Tightening Grain Supplies Raise Demand Rationing Concerns
The recent USDA WASDE report has shed light on the tightening of grain supplies and cattle, leading some to question whether demand rationing is necessary. The reduced corn yield and increased U.S. corn exports are significant factors in this discussion.
According to Mike Zuzolo, Global Commodity Analytics & Consulting LLC founder, the world corn stocks-to-use ratio is at a five-year low due to increased exports. This, coupled with the U.S. stocks-to-use ratio being just 2% from matching its own five-year low, suggests that the U.S. corn price has not yet gone high enough to ration demand.
Zuzolo also highlights Ukraine's potential impact on global grain markets. If the European drought and heat wave migrates east into Ukraine's Corn Belt, Ukrainian corn exports could be reduced sharply. The USDA's August WASDE report lowered Ukraine's 2026-27 corn exports by 1 million metric tons to 22 million metric tons.
The soybean market is also affected, with price determination still driven by both supply and demand for the next 30 days. Improved rainfall patterns forecasted between mid-August and mid-September could help soybeans attain higher yields, potentially weakening prices in late September.