FORT COLLINS, Colo. (Reuters) by Karen Braun – Over the last couple years, datasets from the U.S. government have shocked Chicago grain futures in ways both bearish and bullish, but many recent reports have been friendlier for the bulls as domestic supplies have fallen to multiyear lows.
The quarterly stocks data has been particularly impactful since it has featured larger-than-usual revisions to previous figures, sometimes voiding pre-report predictions. Combining those adjustments with significant market misses of U.S. acreage has amplified price reactions on stocks report days.
The U.S. Department of Agriculture’s statistics branch on Thursday will publish U.S. grain stocks as of Sept. 1, which will be the ending stocks for the 2020-21 corn and soybean marketing years. Analysts see corn stocks at eight-year lows and soybeans at seven-year lows.
General price action has been relatively lighter lately as corn and soybeans seek direction amid the U.S. harvest, a seasonally weak time for futures. Most-active corn futures have fallen 9.5% since the last stocks report on June 30, though they remain at nine-year highs for the date.
Most-active soybeans are off 8.7% since June 30 and at eight-year highs for the date, but soybeans are much closer than corn to their recent low.
Sept. 1 stocks are unique versus the other three quarters because the data stands on its own in terms of corn and soybeans. U.S. planted acres are published along with March 1 and June 1 stocks, and the final corn and soybean crop estimates coincide with the Dec. 1 stocks published in early January.
That means corn and soy price swings on September stocks day predominantly match the actual trade biases, though the moves are usually lighter than in March and June without the acreage tie-in.
Most-active corn and soybean futures declined on only one of the last five September stocks days, both in 2018, because the trade guesses were too low. Otherwise, Sept. 1 stocks came in below the analyst guess in five of the last six years for corn and six of the last seven for soybeans.
Heavier under-guessing of Sept. 1 corn stocks during the lighter supply period early last decade did not cater to bulls. Corn futures rose on just one of the six report days between 2010 and 2015, which was 2012, though soybeans had perfectly split outcomes in those years, consistent with trade biases.
Over-guessing ahead of the 2019 and 2020 September stocks reports produced the largest percentage moves in most-active corn futures for the date since 2012. Futures rose about 4% both times. Most-active soybeans in the last two years jumped about 3% on this day, and last year’s move was the largest since 2011.
Quarterly stocks report days in general have recently trended price-positive. The last big dive in corn futures on a stocks report day was in June 2019, and that followed a big selloff of similar magnitude in March 2019.
Only one of those 2019 stocks reports was bearish, but the market had aggressively underpredicted U.S. planted corn acres, especially in June. In June 2020, March 2021 and June 2021, analysts sharply over-guessed acres, and the latter two produced limit surges in corn futures.
January 2021 also featured a limit rise in corn as analysts were more than 600 million bushels too high on Dec. 1, 2020, stocks, by far their largest miss in either direction for that report. Part of that was caused by an unexpected revision to the prior quarter’s inventory.
Soybean futures are also on a mostly bullish streak, as futures have not closed lower on a stocks report day since March 2019. The last time soybeans ended a stocks day down 2% or more was in 2014.
But the trade biases in soybeans aside from Sept. 1 are mixed. Like September, June 1 stocks have come in below the analyst guess in six of the last seven years. The trade has been too low on March 1 stocks for the past five years and too low on Dec. 1 stocks for the past three years.
On the corn side, the market was clearly unprepared for the pace of the supply build-up mid-last decade because out of the 18 stock reports between June 2014 and September 2018, corn stocks came in heavier than predictions 13 times.
The opinions expressed here are those of the author, a market analyst for Reuters.
Editing by Matthew Lewis
(c) Thompson Reuters