Wheat, corn and soybean quotes took significant steps on the CBoT in Chicago last week. The reason? According to insiders, the results of the Quarterly Grain Stocks report and the Small Grains Summary are quite surprising. All 3 quotations are now well above the 5-year average.
The Quarterly Grain Stocks report revised global wheat stocks down by 83 million bushels to 2,15 billion bushels. This downward revision is explained by the dry conditions in the southern United States and the Black Sea region. Since the latter region is the largest wheat exporter, this has a considerable influence on the quotations. A hiccup in production in this region is causing disruptions to the world wheat market.
Corn supplies are estimated at 1,99 billion bushels, which is 255 million bushels less than previously expected. The stock of soybeans is also estimated to be lower than a few weeks ago. The Quarterly Grain Stocks report projects 523 million bushels, which is a decrease of 53 million bushels. These lower inventory expectations are one of the main reasons why quotes on the CBoT are rising. For example, the wheat price is now $5,92 per bushel, which is approximately $1,20 per bushel above the 5-year average.
Harvest progress
The second reason for the upward movement is related to the progress of the harvest and the quality of the crop. The progress of the corn harvest in particular surprises many in the United States. At the end of September, 15% of the corn had been harvested, compared to 20% previously expected. Nevertheless, harvest progress is in line with previous years. The quality of the corn remains at around 61% in the 'good to excellent' category.
The soybean harvest is progressing as expected. By the end of September, approximately 20% had been harvested, which is 5% more than the average during that period. The quality is better than expected: approximately 64% falls into the 'good to excellent' category. This came as a surprise to insiders, as a percentage around 60% was assumed. This is one of the reasons why the price has risen to $10,44 per bushel, which is $1 per bushel above the 5-year average. However, this plays a role huge question from China also plays a major role in the price of soybeans.
Export is going very well
Finally, what also plays a role is the smooth export of wheat, corn and soybeans. For example, China has purchased 10 million tons of American corn to date, compared to only 60.000 tons during this period last year. The country also imported 20,6 million tons soybeans from the United States, compared to 3,6 million tons last season. The U.S. Department of Agriculture (USDA) expects U.S. wheat exports this season to reach 975 million bushels. Of this amount, 17% has now been exported (approximately 35 weeks after the start of the marketing season), compared to 32% last season in this period.
The US Department of Agriculture estimates corn exports at 2,3 billion bushels and soybean exports are expected to reach 2,1 billion bushels. Those two crops are now also ahead of last year. Corn prices have recently risen to $2 per bushel, which is slightly above the 3,85-year average. However, the level of last season has not yet been achieved. Last year the quotation during this period was $5 per bushel.