Demand for corn and soybeans is increasing, but stocks of both crops remain well above year-ago levels, according to data released Tuesday by the USDA.
On the bright side, stocks of both corn and soybeans were lower than expected and demand is fairly strong, according to the June 1 quarterly Grain Stocks numbers.
Corn Demand Continues
Looking at corn first, USDA projected stocks at 4.447 billion bushels, below the average trade estimate of 4.555 billion but within the range of expectations. Quarterly stocks of corn are 15% above last year’s 3.852 billion bushels.
Corn disappearance for the quarter at 3.3 billion bushels was 140 million bushels stronger than last year.
“Even though avian influenza set back corn demand in the poultry market, we saw growth from the beef and hog sectors,” said Chad Hart, agricultural economist with Iowa State University. “We also saw really good numbers from the ethanol industry.”
Corn use for ethanol production hit an all-time high last week.
“Demand for corn across the board—feed, exports, ethanol—looks fairly strong,” noted Hart.
However, producers are continuing to hold corn in the hope that prices will strengthen. According to the report, on-farm stocks of corn at 2.28 billion bushels are 22% larger than a year ago, while off-farm stocks are only 9% bigger.
“Ownership will shift hands,” said Louise Gartner of Spectrum Commodities in Ohio, speaking during a post-report press call hosted by MGEX. “As stocks unwind, at least from a pricing standpoint, some of the sell pressure should come off.”
Producers Hold Tight to Soybeans
Quarterly stocks of soybeans at 625 million bushels were 45 million bushels lower than the average trade estimate but within the range of expectations. However, soybean stocks are 54% larger than last year’s 405 million bushels.
Disappearance of beans for the quarter was 709,000 bushels, as demand for soybeans continued to improve, particularly from the U.S. oil crush industry.
“Increasing demand is due to a combination of expansion in the livestock industry, which has pulled on supplies,” said Hart. “And lower-cost feed for the past year to year-and-a-half has helped stimulate demand.”
However, on-farm stocks of soybeans at 246 million bushels are 126% larger than a year ago, while off-farm stocks are 38% bigger.
“Farmers have been holding back, hoping for higher prices and they are still holding,” said Hart.
Despite large on-farm stocks and overall volumes, Hart expects the Grain Stocks report to help support corn and soybean prices. “The disappearance numbers will help support the recent rallies,” he said.