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Corn+Soybean Digest

Corn, Soy Stocks Larger Than Expected

Tuesday’s quarterly USDA Grain Stocks Report held bearish news for the corn and soybean markets as USDA pegged June 1 stocks of both crops toward the high end of trade expectations.

USDA pegged June 1 corn stocks at 4.266 million bushels, compared with trade estimates averaging 4.190 billion bushels in a range from 4.064-4.321 billion bushels. The June 1 stocks number was up 5.9% from a year earlier, when there were 4.028 billion bushels of corn in storage.

The June 1 stocks estimate implies third-quarter corn disappearance of 2.692 billion bushels, down 4.9% from a year earlier, which points to slower-than-expected feed/residual usage and suggests USDA will have to raise its 2008-09 carryout projection next month.

In order for corn stocks to drop to USDA’s current carryout projection of 1.600 billion bushels, fourth quarter corn disappearance would have to exceed a year earlier by 10.9%.

USDA pegged June 1 soybean stocks at 597 million bushels compared with trade estimates averaging 586 million bushels, in a range from 559-620 million bushels. Soybean stocks were down 705 million bushels or 54% from March 1 stocks of 1.302 billion bushels and were down 11.7% from a year earlier when stocks of 676 million bushels were reported.

In order for USDA’s current 2008-09 ending stocks projection of 210 million bushels to be met, fourth quarter soybean disappearance will have to exceed the year-earlier level by 3.4%

USDA’s June 1 stocks number implies third-quarter soybean disappearance fell 8.2% short of a year earlier. If disappearance is down by the same percentage during the fourth quarter, stocks could wind up as high as 165 million bushels compared with USDA’s current ending stocks estimate of 110 million bushels.

If fourth quarter disappearance were to match last year’s 471 million bushels, it would leave soybean ending stocks at 126 million bushels.

The wheat market did not expect any significant news out of the grain stocks report and it did not receive any. USDA pegged June 1 U.S. wheat stocks at 667 million bushels, just 2 million bushels below its most recent estimate of 2008-09 ending stocks and only 3 million bushels below the average of trade estimates.

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