Robust Exports to Cut Soybean Carryout

December 6, 2013 12:30 AM
Robust Exports to Cut Soybean Carryout

Ending stocks of both corn and soybeans will be the most closely watched numbers.

When USDA releases its World Agricultural Supply and Demand Estimates on Dec. 10, chances are estimates for this year’s corn and soybean production remain unchanged, but ending stocks of soybeans could plunge.

"This will really be just an export-revision report," says Rich Nelson, chief strategist at Allendale, a brokerage firm in McHenry, Ill. USDA conducts a crop survey each year in December and thus typically waits until January to make changes in its production estimates.

The production revision will be made in January, says Nelson. He expects upward revisions in corn production at that time. "For soybeans, I’m not sure," he adds.

No Changes in Ethanol Use for Now

No changes are expected in corn for ethanol use because the U.S. Environmental Protection Agency is still accepting public input on its recently released proposal to reduce the biofuels mandate by 2.94 billion gallons in 2014. Allendale expects USDA to reduce feed use of corn by 75 million bushels, which will be partially offset by a 50 million bushel increase in exports.

Ending stocks of both crops will be the most closely watched numbers. The average trade estimate for the corn carryout is 1.871 billion bushels, with a range of 1.737 billion to 2.013 billion bushels.

Allendale expects USDA to raise corn ending stocks to 1.9 billion bushels, which is slightly higher than USDA’s November estimate of 1.89 billion bushels and more than twice as large last year’s 824 million bushels.

Robust Exports to Cut Carryout

"Soybean exports are so far ahead of USDA’s estimates that USDA will be forced to rectify the problem on this report," says Nelson.

Allendale puts ending stocks of soybeans at 147 million bushels, substantially lower than USDA’s most recent 170 million bushels and close to last year’s tight 141 million bushels. The average trade estimate for soybean ending stocks is 153 million bushels, with a range of 118 million to 170 million.

World Stocks

The average trade estimate for world corn ending stocks is 163.3 million metric tons, slightly lower than USDA’s November estimate of 164.33 million metric tons.

The average trade estimate for soybeans stocks of 71.64 million metric tons is higher than both USDA’s latest estimate of 70.23 million metric tons and last year’s 60.11 million.

Allendale puts world ending stocks of soybeans at the high end of the range at 70.3 million metric tons and world ending stocks of corn at 164.01 million metric tons.

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