Much larger-than-expected ending stocks of both corn and soybeans will pressure prices lower. USDA’s final quarterly Grains Stocks report for the 2012-13 marketing year shows wheat replaced corn in feed markets this summer.
USDA estimates old-crop corn stocks in all positions as of Sept. 1 at 824 million bushels, 17% smaller than the last year but well above trade estimates.
"Corn stocks were 10% above the highest trade estimate," says Chad Hart, agricultural economist with Iowa State University.
The average trade estimate for corn ending stocks was 681 million bushels and the range of estimates was 552 million bushels to 750 million.
The December corn futures contract set a new contract low below $4.44/bushel following the release of the report.
Wheat Feeding Strong
"We had a lot more wheat feeding this summer, which came at the expense of corn," says Brian Basting, commodity research analyst with Advance Trading, Bloomington, Ill.
In contrast to the higher-than-expected corn ending stocks, all wheat stocks of 1.855 billion bushels plunged 70 million bushels below the average trade estimate, says Basting.
The June–August implied corn disappearance was 1.94 billion bushels, compared with 2.16 billion bushels for the same period last year.
"Feeders backed off, ethanol plants backed off, waiting for new crop to come in," says Hart. "Over the next six months, feed demand could rebuild. Ethanol will build back up. Domestic corn demand will ramp up. We have already seen it on the export side."
Demand for corn from China has been strong, and Mexico is also starting to ramp up its purchases of U.S. corn, Hart adds.
USDA Finds More Beans
USDA estimates old-crop soybeans stored in all positions as of September 1 at141 million bushels, 17% smaller than last year but substantially higher than expected.
The average trade estimate for soybean stocks heading into the report was only 124 million bushels. Unlike the corn ending stocks number, though, soybean stocks fell within the range of estimates of 106 million bushels to 155 million.
Soybeans could see a bigger price impact than corn, though. Unlike corn, Hart says, soybeans were able to maintain relatively high prices heading into the report. Following the report, soybean prices fell sharply.
"We have enough soybeans to just barely get buy," Hart adds. "But that’s the key. We have enough to get by."
USDA also revised 2012-13 soybean production 19 million bushels higher to 3.034 billion bushels, which basically accounts for the higher ending-stocks figure, notes Basting.
On AgDay, Brian Grete provides an overview of this week's Grain Stocks report:
See how the reports are affecting prices in AgWeb's Market Center.
Coverage, Analysis of Sept. 30 Grain Stocks Reports
See all of the data, coverage and analysis of today's Grain Stocks reports.