October WASDE: Soy Goes Against the Grain
The USDA’s October WASDE put on full display the relative divergence of fortunes between CBOT Soybeans and Grains (Wheat especially, but also Corn). US 2021/22 Soybean stockpiles were raised 72% MOM, while export demand weakness (-8% YOY) was confirmed by the slow pace of sales to China and the rapid pace of plantings in Brazil. Just as clear was the USDA’s view of enduring supply risk for grains: wheat production and stocks fell in the US and globally. Surprisingly, US Corn production was raised, but the cumulative impact of declines in exporting countries like Ukraine and Russia, the absence of Brazil, and the eight-month-long wait for the next tangible resupply leave grains high on the price risk pedestal. It remains to be seen whether the general improvement in G&O supplies or consumer reticence will deliver materially weaker prices, but these do look like they will take some time and require more supply to come about.