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A U.S. Department of Agriculture WASDE report that cut the U.S. corn yield estimate to 179.6 bushels per acre from 181.2, and lowered soybean ending stocks to 300 million bushels from 315 million, sent corn and soybean futures higher after weeks of harvest weakness. El Niño grain supply risk is the next factor moving trade, with the market weighing how weather shifts corn and soybean availability through the winter months and into the following crop year. Large U.S. production, lower output in parts of Europe and strong crops in Brazil put exports at the center of the global grain supply picture. Weather and export demand together set how much room grain markets have to move on supply news.
Lane Dungan, StoneX Market Strategist, covers grain and oilseed markets, from U.S. Department of Agriculture reports and grain spreads to global export flows across corn, soybeans and wheat. That coverage gives insight into what is driving corn and soybean supply, from official crop estimates to Brazilian exports and El Niño weather risk.
El Niño weather risk is moving corn and soybean trade after a stretch of harvest pressure on grain futures, shifting the market's focus from the size of the U.S. crop to how supply holds up beyond it. "We're looking at something like the El Niño," Dungan says, "where we're really getting into the weather aspect and how that's going to move supply over the winter months." Weather themes that circulated through the year are starting to drive actual trade, specifically as the market looks past harvest volumes toward the next crop. As a result, El Niño adds a layer of supply uncertainty on top of the latest U.S. Department of Agriculture estimates. For producers, elevators and commercial buyers, weather sits alongside the official balance sheet as a driver of corn and soybean prices.
"What's the crop going to be like next year, and will we have enough internally and to give to the rest of the globe here?" asks Dungan, framing U.S. corn and soybean supply as a test of both domestic needs and export demand. Brazil's grain supply shapes the U.S. export picture, as strong Brazilian corn and soybean crops add to the global supply competing with U.S. exports. According to Dungan, the same question is playing out in Brazilian trade, which reflects "the amount that they're able to give and what they have internally." Consequently, export flows rather than U.S. production alone determine how comfortable the global corn and soybean balance looks. For commercial buyers and sellers, Brazilian export availability and demand for U.S. grain from global buyers are two sides of the same supply picture.
Grain supply signals surface first in U.S. Department of Agriculture WASDE estimates, where changes to corn yield and soybean ending stocks reset the market's read on available supply. Ending stocks carry particular weight, evidenced by soybean futures rallying on a lower stocks figure even as the soybean yield estimate rose. Brazilian trade shows how much South American corn and soybean supply is available for export after domestic needs, while El Niño weather developments show how growing conditions are shifting supply. Read together, these signals frame how much grain is available to global buyers.
--- Written by Frédéric Guétin, StoneX Media Producer
--- Expert: Lane Dungan, StoneX Market Strategist
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El Niño weather risk is starting to move corn and soybean trade, shifting attention from the size of the U.S. harvest to global supply. Strong Brazilian crops and export demand decide how comfortable that supply looks.
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November 11 – Stock futures are pointing to a stronger open, particularly in the tech heavy Nasdaq following a fresh sigh of relief for the sector after CoreWeave’s third quarter earnings results. The mood on Wall Street is calming as the VIX is notably lower to start the day, currently hovering at its lowest level in a week near the 18.4 mark. The dollar is adding to yesterday’s gains after the hotter than expected October CPI data reinforced fears of a more hawkish Fed, currently up 0.5% to trade at 102.73. Treasury yields surged higher yesterday but markets are closed today in observance of Veterans Day; 2-year yields yesterday settled 20-basis points higher at 4.748%, 10-year yields just under 14-basis points higher at 5.00%, and 30-year yields 10-basis points higher at 5.358%. Crude oil prices are bouncing from sharp early week losses, with nearby WTI up 0.9% on the day to trade near $87.20 and nearby Brent up 1.5% to trade near $92.90. The ags are mixed to start the day, with corn and soybeans showing modest losses after the big post-WASDE jump yesterday, while the wheat complex is clinging to small gains at the break following fresh escalations between Russia and Ukraine that we’ll dive into below. Stock futures are pointing to a lower open in classic turnaround Tuesday fashion as they look to take back some of yesterday’s sharp gains. The VIX is up 5.7% from yesterday’s close, currently sitting just above 21, though well below the recent highs above 28 seen last week. The dollar is looking at a turnaround Tuesday as well, up 0.3% to trade near 102 at the time of writing. Treasury yields are sharply higher to start the session, with 2-year yields up near 15-basis points to trade near 4.70%, 10-year yields up 9-basis points to trade near 4.955%, and 30-year yields up 6-basis points to trade just below 5.32%. Crude oil prices are continuing lower amid de-escalatory rhetoric coming from the Trump administration, with nearby WTI down 2.2% on the day to trade below $84.50 while nearby Brent is down 3.4% to trade near $89.40. Meanwhile, the ags are quietly lower at the break.
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