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Wholesale Banking

Global Wheat Supplies Tighten, Corn and Soybeans Loosen

A brief overview of the USDA’s World Agricultural Supply and Demand Estimates (WASDE) supply and demand forecasts for the 2022-23 marketing year, which indicates that the world’s wheat supplies are tightening, while corn and soybeans are getting loose

Stray bales with smiley faces on a field

The USDA’s World Agricultural Supply and Demand Estimates (WASDE) forecasts for the 2022-23 marketing year show that the world’s wheat supplies are tightening, with the tightest stocks-to-use ratio since 2014. Meanwhile, corn and soybeans are getting looser, with global ending stocks for 2023/24 estimated at close to 315mn tonnes, an increase of almost 16mn tonnes year-on-year and the highest levels since 2018/19.

Tightening vise on wheat stocks

The wheat stocks situation is like putting something in a vise. You need to tighten it a little just to hold it in place, i.e., keep prices from going down. Further tightening can distort the item, and even further tightening can sometimes result in breaking what you were trying to fix. Too much tightening in marketing terms results in a short crop/long tail price formation. You get a big spike in prices, but kill off demand and attract production, resulting in an extended period of lower prices to restore market equilibrium.

Looser corn and soybeans

Global corn output will grow by almost 64mn tonnes YoY, with supply increases from key producers more than offsetting concerns over Ukrainian export supply. Meanwhile, weaker prices mean that global demand should rebound by a little over 3% in 2023/24, after declining by more than 1.5% the season before. The soybean/corn ratio in late 2024 suggests that US farmers should increase soybean acreage at the expense of corn area.

What does that mean for you? Click below to read the full artcile and access data insights.