Supply Continues to Squeeze Agriculture Futures

November 13, 2023

Agriculture markets continue to be dominated by historically high supply, keeping corn, wheat, and soybeans futures relatively low.


Weekly gains for wheat, but supply is strong

  • Wheat futures remain stuck below the $5.8/bushel benchmark, as strong supply expectations dominate the consensus. The weekly gain was +0.48%
  • The weekly export sales report showed 354.3k metric tons of wheat was booked during the week that ended November 2nd. That was a 28% increase for the week and was 10% above the same week last year.
  • Wheat ending stocks were raised 14 million bushels to 684 million as USDA left exports unchanged and raised imports 10 million bushels.
  • In the European region, Ukraine’s agriculture ministry estimates that the country’s 2023 wheat harvest has reaped 823.1 million bushels so far, moderately below last year’s volume.



Three-year low for corn on increased global production

  • Corn futures in the US dropped below $4.7 per bushel, the lowest in nearly 3 years amid record supply prospects.
  • USDA revised the US top crop corn projections upwards to 15.23 billion tons in 2023/2024, more than a peak of 15.15 billion in 2016 and above analysts’ expectations due to improved yields.
  • Strong supply data was a counterweight against weaker shipments to China since the latter opted to increase its sourcing from rival, Brazil.
  • Furthermore, the global production forecast was also raised by 6.32 to 1,221 million tons (vs 1,160 million tons in 2022/23), as larger harvests for USA, Ukraine, and the Russian Federation compensated for the decreases in Mexico, Egypt and Indonesia



Soybeans remain below $13.5, amid strong ex-US producers supply

  • Soybeans futures declined to $13.2 per bushel from a nearly 2-month high of $13.7 on November 8th, dragged down by increased US supply projections
  • USDA raised its 2023-24 soybean production estimate to 4.129 billion bushels, exceeding October’s projection and analyst expectations
  • Mixed weather in South America, along with sustained demand from China slowed further price drop.
  • China’s soybean purchases in October increased by 25% from the previous year, and expectations indicate continued strong soybean imports by China in the fourth quarter, potentially setting a new 2023 record.
  • Despite the erratic weather in Brazil, the local agency expects higher soybean production