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Bearish numbers come out of USDA’s quarterly stocks report

By Staff | Oct 8, 2018



The USDA’s quarterly stocks report surprised some with higher than anticipated numbers with both corn and soybeans.

“Obviously today’s report is bearish across the board as we saw more ending corn stocks than what was expected in today’s report and more soybean stocks than what was expected,” said Todd Hultman, DTN grains analyst. “This inventory report is actually a beneficial thing the USDA does to keep the numbers more accurate.”

He said that these numbers for both corn and beans are the ending stocks for the 2017-2018 growing season.

“It tells us how the demand went for the year and in 2017-2018 crop year,” he said. “For corn and beans we are talking about ending stocks here, with corn at 2.14 billion bushels, it tells us how the demand went for the year, and it looks like it was just under 14.8 billion bushels. That is a new record demand for corn. It was up just slightly over the previous year.”

The USDA ending stocks number for corn came in at 2.14 billion bushels (bb), Hultman said.

“That was higher than expected,” he said. “That is a little lower than a year ago when it came in at 2.29 billion bushels, but it was still higher than expected.”

These numbers are showing the overall trend of some gradual growth in corn demand is continuing.

According to Hultman, ending stocks are down just a little from a year ago.

“But we’re still near the higher end of where corn stalks have been the past 10 to 15 years,” he said.

Initially, he said the number of corn is a bit bearish and that has been similar for the USDA’s report on soybeans.

“For soybeans, the ending stocks estimate came in at 438 million bushels,” he said. “That’s up from 302 million bushels a year ago and is also higher than what was expected for today’s report. The 438 million bushels also tells us something about soybean demand for the entire season of 2017, 2018. It came in just under 4. 3 billion bushels.”

“That was a new record high again for 2017 and 2018. Even though we had all of the trade war concerns and all of that political environment going no, we still came in with record soybean demand for the 2017 to 18 season.”

Along with its quarterly stocks report, Hultman said the USDA also gave a production note.

“This is the result of finding more stocks than expected today,” he said. “The USDA went back and increased their yield estimate for the 2017 crop year from 49.1 to 49.3 (bushels to the acre) and that resulted in about a 19 million bushel increase in their crop estimates so their new crop estimates is now 4.41 billion bushels.”

Hultman said the demand continues to rise for soybeans, at least for now.

“Of course part of that is responding to the lower prices we have had the last several years,” he said. “2017-18 is still making new record demand just by a small amount compared to the previous year.”

To Hultman, what is surprising about the Sept. 28 report is the ending stocks of 438 million bushels in soybeans. This means the U.S. has set a record for soybean demand in the fourth quarter.

“It came out to 784 million bushels and that’s significantly higher than anything we have seen recently,” he said. “It’s a bit surprising that in spite of China tariffs being enacted on July 6 we are seeing record soybean demand.”

The 438 million bushel ending stocks number for 2017-18 is just above 10 percent of annual use, which Hultman said is higher than where we have been the past 11 years.

“Those soybean supplies are starting to grow once again in terms of annual use,” he said.

As far as a new crop estimate, Hultman said he would like to remind people there are many unknowns about soybean demand in the new crop season.

“The current political trade war situation makes it very difficult to estimate, but we are definitely seeing a trend of rising surplus of ending stocks of soybeans where we have had six good growing years in a row and have a trade war situation going on,” he said.

Overall, Hultman said the USDA’s report reflected disappointment and lower trade.

“Overall, these ending stocks estimates are short-term adjustments to get used to,” he said, “and there’s gong to be a lot more things concerning the new crop season that is going to start having a bigger influence on grain prices once we get passed the harvest season. Right now, today we are seeing a bearish reaction to today’s report.”

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