44 Our Advertisers Appreciate Your Business Better Farming | October 2024 MOE AGOSTINO & ABHINESH GOPAL Maurizio (“Moe”) is chief commodity strategist with Farms.com Risk Management and Abhinesh is head of commodity research. The United States Department of Agriculture (USDA) verified what the market had been suspecting for most of the summer when it reported massive new record yields for the U.S. 2024-25 corn and soybean crops in their August crop report. Given the conducive cropping conditions this spring/summer with a lot of moisture, a big crop was expected to be in the making. Rain makes grain! Since its initial projections for this year’s crop, the USDA has been reporting a record corn yield, but in the August crop report, they took it up another notch. The U.S. 2024-25 corn crop yield was projected at a big 183.1 bushels per acre (bpa), which was 2.1 higher than the prior estimate. The 2024-25 soybean crop yield was also projected at a record 53.2 bpa, which was up by one bpa versus the prior estimate. There was an offsetting adjustment (lower) in the corn acreage estimate but in the case of soybeans, acreage estimates were raised. It’s not just the U.S. Midwest that is seeing a stellar crop year. Ontario, too, is looking at strong corn and soybean crop yields this year (again), with good-looking crops that just kept getting moisture all throughout the growing season, especially at key crop development stages. Like the situation in the U.S. Midwest, corn and soybean crop conditions in the province during the summer continued to be much better than average, and the crops developed at a faster-than-average pace. The big crop supply outlook for this year is, expectedly, a formidable headwind for grain and oilseed futures. In the case of soybeans, the USDA is projecting a new record U.S. production year of 124.9 million metric tons (MMT), and the huge ending stocks figure of 15.25 MMT is the biggest since 2018 (if it verifies). On top of that, the current estimate for the upcoming 2024-25 Brazilian soybean crop is 169 MMT, which would be a new record too. The two biggest global soybean producing countries are projected to contribute to new record global soybean production and ending stocks figures for 2024-25. This supply glut could find it challenging to attract ample demand and futures are likely to ease off further. Lower grain and oilseed prices, though, could resurrect demand, especially export demand. The U.S. grain export program had been lagging through much of the year, but the summer slide-in futures coupled with a sharp decline in the value of the U.S. dollar may have reinvigorated export demand. U.S. grains and oilseeds had become much more competitive in the global market. More demand is likely and needed but it could take time to develop as prices may need to keep easing to encourage more buying. Big global ag consumer China could also be increasing their ag purchases from the U.S., as they seemed to feature more prominently in the weekly USDA export sales reports. Economically, though, China is grappling with its own economic issues, as growth slowed in the second-biggest global economy. As this is the U.S. presidential election year, the geopolitical landscape with respect to trade – especially concerning U.S-China trade relations – will also be closely watched. According to the Canadian Grain Commission, this year’s canola exports have been significantly lagging yearon-year. Market reports were that the huge U.S. soybean crop and global vegetable oil outlooks were weighing on the demand for Canadian canola and canola oil. Canadian wheat exports, though, were significantly higher year-on-year, but the pace was seen slowing toward the late summer. Lower prices are the cure for lower prices as not only can they ignite better demand, but they may also deter the South American producers from planting a record crop and thus try and prevent some of the global supply overflow. Furthermore, lower grain and oilseed prices could also deter the North American producers from planting a big crop next spring. For grain and oilseed prices, indications are that it could get much worse before it starts getting better. BF LOWER PRICES COULD RESURRECT DEMAND Low prices could deter producers from planting next spring. By Moe Agostino & Abhinesh Gopal Moe’s Market Minute Canadian wheat exports were higher year-on-year. Amelia - stock.adobe.com
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