A bear bit into grain and oilseed prices last week after the United States Department of Agriculture revealed larger than expected U.S. corn and soybeans supplies.
Canadian market analysts say the bearish news will also weigh on wheat and canola prices.
“There are just more supplies than the trade expected,” said Alberta Agriculture market analyst Charlie Pearson about the Oct. 12 report, which sent commodity prices tumbling.
The report updates the USDA September report, which gave preliminary production and carryover numbers.
While harvest was good for most corn and soybean farmers, U.S. oats and barley production were lower than expected.
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China purchased just over 20 million tonnes of wheat, corn, barley and sorghum last year, that is well below the 60 million tonnes purchased in 2021-22.
The USDA report found that 2001-02 U.S. corn production is almost five million tonnes higher than in September.
Combined with lower beginning stocks and higher exports, that put corn ending stocks at 37.04 million tonnes, up about 2.5 million tonnes from the month before.
The USDA also increased global ending stocks to 121.5 million tonnes because of the large U.S. harvest and a bigger than expected corn crop in China.
USDA expects average domestic corn prices to drop about 10 cents US per bushel, to a range of $1.90 to $2.30.
U.S. soybean ending stocks for 2001-2002 were increased to 9.39 million tonnes due mainly to a two million tonne increase in production to 79.12 million.
Global oilseeds production is up 5.2 million tonnes to a record 321.3 million tonnes. USDA estimates this will cause the average soybean price for American farmers to plunge to $3.90-$4.70 from $4.40-$5.40.
USDA put the U.S. wheat crop at 53.28 million tonnes, down about 900,000 tonnes.
But both domestic use and exports are now expected to be lackluster, resulting in ending stocks rising to 17.74 million tonnes, about 500,000 tonnes up from last month.
USDA also raised global year-end wheat stocks as increased crop production in Russia and its former satellites outweighed cuts in Canada and Argentina.
U.S. barley and oats production and ending stocks for 2001-02 are down from the September estimates. Barley’s ending stocks dropped to 84 million bushels from 96 million. Oats dropped to 55 million bushels from 68 million.
In the aftermath of the USDA report, futures markets reacted by lowering soybean and corn prices, while boosting oats and barley.
Canadian analysts say the big soybean numbers limit how far canola’s price can rise, since canola is an integral part of the veg-oil complex.
Corn prices tend to set the pattern that wheat follows, since feed corn competes directly with feed wheat and the corn crop is so large it dominates that part of the market.
Canadian Wheat Board market analyst Dwayne Lee said most analysts expected the USDA to increase its crop estimates, but not by such a large amount.
“We were a little surprised,” Lee said.
Pearson said estimates of U.S. crop production weigh heavily on the Chicago markets, which set world price trends.
Sometimes that creates an overemphasis on U.S. conditions, which ignores overall world supply and demand factors. For instance, global stocks-to-use levels for many commodities are lower than they have been for years, but that hasn’t stirred markets yet.
“The markets look at what’s happening in the U.S. first, versus the world situation,” said Pearson.
He said many commodities, such as barley and feed wheat, have attractive prices now.
But he said there is a chance for better prices, because with such tight stocks-to-use ratios, things can change.
“If we get even a little bit of a change in psychology when we’re in a just-in-time shipping world, then you can see prices react fairly quickly.”
