Lower Corn, Soy Stocks Expected

Smaller-than-expected June 1 stocks and drought conditions in the central Midwest have the grain trade expecting USDA to cut its ending stocks projections for both corn and soybeans in Tuesday’s monthly supply/demand update.

Wheat ending stocks are expected to rise, however, due to larger crop production and higher-than-expected June 1 stocks.

The trade expects USDA to cut soybean ending stocks for both 2004-2005 and 2005-2006 in Tuesday’s report.

Trade estimates of 2004-2005 soybean ending stocks average 297 million bushels in a range from 270-340 million bushels, according to a survey by Dow Jones News Service.

The trade estimates compare with the USDA’s June estimate of 320 million bushels and last year’s ending stocks of only 112 million.

Estimates of 2005-06 soybean ending stocks average 205 million bushels in a range from 150-254 million bushels, vs. the USDA’s June projection of 250 million bushels.

A very small reduction in old-crop corn ending stocks is expected. Trade estimates of 2004-05 ending stocks average 2.206 billion bushels in a range from 2.110-2.265 billion bushels.

A larger decrease in the corn ending stocks projection for 2005-2006 is expected due to the drought conditions in Illinois.

Trade estimates of 2005-2006 corn ending stocks average 2.197 billion bushels in a range from 1.76-2.5 billion, vs. the USDA’s June projection of 2.54 billion bushels.

There is no guarantee that USDA will change its 2005-06 crop estimates since the first survey estimate of U.S. crop production won’t be done until Aug. 1.

However, it seems reasonable to expect that the USDA might cut back its corn yield projection to the trend-line level of 145 bu/acre, from the current 148 bushel estimate.

The USDA will change its 2005-06 crop projections to reflect the minor revisions in planted acreage figures reported in the June 1 crop acreage survey.

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.