Smaller-than-expected corn stocks indicate that demand has been better than expected, driven by exports as well as ethanol and feed use, but soybean stocks were slightly higher than expected, according to USDA’s quarterly Grain Stocks report released Monday, March 31.
"Coming into this report, people were looking for an increase in quarterly corn stocks, but they didn’t get that," says Mike Krueger, president of the Money Farm. Krueger was the analyst on a post-report conference call hosted by MGEX in Minneapolis.
"The most bullish number from the report was corn stocks," says Krueger. Shortly after the report was released, corn futures traded well off their morning lows.
Quarterly corn stocks in all positions as of March 1, 2014, were 30 percent larger than the previous year at 7.01 billion bushels, according to the report. Of the total stocks, 3.86 billion bushels were stored on farms, which is 45 percent more than in 2013. Off-farm stocks of 3.15 billion bushels were up 15 percent from a year earlier.
The indicated use of corn for the second quarter, December 2013 through February 2014, was 3.45 billion bushels, which is substantially stronger than last year’s 2.63 billion bushels for the comparable period.
"USDA will have to trim corn ending stocks in its April 9 supply and demand report," says Krueger.
In the last World Agricultural Supply and Demand Estimates, the corn carryout was larger than expected even though demand for corn from the export and ethanol sectors has been growing.
"This report confirms strong feed use as well," says Krueger.
Bean Stocks Higher than Expected
Soybeans stored in all positions as of March 1, 2014, totaled 992 million bushels, down 1 percent from the previous year, according to USDA. Soybean stocks stored on farms of an estimated 382 million bushels were 16 percent smaller than a year ago. Off-farm stocks of 610 million bushels were 13 percent larger.
Implied use of soybeans for the second quarter of 1.16 billion bushels was 20 percent better than the same period a year earlier.
Analysts were expecting soybeans stocks to be slightly smaller than a year ago at 989 million bushels. The range of estimates for soybeans stocks was 955 million bushels to 1.087 billion.
Despite the better-than-expected stocks number, old-crop soybean inventories are exceedingly tight due mainly to a booming export market.
"We continue to load out big numbers," says Krueger. "We have a problem coming into the April 9 supply and demand report. The only way USDA can balance the old-crop supply sheet is to increase the import numbers."
The U.S. infrastructure, however, is set up to export, not import, he says.