By: Andrew Catsimanes, Copywriter • Production
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.
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
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
Suderman is also watching three factors outside of supply:
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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Register Here---- Written by Andy Catsimanes
---- Expert: Arlan Suderman, StoneX Chief Commodities Economist
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Dry soil is slowing winter wheat planting in Russia and Ukraine, with a third of Ukraine's area in moisture deficit. Lost export revenue and costly diesel add a second risk to the size of the next Black Sea wheat crop.
September 23 – The Nasdaq hit another fresh all-time high yesterday, with the S&P 500 close to doing so as well, though stock futures are pointing to a quietly lower start to today’s session after surging higher to start the week as optimism surrounding this week’s various diplomatic pushes abounds. That optimism continues to be reflected in the VIX, continuing to hang around roughly three-week lows, trading at 14.3 this morning. The dollar is surging higher, adding to the week’s gains, as it nears the 101 mark for the first time in nearly two months. Treasury yields are off to a higher start, with 2-year yields back up to 4.80%, 10-year yields at 4.99%, and 30-year yields just above 5.32%. Crude oil prices are looking to hold their ground after a steady decline since late last week, with nearby WTI up 1.3% to trade near $91 and nearby Brent up 1.4% to trade near $100.65 at the time of writing. The ags are mostly lower to start the day, likely influenced in part by managed money selling off some existing length amid hopes for improvement regarding commodity flow through the Black Sea as part of this week’s diplomacy blitz.
September 22 – The Nasdaq and S&P 500 both closed within 1% of their all-time highs yesterday, with stock futures pointing to a quietly higher open at the time of writing. Diplomacy continues to be the theme of the week, with markets pricing in optimism, particularly in the tech sector following encouraging results from the weekend’s meeting between U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng. It’s also worth noting that Bessent yesterday announced the two sides would be meeting again to discuss AI safety and communication protocols in Shenzen, China in about two months, another potential sign of cooperation instead of escalation. The VIX continues to reflect optimism regarding this week’s various diplomatic pushes as it hovers near its lowest level since early September, starting the day trading just below the 14.7 mark. The dollar is sitting just above unchanged, near 100.46 at the time of writing, touching a fresh two-month high earlier this morning. Treasury yields are quietly lower to start the day, also helping bring some calm to Wall Street, with 2-year yields at 4.747%, 10-year yields at 4.949%, and 30-year yields at 5.279%. Crude oil prices continue their push lower, with nearby WTI down another 1.8% to trade near $90.30 and nearby Brent down 1.6% to trade near $98.70, both roughly two-week lows. The ags are looking at a turnaround Tuesday to kick off the session with most of the complex in the red at the break, led down by the wheat complex. Improving forecasts for planting conditions for the U.S. winter wheat crop are likely having some influence, but I’d also point out the signs of potential increasing U.S. pressure on Ukraine, which we’ll dive into in more depth below, possibly spooking out some managed money length.
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