Corn Stocks Higher than Expected

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Friday morning’s quarterly USDA Grain Stocks Report held negative news for the corn market as it pegged the 2010-2011 carryout more than 200 million bushels above the agency’s previous estimate and above the range of trade expectations.

USDA had mildly bullish news for the soybean market as it pegged Sept. 1 soybean stocks 10 million bushels below its previous forecast.

USDA pegged Sept. 1 corn stocks at 1.128 billion bushels, up 22.6% from its previous 2010-2011 ending stocks projection of 920 million bushels and well above trade estimates that averaged 962 million bushels in a range from 820 million to 1.050 billion.

The corn stocks total was still down 34% from a year earlier, which should limit the negative reaction from the futures market.

The higher stocks total should cause USDA to raise its 2011-2012 corn carryout forecast by more than 200 million bushels since it implies lower usage rates as well as a larger old-crop carryout.

The corn stocks number implies lower-than-expected corn feed/residual usage during the fourth quarter of 2010-11; however, the larger stocks total could also indicate USDA has been overstating corn-for-ethanol usage as the ethanol industry has recently claimed.

Recent inconsistencies in the USDA stocks data will make it difficult for the corn market to trust Friday’s stocks number.

USDA’s Sept. 1 soybean stocks estimate of 215 million bushels was toward the low end of trade expectations that averaged 225 million bushels in a range from 202 million to 240 million bushels, but Sept. 1 stocks were still up 42.4% from 151 million bushels a year earlier.

The lower soybean stocks total suggests 2010-2011 soybean exports may have been a bit larger than USDA previously estimated. USDA should also lower its 2011-2012 soybean carryout forecast slightly when it releases its next supply/demand update on Oct. 12.

 

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.

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