Market Morsel: The USDA throw fuel on the fire

Market Morsel

The United States Department of Agriculture (USDA) have a dataset which I am jealous of. A stocks reporting system, which provides insights into the levels of grain stocks held both on and off farm. This is something that various grain representative groups have been lobbying for in recent years.

The USDA release these stocks every quarter, and this months release was a doozy. It was also a major driver of the bullish tone which we have seen in the market over the past week.

In early September the USDA WASDE forecast end stocks of 57mmt. However, by the time of the quarterly report, the actual stocks were 51mmt.

One of the reasons for the big change that was higher than all analyst expectations was the old government reporting spanner in the works – the readjustment of old figures.

In the case of corn, the June estimate for stocks was revised from 132mmt to 127mmt, a drop of nearly 5.2mmt.

At present corn and wheat, stocks are still relatively well supplied compared to recent years. However, a gluttonous China vacuuming up grains and meat adds a new element (see here).