USDA Reports Preview: Wild card is U.S. Ending Soybean, Corn Stocks – DTN

Trucks waiting in line at grain elevator. ©Debra L Ferguson Stock Images

As I’ve mentioned before, DTN holds a meeting to discuss what could be seen in upcoming USDA reports before those called to duty head off to the lockup in Washington, D.C. For the April set of Crop Production and Supply and Demand reports, the conversation centered on two topics: South American corn and soybean production estimates and domestic ending stocks. It should be noted, as a quick glance at the report preview table will confirm, that covers two of the three sets of data in this month’s reports. Yes, it’s a slow month for numbers. 

USDA will release its latest Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports at 11 a.m. CDT Tuesday.

To me, most of the interest will fall on the latest guesses of South American production. Will increases in Brazil’s soybean crop offset decreases expected in Argentina? How far will corn production be trimmed for both? Carrying these production questions a step further, what will the ripple effects be on world ending stocks?

Pre-report estimates hint at decreased global soybean stocks due to a larger cut in Argentine production than increase in Brazil. World corn stocks are also set to decline, slightly, though the 2.2-million-metric-ton expected drop is only a small part of the 4.5 mmt combined decrease guessed at in pre-report estimates.

Why? The wild card is U.S. ending stocks. Pre-report estimates for U.S. corn came in at 2.192 billion bushels, up 55 million from USDA’s March guess of 2.127 bb. If realized, this would be but a small step toward my post-Quarterly Stocks calculation of domestic ending stocks eventually coming in between 2.66 bb and 2.88 bb (based on four-year and 11-year averages). As of this past Thursday’s weekly export sales and shipment update, total shipments of corn were 954 mb. Using the four-year average, this projects to total marketing-year export demand of 1.927 bb as compared to USDA’s March guess of 2.225 bb.  

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Similarly, the pre-report average estimate for domestic soybean ending stocks came in at 570 mb, up 15 mb from USDA’s March guess of 555 mb. This is a safe estimate given USDA’s track record (last five years) of March-to-April ending stocks adjustments that range from a decrease of 15 mb to an increase of 10 mb. Think back to my post-Quarterly Stocks webinar, though. Using stocks on hand as of March 1 and average second-half demand, I came up with a range for domestic ending stocks between 740 mb (11-year) and 940 mb (four-year). My thought would be USDA eventually comes in closer to that 11-year mark.

But not this month. Recall that USDA’s May reports are the “initial” look at new-crop estimates (actually third if you count the release of its Baseline estimates and Annual Outlook forum). Therefore, it isn’t without precedent that USDA holds back on making major adjustments to domestic old-crop ending stocks (and demand) until the bulk of attention has turned to the overhyped new-crop numbers seen in May. This time around, I have a wager of company swag riding on this idea with a friend and fellow analyst from Winnipeg.

As for wheat, both domestic and global ending stocks are expected to show little change from last month. The average pre-report guess on domestic stocks of 1.040 bb (USDA’s March estimate was 1.034 bb) remains below my projection near 1.1 bb.

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Editor’s Note: Join DTN Analyst Todd Hultman at 12 p.m. CDT on Tuesday, April 10, as he looks at the latest USDA Supply and Demand and Crop Production estimates and what they might mean for the markets. To register, visit https://bit.ly/….

U.S. ENDING STOCKS (million bushels) 2017-2018
Apr. Avg. High Low Mar. 2016-17
Corn 2,192 2,265 2,050 2,127 2,293
Soybeans 570 609 520 555 302
Sorghum 23 26 20 24 33
Wheat 1,040 1,080 1,010 1,034 1,181
WORLD ENDING STOCKS (million metric tons) 2017-2018
Apr. Avg. High Low Mar. 2016-17
Corn 197.0 202.0 191.5 199.2 231.9
Soybeans 92.9 96.0 91.0 94.4 96.7
Wheat 268.4 270.0 266.5 268.9 252.6
WORLD PRODUCTION (Million Metric Tons) 2017-2018
Apr. Avg. High Low Mar. 2016-17
Corn
Brazil corn 92.2 96.0 86.5 94.5 98.5
Argentina corn 33.5 36.0 31.0 36.0 41.0
Soybeans
Brazil soybeans 115.6 118.0 113.3 113.0 114.1
Argentina soybeans 42.3 45.0 39.0 47.0 57.8

Darin Newsom can be reached at darin.newsom@dtn.com

Follow Darin Newsom on Twitter @DarinNewsom

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