The Law of Supply and Demand tells us we can use the Market Price to understand the relationship between supply and demand
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In Corn and Soybeans, the winter quarter saw available stocks-to-use tighten, though neither situation is tight.
Commodity Bulletin: From crude oil to coffee, this FREE newsletter is for industry pros and rookies alike As for US wheat, available supplies will not be running out any time soon.
As you know, last Friday was a quadruple denouement as it brought about the close of the week, month, season (winter, according to the meteorological calendar), and quarter (in the Grains sector). All four of these were important to me, both personally and professionally. On the personal side, while I see the point of all four seasons, I seldom shed a tear as winter passes and spring begins. After all, Major League Baseball’s 2025 season gets rolling for real later this month. Finally. On the professional side, the end of the week, month, and quarter provide a lot of fodder for analysts, with my focus turning to grain stocks on hand. What’s that you say? USDA doesn’t release its quarterly Grain Stocks report until the end of this month? Yes, I’m aware of that. And like the accountants and economists at USDA, I have no idea what US grain stocks actually were at the end of February – be it bushels, metric tons, whatever. But nobody else does either, regardless of the imaginary numbers released at the end of March. However, I do know what the available stocks-to-use situation was for the various Grain markets as the quarter came to an end, so there’s that advantage.
I’ve simplified the conversation by applying the Law of Supply and Demand: Market Price is the point where the quantity demanded equals quantities available creating a market equilibrium. My take on this Law is tweaked by looking at “available supplies” rather than “total supplies”, an important distinction in the Grains sector given supplies can be held off the market in on-farm or commercial storage. If we consider the three variables in the equation (Market Price = Supply, Demand) the only one known is Market Price. Therefore, a study of Market Price is all that is needed to understand the relationship between the unknown variables of Supply and Demand.
CORN: The National Corn Index ($CNCI) was calculated near $4.27 at the end of February, putting available stocks-to-use (as/u) at 12.4%. The end of the previous quarter – November (Q1) - saw the NCI at $4.07 with as/u of 12.8% and February 2024 showing $4.00 and 12.9%. The US corn supply and demand situation continued to tighten over 2024-2025 Q2 (December through February, the winter quarter), though it is not tight. The 12.4% is neutral, with the previous 10-year average for February coming in at 12.6%. Meanwhile, the NCI priced at $4.27 put it in the lower 33% of its 10-year price distribution range based on weekly closes only.
SOYBEANS: The National Soybean Index ($CNSI) was calculated near $9.52 at the end of February, putting as/u at 17.4%. The end of November saw the NSI at $9.38 with as/u of 18.1% and February 2024 showing $10.80 and 12.2%. The US supply and demand situation tightened this past quarter but remains much looser than what was seen a year ago. At the end of February, the US soybean as/u could be considered neutral given the previous 10-year average for February is 14.9% while the previous 10-year high is 25.7%.
SRW WHEAT: The National SRW Wheat Index ($CSWI) was calculated near $4.91 at the end of February, putting as/u at 44.9%. The end of November (Q2) saw the SWI at $4.80 with as/u of 45.7% and the February 2024 showing $5.26 and 42.6%. The US SRW wheat supply and demand situation tightened during Q3 (December through February, the winter quarter) of the 2024-2025 marketing year, but is a long way from being tight. The February as/u number of 44.9% was the largest February figure going back through February 2020. The bottom line is the US SRW market is fundamentally bearish.
HRW WHEAT: The National HRW Wheat Index ($CRWI) was calculated near $4.97 at the end of February, putting as/u at 44.1%. The end of November (Q2) saw the HWI at $4.73 with as/u of 45.4% and February 2024 showing $5.41 and 41.5%. Similar to the SRW market, the US HRW wheat supply and demand situation tightened during Q3 but is a long way from being tight. The February as/u number of 44.1% was the second largest February figure going back through 2020, trailing only that year’s figure of 48.4%. The bottom line is the US HRW market remains fundamentally bearish.
HRS WHEAT: The National HRS Wheat Index ($CRSI) was calculated near $5.57 at the end of February, putting as/u at 44.2%. The end of November (Q2) saw the HWI at $5.59 with as/u of 44.1% and February 2024 showing $6.42 and 39.8%. The US HRS wheat supply and demand situation tightened slightly during Q3 but is not tight. The February as/u number of 44.2% is the second largest February figure going back through 2020, trailing only that year’s figure of 46.8%. As with winter markets, the bottom line is US HRS wheat remains fundamentally bearish.
