Old-Crop Corn Stocks Seen Slightly Larger

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The grain trade expects Friday’s quarterly Grain Stocks Report to peg the old-crop corn carryout about 4.6% above USDA’s most recent projection, but indicate no change in the soybean carryout.

Trade estimates of Sept. 1 U.S. corn stocks average 962 million bushels in a range from 820 million to 1.050 billion compared with USDA’s current projection of 920 million bushels, according to a survey of 16 analysts by Dow Jones Newswires.

Pre-report expectations for Sept. 1 soybean stocks average 225 million bushels, unchanged from USDA’s current estimate, in a range from 202 million to 240 million bushels.

The corn stocks number should draw the most attention from the trade as it will provide the industry with a reading on how much high corn prices slowed corn feed usage during the fourth quarter of 2010-2011.

High corn prices should have driven increasing use of DDGs and other alternative feeds this summer. Increased feeding of wheat, in particular, is likely to have cut into corn feed usage this summer, since corn prices were premium to the feed wheat market for a significant time.

Any cutback in feed usage will be limited by an increase in number of grain consuming animal units compared with the fourth quarter of 2009-2010.

While ethanol production remained strong this summer, there’s the possibility USDA have overestimated corn-for-ethanol usage by failing to fully account for increased production efficiency, as ethanol producers have recently claimed.

Recent inconsistencies in the USDA stocks data will make it difficult to trust Friday’s corn stocks number. Last year’s September stocks report overestimated Sept. 1 corn stocks as it inadvertently counted some supplies of early harvested 2010 crop corn. That should not be a problem this year as corn harvest was just getting started when USDA took its stocks survey.

However, there have been other significant inconsistencies in recent stocks reports. March 1 corn stocks were understated as USDA apparently missed some corn stocks in its March survey. Those stocks were then "found" in the June stocks survey, causing June 1 corn stocks to come in far above trade expectations.

 

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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