July 8, 2024

 

US corn and soybean prices drop to four-year lows amid record stockpiles

US corn and soybean prices have fallen to their lowest levels in four years, resulting in unusually large stockpiles as farmers hesitate to sell, Reuters reported.

 

This reluctance to sell could create the impression of tighter grain availability in local markets, but any price rallies may prompt farmers to release their stock, potentially limiting the duration of price increases.

 

According to the US Department of Agriculture's (USDA) survey, US corn stocks as of June 1, 2024, stood at 4.99 billion bushels, a four-year high, representing a 22% increase from the previous year and a 7% increase from the 10-year average for that date. Of these supplies, 61% were held on farms, the largest share for June 1 since 1999, significantly above the decade average of 52%.

 

Similarly, 48% of June 1 soybean stocks were held on farms, the largest percentage for that date since 2006 and above the 10-year average of 35%. Total June 1 soybean stocks were 22% higher than a year ago, reaching four-year highs at 970 million bushels, although this was about 1% lower than the decade mean.

 

Throughout this marketing year, US farmers have retained a larger-than-usual portion of corn and soybean stocks, with this trend intensifying in the third quarter between March and May. This indicates that farmers have been increasingly reluctant to sell. On March 1, farms housed 61% of U.S. corn supplies, a 19-year high for the date, compared to a decade average of 56%. For soybeans, 51% of March 1 supplies were on farms, a 17-year high but closer to the decade average of 42%.

 

On December 1, right after the previous year's harvest, corn and soy stocks on farms accounted for 64% and 48% of national stocks, respectively, compared to decade averages of 62% and 47%.

 

US farmers have reduced the area under corn by 3% from 2023, but increased soybean plantings by roughly the same amount. If crop yields are strong this year, this could further add to the soybean stock build. Only three major US corn states - Iowa, Nebraska, and Kansas - recorded total June 1 stocks below the recent five-year average, with respective shortfalls of 3%, 17%, and 20%.

 

Iowa's 2024 corn plantings remain unchanged from 2023, while Nebraska's are up 1.5% and Kansas' are up almost 10%, making them the only major states with year-on-year area increases. Soybean plantings are less correlated with statewide stock trends, as Iowa was the only major state to cut plantings from a year ago, by a half-percent.

 

June 1 soybean stocks have significantly increased from 2023 across most major states but remain notably below five-year averages due to supply oversaturation between 2018 and 2020.

 

Illinois holds 17.5% of the national corn stocks as of June 1, compared to a five-year average of 15.6%, making it the most stocked state relative to normal. Iowa, the top corn producer, accounted for 17.6% of total stocks, down from the average of 19.6%. Nebraska also had a larger deficit from average in 2024, down 2.6 percentage points. Kansas' share of June 1 corn stocks was below average, but shares in Minnesota, Ohio, Missouri, and the Dakotas were between 0.5 to 1 percentage point above normal.

 

Minnesota held 11.2% of all June 1 soybean stocks, above the 10% average. Only Ohio and South Dakota maintained a higher gap than normal, combining for nearly 15% of June 1 stocks. Iowa, Michigan, Nebraska, and Kansas accounted for smaller-than-normal portions of June 1 soybean stocks.

 

-      Reuters