USDA is expected to report tighter stocks of both corn and soybeans on Wednesday when it releases its latest quarterly Grain Stocks Report and its monthly supply/demand update, however, the corn trade is leery of the grain stocks data following major surprises in the last two quarterly surveys.
A much lower-than-expected June 1 corn stocks number helped trigger the current bull market, which began in late June of last year.
The Sept. 1 stocks total then came in much higher than the trade expected. USDA attributed the larger-than-expected Sept. 1 corn stocks to higher-than-normal usage of 2011 crop corn before the end of the 2009-2010 marketing year, but the market will be looking for confirmation of that in Wednesday’s stocks report.
Trade estimates of Dec. 1 grain stocks average 10.097 billion bushels in a range from 9.832 billion to 10.350 billion bushels. The average of trade estimates represents a decline of 7.4% from the Dec. 1, 2009 corn stocks of 10.902 billion bushels.
The quarterly stocks data will provide the market with its first reading on 2010-2011 corn feed/residual usage. Record-high hog weights this fall and larger supplies of cattle in U.S. feedlots suggest feed usage should be higher than a year ago, but increased distillers’ dried grains supplies are a negative factor for corn feed usage.
USDA’s projection for the U.S. corn carryout is expected to fall from December largely because the department is seen cutting its estimate of crop production further and because of strong corn-for-ethanol usage.
Trade estimates of the U.S. corn carryout average 778 million bushels in a range from 681 million to 884 million bushels compared with USDA’s current estimate of 832 million bushels and last year’s carryout of 1.708 billion bushels.
If USDA pegs the carryout at 778 million bushels, it would be the lowest since 1995-1996 when ending stocks slipped to only 426 million bushels or 5% of annual usage.
Trade estimates of the U.S. soybean carryout average 158 million bushels in a range from 113 million to 200 million bushels compared with USDA’s current estimate of 165 million bushels and last year’s ending stocks of 151 million bushels.
USDA is expected to cut carryout due to continued strong U.S. export sales, primarily to China. U.S. soybean export sales commitments for 2010-2011 were running 9.9% ahead of a year earlier through Dec. 30, with USDA forecasting a 5.9% increase in marketing year exports.
Dec. 1 soybean stocks are expected to have little change from a year earlier, with larger first quarter exports offsetting slightly larger 2010 crop production.
Pre-report estimates of Dec. 1 stocks average 2.333 billion bushels in a range from 2.175 billion to 2.412 billion compared with the Dec. 1, 2009 stocks of 2.339 billion bushels.
Editor’s note: Richard Brock, Corn & Soybean Digest's marketing editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.