The consensus in the grain trade is that USDA should cut its estimate of the 2011-2012 U.S. corn carryout by nearly 6% in Thursday’s monthly supply/demand update. The trade is also anticipating a small cut in the U.S. soybean carryout amid prospects for better U.S. soybean exports due to South American crop reductions and a recent pick-up in U.S. wheat export sales.
Pre-report estimates of 2011-2012 U.S. corn ending stocks from 20 analysts average 796 million bushels in a range from 680 million to 846 million bushels, compared with USDA’s January estimate of 846 million bushels, according to combined results of surveys taken by Dow Jones Newswires and Reuters News Service.
There are expectations USDA could raise its estimate of U.S. corn exports further due to a stronger-than-expected export sales pace and lower-than-expected production for major export competitor Argentina.
The U.S. agricultural attaché in Buenos Aires recently cut his estimate of Argentina’s production to 21.8 million metric tons (mmt) versus USDA’s January estimate of 26 mmt. The attaché trimmed his estimate of Argentina’s 2011-2012 corn exports to only 14 mmt compared with USDA’s most recent estimate of 18.5 mmt.
Strong U.S. ethanol production could also cause USDA to raise its projected corn-for-ethanol use slightly. Ethanol production slipped only modestly in January from the record pace set in December despite the expiration of the blenders tax credit.
Estimates of U.S. soybean ending stocks from 20 analysts average 271 million bushels, 4 million below USDA’s January carryout projection, in a range from 245 million to 300 million bushels, according to combined survey results.
Some observers see USDA raising its projection for 2011-2012 U.S. soybean exports due to decreased competition from South America following crop losses in Argentina, southern Brazil and Paraguay due to dry conditions there.
However, U.S. soybean export sales have shown little improvement in the past month and are still running well behind the pace needed to meet USDA’s current 2011-2012 export projection of 1.275 billion bushels.
Through Jan. 26, U.S. soybean export sales commitments were running 31.4% behind a year earlier, with USDA forecasting only about a 15% drop in marketing year exports.
While there has been increased talk of China boosting purchases of U.S. beans due to South American crop losses and delays at Brazilian ports, there has been no evidence of fresh demand at Gulf export terminals this week. Spot Gulf CIF basis bids for soybeans at midday on Tuesday were 5¢ weaker than on Friday afternoon.
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.