U.S. Corn Stocks Far Above Expectations

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Thursday morning’s quarterly USDA Grain Stocks Report held bearish news for the corn market as it pegged June 1 corn stocks nearly 350 million bushels above the average of trade estimates.

The grain stocks report also looked negative for the soybean and wheat markets as June 1 stocks of both of those commodities were near the high end of expectations.

USDA pegged U.S. corn stocks in all positions as of June 1 at 3.670 billion bushels, down 640 million bushels, or 17.4%, from a year earlier, but above trade estimates that averaged 3.324 billion bushels in a range from 2.998 billion to 3.515 billion bushels.

June 1 soybean stocks were estimated by USDA at 619 million bushels, up 48 million bushels (8.4%) from a year earlier and toward the high end of trade expectations that averaged 597 million bushels in a range from 549 million to 632 million bushels.

Thursday’s report put June 1 wheat stocks at 861 million bushels, down 112 million bushels or 11.5% from a year earlier, but toward the high end of pre-report estimates averaging 825 million bushels in a range from 791 million to 878 million bushels.

The June 1 corn stocks figure implies a sharp drop off of 15.6% in corn disappearance during the third quarter of 2010-2011 compared with a year earlier. In particular, a steep decline in feed/residual usage is implied.

This clearly suggests the impact of high corn prices on usage this spring was greater than previously thought, however, there’s also a strong chance USDA may have missed some corn stocks in its March 1 grain stocks survey, which implied record second quarter corn disappearance.

USDA can be expected to raise the projected 2010-2011 corn carryout sharply in its next monthly supply/demand update, due out on July 12.

The June 1 soybean stocks figure implies third quarter 2010-2011 soybean disappearance was down 9.3% from a year earlier.

Given that the soybean market has a good handle on export shipments and the U.S. crush, the drop off in third quarter disappearance implies USDA missed a significant amount of soybean stocks in its March 1 grain stocks survey.

USDA can be expected to raise its 2010-2011 soybean carryout estimate further in July.

Implied wheat disappearance for the fourth quarter of the 2010-2011 wheat marketing year was up 48% from a year earlier, but the trade on average was looking for an increase of nearly 58%.

 

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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