Stocks Report Delivers September Surprise

September 28, 2012 09:50 PM
Stocks Report Delivers September Surprise

USDA slashed corn stocks, which shoot prices up. Jerry Gulke analyzes the report and what that means for the big picture.

In a normal year, a surprise in USDA’s September Grain Stocks would be more corn was found than expected. But, this year is anything but normal.

On Friday, USDA’s Grain Stocks report showed a decrease in old-crop corn stocks, as well as decrease for old-crop soybeans and stored wheat.

Here are the numbers:

  • Old crop corn stocks in all positions on Sept. 1, 2012 totaled 988 million bushels, down 12% from Sept. 1, 2011.
  • Old-crop soybeans stored in all positions on Sept. 1, 2012 totaled 169 million bushels, down 21% from Sept. 1, 2011.
  • All wheat stored in all positions on Sept. 1, 2012 totaled 2.10 billion bushels, down 2% from a year ago.


Traders were expecting a bearish report, meaning they thought more stocks were going to be on hand, says Jerry Gulke, president of the Gulke Group. He says for so many traders to be caught off guard, it is obviously difficult to get a handle on the stock situation.

The trade was expecting the Sept. 1 corn stocks to come in around 1.126 billion bu. (much ahead of USDA’s 988 billion bu.) was because corn harvest is so far ahead of schedule. According to USDA’s Sept. 24 Crop Progress reports, nearly 40% of the U.S. corn crop is harvested.

Gulke says either the amount bushels that were harvested early were not as large as or more the crop was used as feed.

"What USDA is going to have to assume is that even at these high prices, we didn’t curb demand as much as we thought we would. Right now we saw nothing in there that $6 or $7 corn did much to curb demand."

As displayed by the week’s export sales report, exports are an area that has suffered from the short crop and perhaps high prices. Corn export sales reported at just 400 tons. The trade was looking for a number between 150,000 and 300,000. Last week 69,900 exports were reported.

"Our exports in corn sales this week were basically non-existent."

Economics of On-Farm Storage

With this report, USDA also issues where the stocks are physically located.

  • Corn: Of the total stocks, 314 million bushels are stored on farms, down slightly from a year earlier. Off-farm stocks, at 675 million bushels, are down 17% from a year ago.
  • Soybeans: On-farm storage totaled 38.3 million bushels, down 21% from a year ago. Off-farm stocks, at 131 million bushels, are down 21% from last September.
  • All wheat: On-farm stocks are estimated at 573 million bushels, down 9% from last September. Off-farm stocks, at 1.53 billion bushels, are up 1% from a year ago.


Gulke says an old marketing saying is: When grain is in farmers hands, it is in weak hands. We know we grow corn to sell it. When corn is in commercial hands, it is in strong hands. They won’t sell it at a loss.

"On-farm corn stocks are down 21%. Farmers have been moving their grain, which is good news."

Gulke says it will be interesting this fall to see how fast elevators need to move grain, due to aflatoxin concerns.

Listen to Gulke's full analysis:





Coverage of Sept. 28 Grain Stocks Reports
See AgWeb's full coverage of the Sept. 28 Grain Stocks and Small Grains reports.

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Spell Check

9/29/2012 03:20 AM

  Perhaps the folks reporting to the government are also confused about millions and billions. What does 69,900 exports mean? At this point a person might well question thecorrectness of this article. It is nice though to think that I must have been the first to read it.


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