Stocks of corn and soybeans continue to dwindle even as the livestock industry culls herds and flocks and switches to less-expensive feedstuffs.
USDA’s quarterly Grain Stocks report, released Friday, Sept. 28, shows corn stocks in all positions as of Sept. 1 were 12% smaller than a year ago, and soybean stocks plunged 21%.
Corn stocks are now below 1 billion bushels at 988 million bushels. On-farm stocks of 314 million bushels are close to last year’s levels, but off-farm stocks are 17% smaller than a year ago. USDA’s corn stocks figure came in well below the average trade estimate of 1.126 billion bushels. Following the report corn prices surged on higher-than-expected stocks.
Stocks of soybeans were 169 million bushels, down 21% from a year earlier. Only 38.3 million bushels of soybeans are stored on farms, down 21% from a year ago. Off-farm stocks of 131 million bushels were also 21% smaller than a year ago. Analysts, however, were expecting a much sharper drop in soybean stocks, with the average trade guess near 132 million bushels.
Wheat stocks of 2.1 billion bushels were 2% smaller than last year. "We fed 436 million bushels of wheat last quarter, which is two times the amount fed last year," says Brad Paulson, president of Northern Crops Marketing and Investments, Langdon, N.D. Paulson was the commentator on a MGEX post-report press briefing.
This year’s early harvest pace could mask just how much corn is being fed, say analysts. In the Delta states, for instance, where harvest began weeks earlier than usual, a significant amount of new-crop corn has already moved into elevators and to the poultry industry, says Jack Scoville, vice president with Price Futures Group, Chicago. Scoville was a commentator on the pre-report press briefing held by the CME Group. "There is a lot of hoarding going on in the commercial feed industry," Scoville adds.
Corn and soybean stocks will remain tight well into 2012. Scoville thinks corn prices could make another run at $8 per bushel. However, when prices get above that level, he says demand resistance sets in. Soybean prices will likely remain strong into early 2013 at the very least. "The market will then turn its gaze to the south," says Scoville. If the South American crop has problems, U.S. soybean prices will continue higher. "My projections are for generally high prices well into next year," he adds.
In its Small Grains report, also released Sept. 26, USDA estimated 2012 all-wheat production at 2.27 billion bushels, up 13% from 2011 output. The department forecast the U.S. all-wheat yield at 46.3 bushels per acre, up 2.6 bushels from the previous year. The yield is a record high, matching 2010’s. Winter wheat production of 1.65 billion bushels was 10% higher than last year. Other spring wheat of 542 million bushels is 19% higher, and Durum wheat of 82 million bushels is 62% higher.
"The winter wheat crop is a much bigger crop that last year, when wet conditions and flooding were a problem. And the quality of this year’s crop is excellent," says Paulson. "Most of Canada’s crop will be very good as well."
Coverage of Sept. 28 Grain Stocks Reports
See AgWeb's full coverage of the Sept. 28 Grain Stocks and Small Grains reports.