Corn, soybean and wheat futures jumped after the US said that its stocks of all three crops had shrunk further over the summer than investors had expected, signalling resilient demand despite the Covid-19 pandemic.
Chicago corn futures for December, which stood marginally lower ahead of much-anticipated US Department of Agriculture quarterly data on domestic crop stocks, soared 4.9% in the aftermath to top $3.80 a bushel for the first time in six months, on a spot contract basis.
November soybean futures took gains to 4.2% at one stage, retaking the $10.00-a-bushel mark by a distance.
Chicago soft red winter wheat for December accelerated headway to hit $5.87 a bushel, a surge of 6.8%, and matching an eight-month high for a spot contract.
The jumps reflected US inventory data which came in well below investors’ expectations – in the case of corn, coming in comfortably beneath even the most pessimistic market forecast.
"Markets rocket higher, with the USDA surprising on soybean, corn and wheat stocks," said Benson Quinn Commodities.
At just under 2.00bn bushels, corn inventories as of as of September 1, the end of the crop’s marketing year, were 250m bushels below market expectations and below the year-ago level.
This means that US corn stocks actually fell last over 2019-20, by more than 220m bushels – despite being supported by the second largest harvest on record last year – rather than showing small expansion, as the USDA has previously pencilled in.
For soybeans - for which the September 1 also marked the change of marketing years – inventories were pegged at 523.5m bushels.
That was more than 52m bushels below the figure that investors had forecast.
It also represents a plunge of 42% from a year before, when stocks were swollen by the knock-on effects of the US trade war with top soybean importer China.
For wheat, September 1 inventories of 2.16bn bushels were more than 80m bushels below market expectations, besides standing down 187m bushels year on year, and at the lowest for that date in five years.
The wheat figure reflected in part a 2020 harvest figure which a separate report showed at 1.83bn bushels, some 11m bushels short of investor forecasts, reflecting a shortfall in winter wheat production numbers compared with those that the market, and the USDA, has been factoring in.
The data mean that wheat has become a “supportive feature” for grain values, said Mike Zuzolo at Global Commodity Analytics immediately after the briefing, saying the data had added to support from dry weather for sowings in the Black Sea and the US, and for crop development in Argentina.
“We have less wheat than we did 20 minutes ago and we have dry weather cutting the future crop prospects,” Mr Zuzolo said.
For corn and soybeans, the inventory shortfalls reflected in the main more-buoyant-than-expected consumption of both crops since the previous inventory figure, on June 1.
While soybean disappearance over the three months, at 858m bushels, was 2% down on the same period of 2019, that came in the teeth of the Covid-19 pandemic, which undermined demand for the likes of soyoil, used largely in making biodiesel as well as by the foodservice industry.
Corn disappearance, at 3.02bn bushels, was up 40m bushels year on year despite the hit to US ethanol production from the coronavrirus-caused hit to fuel needs.
What do the data mean for markets? For analysis, click here.
For key data in the stocks and small grains production reports, click here.