Are big swings ahead for U.S. grain markets?

September 28, 2021
Joe Lardy, market intelligence and insights analyst with CHS Global Research, discusses the major factors impacting grain markets this year.

Much like the weather across the U.S. in 2021, early harvest results have been a tale of extremes. This variability leaves producers uncertain about what to expect from grain prices the rest of the year.

Joe Lardy, market intelligence and insights analyst with CHS Global Research, says three big events could shake up grain prices this fall. “Over the next three weeks, we are going to get a ton of information about this year’s crop, and that’s really going to shape futures prices going forward.”

First is the September 30 stocks report. “These reports have historically surprised the market, and the price moves associated with stock reports are usually some of the biggest we see in government reports,” says Lardy. He notes that price moves from stock reports are generally much greater than those related to the monthly World Agricultural Supply and Demand Estimates (WASDE) report.

The second swing could come with the October 12 WASDE report. “The big question that the WASDE report may help answer is where we’re going with yields,” says Lardy. “We’ve already seen yields bounce around in previous reports this year, so we don’t have a clear trend on which way yields are going to go — and early harvest results are making that even more cloudy.”

The third event Lardy suspects will impact prices is harvest. “When we get to that October WASDE report in a couple weeks, we should be at the 50% harvested mark,” he explains. “I don’t think the yields we’re seeing on some of the early crops are the best representation of what’s out there, due to variability in planting last spring and crops maturing in different stages.”

South America planting season underway

Lardy also expects South American planting progress reports to impact grain prices.

“Brazil is projected to produce a record soybean crop of 144 million tons this year, and that’s just an absolute monster crop. In context, the U.S. soybean crop is 119 million tons on average,” says Lardy. “The western areas of Brazil have received rain and farmers have started planting aggressively, so I don’t expect any delays in planting. That means the potential for Brazilian production is very high if the weather stays normal in that area.”