Could the Stocks Report have a Deeper Meaning for Soybeans?

Could the Stocks Report have a Deeper Meaning for Soybeans?

Sep 26, 2017

TRADING COMMODITY FUTURES AND OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS ANDMAY NOT BE SUITABLE FOR ALL INVESTORS. YOU SHOULD CAREFULLY CONSIDER WHETHER TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES, KNOWLEDGE AND FINANCIAL RESOURCES.

On Friday the USDA will release the September 1st Quarterly Grain Stocks Report. This report will, in effect, establish old crop corn and soybean carryover and new crop beginning stocks. But as we read between the lines it could have even more meaning if stocks come out much different than trade guesses, especially for soybeans.

By the time we get to the end of the marketing year we have a pretty good idea of what soybean demand has been. Exports and crush data have been collected and applied and the implied carryover has been determined. There can be small differences in 4th quarter usage and this would have a small effect on the residual category. However, if there is a big surprise in either direction itcould meanthat the supply side of the equation we have been using is off somewhere.

There are a few ways that the supply side estimate can be off. Planted acreage, harvested acreage and/or yield. At this point however the national average yield would be the most likely to be off by any significant margin. In this particular year, as we try to get a handle on what the current crop will yield, this could have significant market impact.

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Last year we set a new record for national average soybean yield. If the stocks number were to come in much higher than expected it could suggest that yield was actually higher than the 52 bushels per acre that the USDA has reported. If this was the case it would make it easier to see how this year the soybean crop could be close (or possibly above) the 50 bushels an acre the USDA is currently estimating. On the other hand, if stocks come in much lower than expected it could make it harder to imagine that the soybean crop this year could benear 50 bushels an acregiven the differences in conditions and weather.

If there is a major miss on trade expectations this Quarterly Grain Stocks report could have a big impact on the soybean market. If stocks come in close to expectations we will have to wait to get more harvest results as the market tries to get…

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