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Grain stocks continue tightening supply theme

A market analyst calls Monday’s USDA Quarterly Grain Stocks report a continuation of a tightening supply theme.

Global Commodity Analytics president Mike Zuzolo says the trend started two weeks ago when USDA trimmed yield projections in its latest supply and demand estimates.

“We’ve had harvest weather start to come in and impact certain parts of the Corn and Bean Belts. And for that matter, certain parts of the Canadian Spring Wheat and Canola Belts as well. We’ve also seen harvest reports anecdotally as we start maybe trim the supply mindset a bit.”

Corn and soybean futures responded positively Monday to stocks figures that were below what some analysts were expecting.

He tells Brownfield the outlook for corn prices should remain favorable going into 2020.

“And I think it has to be mentioned here that we came into the Grain Stocks Report with the lowest stocks-to-use ratio in corn globally than we’ve had in the last three years. The trade really hasn’t priced that in at all.”

Zuzolo says he’s not as optimistic about soybeans because of the trade war and demand uncertainties tied to the African swine fever outbreak in Asia and Eastern Europe.