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Corn+Soybean Digest

Trade Sees Smaller Soy Stocks, Larger Corn Carry

The grain trade is expecting USDA to trim its estimate of the 2008-2009 U.S. soybean carryout a bit further in Wednesday’s monthly supply/demand update, while raising its projections of corn and wheat ending stocks.

Trade estimates of the 2008-2009 U.S. soybean carryout average 200 million bushels in a range from 177 million to 220 million bushels compared with USDA’s February estimate of 210 million.

There are ideas USDA will further raise its forecast for U.S. soybean exports due to strong Chinese demand and lower South American crop production.

U.S. soybean export sales are running 4.8% ahead of a year earlier with USDA forecasting about a 1% drop in exports.

However, we would expect USDA to be cautious about raising soybean exports any further due to prospects for a seasonal shift in demand to South American supplies.

U.S. export sales have clearly dropped off the past couple of weeks, with last week’s sales total representing a marketing year low.

Trade estimates of the U.S. corn carryout average 1.811 billion bushels in a range from 1.710 billion to 1.944 billion bushels, compared with USDA’s February projection of 1.790 billion bushels.

USDA could easily cut projected 2008-2009 corn exports further, adding to the carryout.

Although U.S. corn export sales improved during late January and early February, they were still running 42.8% behind a year earlier as of Feb. 26, with USDA forecasting only a 28.2% drop in exports.

The corn export sales rebound has slowed the past the past couple of weeks and competition from new-crop South American supplies is likely to limit U.S. sales in coming weeks.

There is also the possibility that USDA may further trim corn usage for ethanol production, with a significant portion of ethanol production capacity still idled due to financial problems and weak profit margins.

For wheat, trade carryout estimates average 659 million bushels in a range from 625 million to 680 million bushels against USDA’s February estimate of 655 million bushels.

If USDA makes a change to its U.S. wheat supply/demand balance sheet, it will most likely be a small cut to projected exports and a similar increase in the carryout.

Through Feb. 26, U.S. wheat export sales had slipped 24.2% behind a year earlier with USDA forecasting a 20.9% decline in exports. With the marketing year winding down, that deficit will be difficult to make up.

Editor’s note: Richard Brock, Corn & 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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