On the latest RaboResearch Agri Commodities podcast, Carlos Mera and Michael Magdovitz discuss the October WASDE report. Poor 2022/23 US grain and oilseed harvests are forcing the USDA to become increasingly adept with scissors. As it cuts production, the USDA must increasingly (and tragically) cut demand to prevent ending stockpiles from disappearing. Relative to expectations, the report was bearish on corn and bullish on soy, and it resulted in funds partially unwinding their corn/soy spread. The prime takeaway is that supply inflation is being increasingly controlled by weak, recession-linked demand.

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