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Corn+Soybean Digest

Grain Stocks Estimates Supportive

USDA raised its 2007-2008 U.S. carryout projection for corn slightly last Friday morning as a result of larger-than-expected production, and cut expected wheat ending stocks largely due to a drop in winter-wheat production.

However, the increase in U.S. corn production was largely offset by a sharp increase in expected corn exports and feed usage, while projected world corn ending stocks were cut.

USDA raised its corn crop estimate by 214 million bushels due to better-than-expected yields, but raised expected ending stocks by only 14 million bushels.

USDA pegged U.S. 2007-2008 corn ending stocks at 1.516 billion bushels, up from a previous estimate of 1.502 billion bushels. The USDA stocks number compared with trade estimates averaging 1.463 billion bushels in a wide range from 1.168-1.802 billion bushels.

Projected U.S. corn exports for 2007-08 were raised by 150 million bushels to 2.150 billion bushels, due to strong world demand and lower foreign production.

Corn feed/residual use was raised by 50 million bushels as a result of the larger crop.

USDA’s world corn supply/demand balance sheet held supportive news for corn prices. USDA cut projected world ending stocks by 6.13 million metric tons, or 5.7%, despite the projected increase in U.S. production due to crop losses in Europe.

USDA slashed its European Union-27 corn crop estimate by 6.8 million metric tons, noting that “extended drought and extreme heat in late June and July devastated crops in Bulgaria, Hungary and Romania.”

Production was also lowered for the Former Soviet Union states (FSU-12), Bosnia, Croatia and Serbia.

The wheat market was expecting lower U.S. and world ending stocks estimates and it got them.

USDA trimmed its estimate of U.S. wheat ending stocks to 404 million bushels from a previous estimate of 418 million bushels.

U.S. all-wheat production was cut by 24 million bushels. Projected U.S. exports were raised another 25 million bushels due to strong demand and lower production in the European Union and Canada.

However, feed/residual usage was slashed by 35 million bushels with high wheat prices expected to severely limit use of wheat as feed.

USDA lowered its world wheat carryout estimate by 1.8 million metric tons due to lower global production and stronger export demand.

Global production was cut by 1.9 million metric tons as reduced production in the EU-27, the U.S., Canada, Turkey and Brazil more than offset production increases in India and the FSU-12.

World wheat exports were raised by 1.2 million tons with increases for the U.S., Russia and Australia.

Editor’s note: Richard Brock, The Corn And Soybean Digest's Marketing Editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.

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