No Surprises In USDA S/D Report

There were no real surprises for the grain markets in the March 10 monthly USDA supply/demand update. As expected, USDA cut projected U.S. corn ending stocks and raised projected soybean stocks slightly.

USDA cut its estimate of 2005-06 U.S. corn ending stocks by 50 million bushels to 2.351 billion bushels and raised projected U.S. exports by 50 million bushels.

The changes reflected the recent strength in U.S. exports and China’s apparent withdrawal from the export market. USDA cut China’s projected 2005-06 corn exports to 5 million metric tons (MMT) from 6 million.

On the bearish side, USDA raised projected world corn ending stocks by about 2 million metric tons to 130.15 million.

The increase in world stocks reflected a decrease of 2.35 MMT in projected world feed use. This decrease may be partly due to bird flu problems, although USDA made no mention of those problems in its report narrative.

USDA raised its estimate of 2005-06 soybean ending stocks by 10 million bushels to a record 565 million due to continued slow U.S. exports. Projected exports were cut by 10 million bushels to 900 million.

South American production estimates were left unchanged at 58.5 MMT for Brazil and 40.5 million tons for Argentina.

One small negative surprise for the soybean market is that USDA raised China’s 2005-06 soybean crop to 18.3 million tons from a previous estimate of 17 million.

USDA also boosted its world soybean stocks number a bit further to 54.42 million metric tons from 53.83 million.

March 10’s reports should have little impact on futures markets as traders will turn their attention to the prospective plantings and quarterly grain stocks reports due out March 31.

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.