As Suderman noted, the wheat increase partly reflected USDA correcting an August underestimate.
The corn stocks story was a bit more nuanced. USDA raised last year’s crop by 25 million bushels but may still be short. The agency shifted numbers into feed and residual use instead. Suderman said that choice could distort both last year’s and this year’s balance sheets. “Those changes don’t just apply to the old crop, they spill into the new marketing year as well,” he noted.
The September 1 data showed higher stocks for both wheat and corn, while soybeans came in slightly below trade expectations.
Source: USDA, StoneX Calculations
Corn and Soybean Demand Outlook Weakens Without China
Suderman pointed to demand as the bigger risk. He called USDA’s corn feed and export numbers “overly aggressive.” Mexico is feeding more cattle, which means U.S. feed use cannot be as strong as USDA projects.
Soybeans are more uncertain still. China has yet to book U.S. soybeans. Suderman projects exports at least 150 million bushels under USDA’s estimate, with the gap potentially widening to 235 million bushels if no trade deal emerges. “Domestic crush capacity can’t cover a shortfall of that size,” he said.
The chart below underscores China’s absence from the U.S. soybean market so far this year, a gap Suderman sees as pivotal for the export outlook.
Source: USDA
Tariffs, Brazil’s Weather, and Biofuels Lead Risks
Suderman is also watching three factors outside of supply:
- A Supreme Court ruling – Justices will decide whether reciprocal tariffs are legal. If overturned, he warned, trade deals could unravel and U.S. leverage with China would weaken.
- Brazil’s start – Forecasts for Brazil’s planting season are split. Some models show timely rains, others point to dry conditions. “If rains arrive on time, production looks good. If not, we could see trouble,” Suderman said.
- Biofuel policy remains unresolved – With RVOs and refinery exemptions delayed, Suderman said the soybean oil market has no clear direction.
Wheat and Corn Exports Diverge
Corn exports are running strong, led by Mexico. Soybeans, by contrast, are at a 17-year low. Wheat sales are picking up as lower prices draw buyers back.
Mexico has been the primary driver of U.S. corn export strength this season, with sales running ahead of prior years.
Source: USDA
For producers and buyers alike, the latest USDA data provide some short-term stability. Yet as Suderman emphasized, unresolved trade issues, uncertain weather, and delayed policy calls mean the market narrative is far from settled.
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---- Written by Andy Catsimanes
---- Expert: Arlan Suderman, StoneX Chief Commodities Economist
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