The grain trade is anticipating USDA may tighten its estimate of U.S. corn ending stocks a bit further and also lower the projected wheat carryout when it releases its monthly supply/demand update on Thursday.
Trade estimates of the 2010-2011 U.S. corn carryout average 667 million bushels in a range from 625 million to 702 million bushels compared with USDA’s February estimate of 675 million bushels and last year’s 1.708-billion-bushel carryout, according to a survey done by Dow Jones Newswires.
There is anticipation that USDA may further increase its estimate of U.S. ethanol output slightly based on continued strong production and higher crude oil prices.
Of course, USDA could offset increased ethanol usage with a cut in projected feed/residual usage. The recent drop in the wheat/corn price spread argues for larger feed usage of wheat and reduced corn feeding.
USDA seems unlikely to change feed/residual usage, however, ahead of the next quarterly grain stocks report, which is due to be released March 31.
Recent strong U.S. corn export sales have pushed sales 6.2% ahead of a year earlier with USDA projecting a slight drop in marketing year exports. However, USDA is seems unlikely to raise projected corn exports as actual corn exports are still lagging behind a year earlier
Estimates of wheat ending stocks average 809 million bushels in a range from 751 million to 843 million bushels against USDA’s February estimate of 818 million bushels and last year’s 976 million bushels.
USDA could raise projected U.S. wheat exports on Thursday. U.S. wheat export sales through Feb. 24 were 59.4% ahead of a year earlier and actual export shipments were up 45.4%, with USDA projecting only a 28.1% increase in marketing year exports.
Meanwhile, the wheat/corn price relationship suggests potential for increased feed usage of wheat with the premium held by nearby Chicago Board of Trade wheat over nearby corn futures at a four year low. However, as mentioned above, USDA may not make changes in feed usage estimates ahead of the grain stocks report.
The trade anticipates little change in soybean ending stocks. Trade estimates of the U.S. soybean carryout average 141 million bushels, 1 million bushels above USDA’s February estimate, in a range from 121 million to 181 million bushels.
With U.S. soybean export sales still running ahead of the pace needed to reach USDA’s current projection for marketing year exports, some analysts anticipate the export projection will be raised further.
As of Feb. 24, U.S. soybean export sales had already reached 91% of USDA’s export projection compared with a five-year average of 83%.
However, USDA will likely be cautious with any further changes to its export projection as U.S. soybean sales have slowed over the past month and should remain seasonally slow over the second half of the marketing year.
Larger-than-expected South American production could prevent USDA from raising projected U.S. exports. Many private estimates now put Brazil’s soybean crop at 71-72 million metric tons (mmt) compared with USDA’s February estimate of 68.5 mmt. Estimates of Argentina’s crop have also firmed over the past two to three weeks.
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.