The six-month long bull market in crops received a fresh boost yesterday after the World Agriculture Supply and Demand (WASDE) report from the U.S. government lowered the outlook from already reduced expectations. The combination of cuts to U.S. corn and soybeans production and estimates for more exports helped support prices with both crops along with wheat surging to fresh seven year highs.
The US Department of Agriculture (USDA) pegged the 2020/21 domestic soybean ending stocks outlook at 140 million bushels, down 77% from the 610 million bushels projected in August, and corn ending stocks at 1.552 billion bushels, lowest since 2013 and down more than 50% since the June projection. The USDA also lowered its forecast for upcoming harvests in key export countries Brazil and Argentina while highlighting the risk to supplies after countries such as Russia (wheat) and Argentina (corn) have or are considering to introduce measures to limit exports in order to preserve domestic supplies to keep a lid on prices.
The rally in agriculture commodities led by grains and oil seeds has to a certain extent occurred while the focus has been elsewhere. But the continued surge which has seen the Bloomberg Agriculture Index rise by close to 45% during the past six months has started to bring back worries about the impact on economies and inflation.