Soybean and wheat stocks remain plentiful, however
Old-crop corn stocks continue to be tight, but soybean stocks are growing and wheat stocks remain more than ample, according to USDA’s quarterly Grain Stocks report, released March 30.
USDA pegged quarterly corn stocks at just over 6 billion bushels, which was roughly 140 million bushels lower than the trade anticipated, and lower than last year’s 6.52 billion bushels. "We will come out of the 2011 crop year tight," notes Chad Hart, agricultural economist with Iowa Sate University, Ames. "Corn disappearance is still better than last year. Ethanol production in the first quarter of 2012 was running stronger than a year ago. Ethanol plants produced at high levels in January and February, which has resulted in a lot of ethanol in storage."
Even though the Volumetric Ethanol Excise Tax Credit (VEETC) ended at the end of 2011, Hart says that it took plants time to wind down after ramping up production late last year to take advantage of the blender’s tax credit. "Now we are seeing a weekly ethanol grind back down at 2011 levels," Hart adds.
Corn use in the December 2011 through February 2012 period was 3.64 billion bushels, compared with 3.53 billion bushels during the same period last year, which resulted in and 8 percent drop in total corn stocks.
Slower exports to China raise soybean stocks
Soybean stocks were 10 percent higher than a year ago and even larger than the trade expected due to sluggish exports to China. "China’s economy has slowed. China has tightened its money supply because of inflation concerns," says Hart. "Each week, U.S. exports to China have consistently been 15 percent to 20 percent lower than year-ago level. But China is still buying new-crop beans."
Soybean demand for the December 2011 through February 2012 period totaled 998 million bushels, a 3-percent decline from the same period a year earlier. Soybean stocks of 1.37 billion bushels were about 10 million bushels higher than expected and 123 million bushels larger than a year ago. USDA will release world soybean stocks April 10, which will give the trade insight into South American stocks and exports.
Still plenty of wheat
Year over year, wheat stocks declined by 224 million bushels. "Wheat stocks came in as expected. There is still plenty of wheat around," says Brad Paulson, Northern Crops Marketing and Investments, Langdon, N.D. Paulson was the commentator on a post-report MGEX press briefing. USDA put total wheat stocks at 1.2 billion bushels, close to the middle of the trade range estimate of 1.81 billion to 1.41 billion bushels, but 55 million bushels under the average estimate of 1.255 billion bushels.
Wheat use has slowed, according to USDA. Disappearance of 462 million bushels for the December 2011 through February 2012 period indicates a 9 percent drop in demand from the same period a year earlier.