Farmers’ Woes Grow with Large Grain Stocks

By Bernt Nelson

Year-over year increases in grain stocks are unwelcome news for corn and soybean farmers, who are poised to harvest record crops in the coming weeks. Commodity markets, though, had a mixed- response to USDA’s Sept. 1 grain stocks and inventory estimates, released today.

The quarterly Grains Stocks report contains estimates for corn and soybean ending stocks for the 2023/2024 production year. This is a highly anticipated report for farmers because it provides firm estimates of the 2023/2024 crop (old crop) being stored both on and off the farm for all wheat, durum wheat, corn, soybeans, sorghum, oats, barley, flaxseed, canola, rapeseed, rye, sunflower, safflower and mustard seed by states and by position (both on-farm and off-farm storage).

In its September Farm Income forecast, USDA estimated cash receipts for crops will suffer a $27.7 billion, or 10%, drop from 2023. These price drops pushed many farmers to store grain in hopes of receiving a better price, but with no improvement in prices and harvest underway in key production regions, farmers will need to make room for the incoming crop. This Market Intel will provide insights into what the Sept. 1 Grain Stocks report means for the market, both in the short and long term.

Corn

Old crop stocks of corn (corn from the previous crop year) are estimated to be 1.76 billion bushels, up 29% from last year. Of these stocks, 780 million bushels are being stored on-farm, up 29% year over year. The other 980 million bushels are being stored off-farm, up about 30% year over year. June through August disappearance is estimated to be 3.24 billion bushels, up 19%, or 530 million bushels, from 2.74 billion bushels during the same period in 2023. 2023 corn for grain production was reduced by 1.08 million bushels, while corn for silage production was reduced by 140,000 tons due to reduced harvested acreage.

Soybeans

Old crop stocks of soybeans are estimated to be 342 million bushels, also up 29% from last year. Soybeans stored on farms totaled 111 million bushels, up a shocking 54% year over year, while off-farm storage totaled 231 million bushels, up just 20% from last year. June through August disappearance was estimated at 628 million bushels, up about 18% from the same period in 2023. Production was adjusted down 2.62 million bushels due to reduced harvested acres.

Wheat

All wheat in storage, both on and off farm, totaled 1.99 billion bushels, up 12% from Sept. 1, 2023. Wheat stored on farm was estimated to be 664 million bushels, up 11% year over year, while off-farm stocks were 1.32 billion bushels, up 13% year over year.

Storage, Delivery and Basis

The initial market response to the grain stocks data was slightly bullish because many industry trade experts were expecting higher estimates for stocks of corn, soybeans and wheat. With a record corn and soybean crop forecast for 2024/2025, higher stores of these crops are concerning because farmers will need to make sales to deliver old crop in order to make room for incoming new crop. Elevators will need to make sales of old crop to make room for both new and old crop being delivered by famers. When there is a large flood of products sold at one time, it can cause elevators to fill up, leading grain buyers to adjust the local basis.