Grain prices firmed over the past week. Most of the gain was after USDA released its quarterly grain stocks report on Mon Sept. 30.  For corn and soybeans, these are the final carry outs (CO) for the 2018/19 crop year, which ended Sept. 1.

Last year’s final US corn CO was lowered to 2.114 bln bu.  In their monthly demand/supply report from Sept 12, they said it would be 2.445 bln., so suddenly the US “lost” 331 mln bu. That’s not far from the 345 mln bu that Ontario produced last year!

The final US soybean CO was lowered to 913 mln bu. That’s still a new record, but 92 mln bu less than they reported on Sept 12, and 68 mln bu less than traders thought. This was all because USDA lowered the size of last year’s crop by a significant 116 mln bu.

One thing you have to say about USDA is that they are consistently inconsistent. That makes it impossible to second guess any of their reports. The trade and the markets still, however, react to what to whatever they report.

Soybeans took out the Sept. high and closed at their best level since July 19. The large speculators were leaning the wrong way, which added fuel to the fire. China is buying more US soybeans, non-tariff, which is also helping.

As of Sept 29, 11 percent of US corn and 7 percent of US soybeans were harvested. Normally, they are 19 and 20 percent off by that date. Overall, corn yields are meeting expectations, but soybean yields are disappointing.

A few soybean fields in Ontario have been cut, with huge variability in yields. Most of Ontario planted late due to a wet spring. In the areas that missed the rains in July and August, yields are disappointing. Hopefully, we will again have an extended fall to allow our corn crop to mature.

South America (SAM) remains drier than normal, especially Argentina. Crop problems there would cause China, and other importers, to source more from the US. The supplies in SAM are down, as China has been buying most of their soybeans from there, until just recently.

The US dollar index traded at its highest level since May 2017. A strong US dollar is usually negative for commodities and perhaps helps to explain the weakness in crude oil and gold this week. The fact grains gained is another sign that maybe grains have seen their harvest low.