USDA Cuts Soy Stocks, Raises Corn

Thursday morning’s USDA monthly supply/demand update lowered projected 2004-2005 U.S. and world soybean ending stocks, but raised the forecast for corn stocks again.

The changes may not have a big impact on corn and soybean prices because they were largely expected by the trade.

The USDA lowered its estimate of U.S. soybean stocks by 30 million bushels to 410 million bushels. The cut reflected stronger-than-expected exports due to record shipments to China and cuts to South American production.

Projected world soybean stocks were cut to 55.98 million metric tons, from 61.35 million tons – a drop of 8.7%. World stocks declined primarily due to smaller production in Brazil.

USDA lowered its Brazilian crop estimate to 59 million metric tons from 63 million. However, Argentine production was left unchanged at 39 million tons.

Due to the smaller stocks estimates, USDA raised its projection for the U.S. on-farm average price of soybeans to $5.05-$5.45 per bushel from $4.80-$5.40.

The USDA raised its estimate of U.S. corn ending stocks by another 45 million bushels to 2.055 billion, due to continued slow export demand.

Projected exports were cut 50 million bushels for the third month in a row due to increased competition from Argentina and South Africa and smaller world imports.

The USDA raised its estimate of world corn ending stocks by another 4.77 million metric tons to 122.04 million tons. That’s an increase of over 4%.

The larger world stocks were due to higher U.S. stocks and higher production estimates for Argentina, China and South Africa.

The USDA raised Argentine production by 2 million metric tons to 19.5 million tons. China’s crop was raised by 2 million tons to 128 million, while South African production was raised 1.3 million tons to 11 million. Those gains were partially offset by a 2 million ton decrease in expected Brazilian production.

Despite the larger stocks estimates, the USDA raised its projected range for the U.S. on-farm average price of corn to $1.95-$2.15 per bushel from $1.85-$2.05.

Editors note: Richard Brock, The Corn and Soybean Digest's Marketing Editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.

To see more market perspectives, visit Brock's Web site at www.brockreport.com.