American corn supply tighter than grain trade expected

Last week the United States Department of Agriculture’s quarter stocks report wiped about 6.55 million tonnes of corn off its books, a shocking move that lifted the crop’s price, at least for a while.

Only a few weeks before, the part of the USDA that does production and demand forecasts for the World Agricultural Supply and Demand Estimates (WASDE) monthly report said the amount of U.S. corn in stock at the end of the American crop year on Aug. 31 would be 2.253 billion bushels, or 57.2 million tonnes.

But then on Sept. 30 the part of the USDA that does surveys and other data gathering for the quarterly stocks report said the actual amount of year-end stocks was 1.995 billion bu., or 50.76 million tonnes, or about 6.5 million tonnes less than the WASDE estimate.

There is always an adjustment between the forecast and the actual survey result, but this adjustment was a lot larger than normal.

In the context of the vast amount of corn the U.S. produces, 6.5 million tonnes is not a huge amount but it is significant. For context, that would be equal to about 50 percent of Canada’s annual corn production.

It is not clear yet what accounted for the big discrepancy between the forecast and survey result, but it might be a miscalculation in how much corn livestock were eating during the year. Or perhaps there were other errors in reporting about grain in transport, in storage or to export.

The next WASDE report, due Oct. 9, will see several revisions as it rejigs its numbers to account for the new data from the stocks report.

On Sept. 30, the day of the stocks report, Chicago December corn futures rose four percent but sagged a little by the end of the week, partly on uncertainty caused by the news that U.S. President Donald Trump had contracted COVID-19. It closed the week up three percent from the previous Friday.

The quarterly stocks report for U.S. soybeans was also smaller than expected at 523 million bu. or 14.24 million tonnes, down 1.4 million tonnes the from the WASDE forecast. Wheat stocks were also a little smaller than expected.

The stocks report will recede into memory quickly and focus will return to the ongoing U.S. harvest, South American weather and the pace of export sales.

But it was a bit of price supporting news at a time when usually there is lots of downward pressure because of harvest.

And even as focus moves to export sales and South American weather, the news is supportive.

Weekly U.S. corn export sales last week topped two million tonnes, up from the trade’s expectation for 800,000-1.4 million. Soybean sales were almost 2.6 million tonnes, topping the trade’s expectation for 1.5-2.5 million.

And dry soils are slowing soybean seeding in Brazil. It is also dry in Argentina but it’s too early to seed there.

We must note it is still early in the season.

La Nina can lead to a drier than normal production season in southern Brazil, but it can also deliver good rain farther north resulting in normal national soybean production.

La Nina has a more consistent negative effect on Argentina’s soybean and corn crops.

It also is generally dry this fall in Russia and Ukraine, meaning wheat crops there could be stressed going into winter dormancy.

I’ve already talked about the strong pace of U.S. crop export sales and here in Canada exports are also good.

Total grain shipments to the end of week 8, Sept. 27, stood at 7.167 million tonnes, up 19 percent from the same time last year, according to Canadian Grain Commission weekly figures.

Good harvest weather and the addition of a new export terminal at Vancouver help explain the strong exports.

Wheat shipments at 3.22 million tonnes were up 31 percent compared to the end of week eight last year. Canola shipments at 1.66 million tonnes were up 44 percent.

Barley and pea shipments were also ahead of last year but durum and soybean exports lagged.

The CGC issued its monthly destination report for August so we now know where some of those exports are going, at least for the first month of the crop year.

There was excellent wheat movement to Peru, China, Colombia and Bangladesh. Overall, 29 countries imported Canadian wheat in the month.

China took 135,700 tonnes of barley, the lion’s share of the total barley movement of 167,900 in the month.

In canola, China was the biggest buyer, taking 252,100 tonnes of the 901,400 tonnes total. European countries continued strong canola buyers during August, helping to make up for slower shipments to Japan, Mexico and the United Arab Emirates.

The Quorum Grain Monitoring report said 38 ships were in the line-up at Vancouver as of week eight, including 10 at berth, one at anchor in Burrard Inlet, 10 in English Bay and 17 standing off at Vancouver Island.

That was double the number of ships lined up for Vancouver last year at the same time.

Only three were lined up at Prince Rupert compared to six last year.

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