USDA reports show increase in grain stocks

The USDA Crop Production and World Agricultural Supply and Demand Estimates (WADSE) Reports released on May 9 were regarded as neutral to bearish for the corn and soybean market in the coming months. Corn stocks are expected to increase by more than 50% by the end of the next crop marketing year, while the ending stocks for soybeans are expected to more than double by the end of the 2014-15 marketing year, which runs from September 1, 2014 to August 31, 2015.

Corn

According to the May 9 USDA WADSE Report, the projected corn ending stocks for 2013-2014 are now estimated at 1.146 billion bushels, which was decreased by 185 million bushels compared to the April WADSE Report. This was based on increases in the corn used for ethanol production, and in the expected total amount of corn exports during the current year. The 2013-14 ending stocks level is still above the 2012-13 ending stocks of 821 million bushels. USDA is projecting that total U.S. corn use for 2013-2014 will be approximately 13.635 billion bushels for livestock feed, ethanol, food products, seed, exports, etc., which is up considerably from 11.111 billion bushels in 2012-13, following the reduced corn production that resulted from the 2012 drought.

Based on the most recent WADSE Report, USDA is projecting the corn ending stocks to increase by 580 million bushels by the end of the 2014-15 marketing year, compared to 2013-14 levels, increasing to an estimated 1.726 billion bushels. This would be the highest level of ending stocks since the carryover level of 1.97 billion bushels for 2005-06. The important ending stocks-to-use ratio for corn is projected to increase from the current level of 8.4 % to a level to about 12.9 % for 2014-15. USDA is projecting total corn usage to stay fairly steady at 13.385 billion bushels for 2014-15.

USDA is estimating total U.S. corn production for 2014 to be at 13.935 billion bushels, which is almost the same as total 2013 U.S. corn production, with 3.7 million fewer corn acres expected in 2014. The Report indicated an estimated 91.7 million acres planted to corn in 2014, which is down from 95.4 million planted acres in 2013, and much lower than 97.2 million corn acres in 2012. USDA is estimating a U.S. average corn yield of 165.3 bushels per acre in 2014, compared to 158.8 bushels per acre in 2013, and only 123.4 bushels per acre in the drought year of 2012. If achieved, the projected U.S. average corn yield for 2014 would be a new record yield, besting the current record national average corn yield of 164.7 bushels per acre in 2009. Some analysts are questioning the 2014 yield projection, given the later-than-normal corn planting dates in some regions of the Midwest.

USDA is now estimating the average U.S “on-farm” corn price for the 2014-15 marketing year in a range of $3.85-$4.55 per bushel, or an average price of $4.20 per bushel. This is a decrease from the current 2013-14 estimated average “on-farm” price of near $4.65 per bushel, and would be a major decline from the 2012-13 final U.S. average corn price of $6.89 per bushel.  

Soybeans

According to the May 9 USDA WADSE Report, the projected soybean ending stocks for 2013-14 are estimated at 130 million bushels, which is a decrease of 5 million bushels from the April soybean carryover estimate. The projected 2013-14 soybean ending stock level compares to carryover levels of 141 million bushels for 2012-13, and 169 million bushels in 2011-12.  

Based on the recent WADSE Report, soybean ending stocks for 2014-15 are expected to increase to 330 million bushels, which would be an would be an increase of 200 million bushels above the estimated 2013-14 ending stocks. The soybean ending stocks-to-use ratio for 2014-15 is projected to increase to approximately 9.6%, which would be at the highest level in recent years. This estimate is based on significantly increased soybean production in 2014, with only moderate increases in the levels of usage for the soybean crush and for soybean exports in 2014-15, compared to the current year.

Total U.S. soybean production in 2014 is expected to be approximately 3.635 billion bushels, which compares to 3.289 billion bushels in 2013 and 3.034 billion bushels in 2012. Planted soybean acres for 2014 are estimated at 80.2 million acres, compared to 75.9 million acres in 2013, and 76.2 million acres in 2012. USDA is estimating a national average soybean yield of 45.2 bushels per acre in 2014, which compares to 43.3 bushels per acre in 2013, and 39.8 bushels per acre in 2012. The current record average U.S. soybean yield is 44.0 bushels per acre, which was achieved in 2009.

USDA is now estimating the U.S “on-farm” soybean price for the 2014-15 marketing year in a range from $9.75-$11.75 per bushel, or an average price of $10.75 per bushel, which compares to a current estimated average farm price of $13.10 per bushel for 2013-14, and a final U.S. average soybean price of $14.40 per bushel for 2012-13. 

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