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Hedging Corn and Soybeans

RSS By: Howard Tyllas, AgWeb.com

Howard Tyllas is currently a member of the Chicago Board of Trade and registered with the Commodity Futures Trading Commission as a floor broker and as a Commodity Trading Advisor.

USDA Report for 3/28/13

Mar 28, 2013

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Corn Stocks Down 10 Percent from March 2012
Soybean Stocks Down 27 Percent
All Wheat Stocks Up 3 Percent

Corn stocks in all positions on March 1, 2013 totaled 5.40 billion bushels, down 10 percent from March 1, 2012. Of the total stocks, 2.67 billion bushels are stored on farms, down 16 percent from a year earlier. Off-farm stocks, at 2.73 billion bushels, are down 4 percent from a year ago. The December 2012 - February 2013 indicated disappearance is 2.63 billion bushels, compared with 3.62 billion bushels during the same period last year.

Soybeans stored in all positions on March 1, 2013 totaled 999 million bushels, down 27 percent from March 1, 2012. Soybean stocks stored on farms are estimated at 457 million bushels, down 18 percent from a year ago. Off-farm stocks, at 543 million bushels, are down 34 percent from last March. Indicated disappearance for the 
December 2012 - February 2013 quarter totaled 967 million bushels, down 3 percent from the same period a year earlier.

All wheat stored in all positions on March 1, 2013 totaled 1.23 billion bushels, up 3 percent from a year ago. On-farm stocks are estimated at 237 million bushels, up 9 percent from last March. Off-farm stocks, at 997 million bushels, are up 2 percent from a year ago. The December 2012 - February 2013 indicated disappearance is 436 million bushels, down 6 percent from the same period a year earlier.

Durum wheat stocks in all positions on March 1, 2013 totaled 42.4 million bushels, up 18 percent from a year ago. On-farm stocks, at 21.4 million bushels, are up 20 percent from March 1, 2012. Off-farm stocks totaled 21.0 million bushels, up 17 percent from a year ago. The December 2012 - February 2013 indicated disappearance of 18.6 million bushels is up 52 percent from the same period a year earlier.

Grain sorghum stored in all positions on March 1, 2013 totaled 91.4 million bushels, down 15 percent from a year ago. On-farm stocks, at 10.9 million bushels, are down 15 percent from last March. Off-farm stocks, at 80.5 million bushels, are down 15 percent from a year earlier. The December 2012 - February 2013 indicated disappearance from all positions is 48.5 million bushels, up 13 percent from the same period last year.

Statistical Methodology

Survey Procedures: The grain stocks estimates in this report are based on surveys conducted during the first two weeks of March. Separate surveys are conducted to obtain the on-farm and off-farm estimates. The on-farm stocks survey is a probability survey that includes over 83,500 operators selected from a list of producers that ensures all operations in the United States have a chance to be selected. These producers are asked to provide the total quantities of grain stored on their operations as of March 1, 2013. This includes all whole grains and oilseeds stored whether for feed, seed, or sale as well as any stored under a government program.

The off-farm stocks survey is an enumeration of all known commercial grain storage facilities. This includes 
approximately 8,800 facilities with 10.2 billion bushels of storage capacity. An effort is made to obtain a report from all facilities. Reports of stock holdings are normally received from operations covering about 90 percent of the capacity. Estimates are made for missing facilities to make the survey complete.

Estimation Procedures: On-farm and off-farm survey data are reviewed at the State and National levels for 
reasonableness, consistency with historical estimates, and current crop size. After estimates are made for on-farm and off-farm stocks, the totals of these two are combined and evaluated using the balance sheet approach. This method utilizes other sources of data to check the reasonableness of the stocks estimates. Estimates of production, imports, exports, crushings, millings, and all other recorded uses of grains and oilseeds are reviewed to make sure beginning stocks,


production, utilization, and ending stocks are within reasonable balance and present the best possible estimate of stocks.Revision Policy: On-farm and off-farm stocks are subject to revision the quarter following initial publication and again in the following December 1 Grain Stocks report published in January each year. Revisions can be made when late reports are received, errors are detected in reporting and calculations, and production estimates are revised. Estimates will also be reviewed following the 5-year Census of Agriculture. No revisions to these years will be made after that date.

Reliability: Reliability of the on-farm and off-farm stocks must be treated separately because the survey designs for the two surveys are very different. The on-farm stocks estimates are subject to sampling variability because all operations holding on-farm stocks are not included in the sample. This variability, as measured by the relative standard error at the United States level, is approximately 2.4 percent for corn, 2.5 percent for soybeans, and 2.7 percent for all wheat. This means that chances are approximately 95 out of 100 that survey estimates for stocks will be within plus or minus 4.8 percent for corn, 5.0 percent for soybeans, and 5.4 percent for all wheat of the value that could be developed by averaging the estimates produced from all possible samples selected from the same population and surveyed using the same procedures. The relative standard errors for sorghum, barley, and oats are 16.8, 4.7, and 3.1 percent, respectively.

Survey indications are also subject to non-sampling errors such as omission, duplication, imputation for missing data, and mistakes in reporting, recording, and processing the data. Off-farm, as well as on-farm stocks, are subject to these types of errors. These errors cannot be measured directly, but they are minimized through rigid quality controls in the data collection process and a careful review of all reported data for consistency and reasonableness.

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