On March 31, the USDA will release two important reports, the Prospective Plantings and March 1 Grain Stocks reports. A lot of discussion has focused on the Prospective Plantings report and the importance of farmers' intentions for total planted acreage and the acreage of individual crops. There has been less discussion of the estimate of March 1 grain stocks, says University of Illinois Agricultural Economist Darrel Good.

"Expectations for very small inventories of corn and soybeans at the end of the current marketing year put additional importance on the mid-year stocks estimate. The estimates will provide an opportunity to evaluate the pace of consumption that can be supported during the last half of the 2010-2011 marketing year," he says.

Forming expectations about the level of March 1 inventories is limited by incomplete data on the consumption categories that are reported on a weekly or monthly basis and the lack of any ongoing estimates of feed and residual use of corn. The following calculations provide some context for forming expectations about the likely level of March 1 soybean and corn stocks and for evaluating the actual estimates when they are released, he says.

For the December through February quarter of the current marketing year, the Census Bureau has reported estimates of the domestic soybean crush for December and January. Crush in those two months was 11.2% less than in the same period last year, he says.

The February crush will be reported on March 24. A continuation of the rate of decline reported in December and January would result in a quarterly crush of 438.8 million bushels, Good adds.

"We anticipate a smaller year-over-year decline in February, with the quarterly crush near 442 million bushels. The USDA's weekly export inspections estimate indicated that 546.5 million bushels of soybeans were exported in the December 2010 through February 2011 quarter of the marketing year. Adjusting for Census Bureau export estimates that are available only through December 2010, quarterly exports were likely near 559.3 million bushels," he says.

The large level of residual use of soybeans, reported in the first quarter of the marketing year suggests that second quarter seed, feed and residual use should be near zero. These projections of quarterly soybean consumption point to a March 1 inventory of about 1.28 billion bushels, very near the level of inventories of a year earlier, he says.