Bean Exports and Feed Use of Corn to Take Limelight

January 9, 2014 12:57 AM
Bean Exports and Feed Use of Corn to Take Limelight

Analysts will be watching for some specific numbers when USDA releases its Jan. 10 crop reports.

Friday’s onslaught of USDA crop reports could have a dizzying effect on markets, but analysts will be paying close attention to certain reports and several numbers immediately following their release.

On Jan. 10, USDA will release four major crop reports: Annual Crop Production, Grain Stocks, Winter Wheat Seedings, and World Agricultural Supply and Demand Estimates (WASDE).

"No doubt, the number one report will be the Grain Stocks report," says Rich Nelson, director of research for Allendale, a brokerage services firm in McHenry, Ill. "The Grain Stocks report is the one that typically causes the big price swings in January."

Corn Stocks Closely Watched

The quarterly Grain Stocks report will provide the first snapshot of feed use of corn for the 2013-14 crop, and the average trade estimate for corn stocks as of De. 1, 2013, is 10.79 billion bushels, with a range of 10.025 billion to 11.25 billion bushels. A year ago, corn stocks were much lower at 8.033 billion bushels.

"We don’t think there was a large first-quarter feed usage because not a lot of corn was harvested in August," says Nelson. That means old-crop supplies were still being fed, limiting the feeding of new-crop corn.

Nelson thinks the Grain Stocks report will be a non-event for soybeans. The average trade estimate for Dec. 1 soybean stocks is 2.161 billion bushels, with estimates ranging from 2.027 billion to 2.266 billion bushels. This year’s estimates are also much higher than year-earlier stocks of 1.966 billion bushels.

Soybean Exports on Tap

As for soybeans, the WASDE report should provide the biggest clues into world supply and demand. Allendale expects USDA to raise soybean exports by 25 million bushels, but cautions not to become too bullish on beans.

"We do think there will be cancellations. There are 633 million bushels of beans sold that have not yet been shipped. That is a record," says Nelson. "And 80% of those sales are to China. Later this month, we could start to hear of the first cancellation."

Cancellations could become more frequent as the South American crop moves into the global market. Allendale expects USDA to raise Argentina’s soybean production by 500,0000 metric tons to 55 million and Brazil’s output by 1 million metric tons to 89 million.

2013 Finals

USDA will also release final production and yield figures for the 2013 crop.

Informa Economics, a private forecaster based in Memphis, expects USDA to release final corn production at a record 14.2 billion bushels, which is at the high end of the range of estimates. Informa’s bullish estimate is partly the result of higher yields in Ohio and North Dakota that lifted the U.S. corn yield to 161.6 bu. per acre.

The average trade estimate for 2013 corn production is 14.06 billion bushels, with a range of 13.9 billion to 14.255 billion. The average corn yield estimate is 161.2 bu. per acre, with a range of 159.8 bu. to 163.3 bu. per acre. USDA’s latest production estimate for corn puts the crop at 13.989 billion bushels. Allendale forecasts corn production at the low end of the range at 14.083 billion bushels.

As for soybeans, Informa estimates 2013 production at 3.33 billion bushels, which is 72 million bushels above USDA's most resent estimate of 3.258 billion bushels. As with corn, Informa’s projected soybean yield of 44 bu. per acre is also more bullish than both USDA’s recent 43 bu. and the average trade estimate of 43.3 bu.


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