Cash Strategist 7 17 2024

Old-crop stocks add to bearish new-crop supply picture

Prices for ag commodities have broadly trended lower throughout the first half of this summer, as prospects for large crops, which have been aided by favorable weather for the most part, have made futures market rallies short-lived and hard to come by.

South America, which for all intents and purposes is nearly equal to the U.S. in terms of importance to global supply, had weather issues throughout the season but still produced a soybean crop between Brazil and Argentina that was some 17 million metric tons bigger than last year and a corn crop that was up around 2 million metric tons from last year.

This has added to the bearish picture, but it is the remaining stocks from record U.S. crops last year that have really hindered the market's ability to see any kind of upside price action.

The U.S. Department of Agriculture (USDA) at the end of June estimated corn stocks in the U.S. as of June 1 at 4.993 billion bushels. This is up nearly 90 million bushels from June 1, 2023, and the highest stocks level on this date since the 2019-20 season.

The number is also the fifth highest of the last 10 years, with the average September futures price at the end of June in those four higher years averaging $3.82-3/4. Take out 2019, and that average drops to $3.68-3/4. September ...