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Corn Stocks Lower than Expected, Soybean Stocks Higher

Corn Stocks Lower than Expected, Soybean Stocks Higher

10 October 2012
Iowa State University Extension

US - September ended on a bang with the release of USDA’s Grain Stocks report. With corn stocks lower than expected and soybean stocks higher than expected, the report had a lot of information to dissect. By the end of the day, both corn and soybean prices were higher as traders continue to adjust to very tight stocks for both crops, writes Chad Hart, Grain Markets Specialist at Iowa State University.

Corn stocks came in at 988 million bushels, sizably below the trade estimate of 1.145 billion and USDA's previous estimate of 1.181 billion. But while stocks are down, so is corn disappearance. In the last quarter, corn disappearance is down 15 per cent compared to last year. Corn supply and demand have both shrunk with the drought.

It will be interesting to see how USDA adjusts demand estimates to reflect the lower stock levels. On the soybean side, the stocks numbers, in combination with demand data, forced USDA to update the 2011 soybean production numbers.

Soybean planted area was raised 70,000 acres, while harvested area was increased 140,000 acres. The 2011 soybean yield was increased to 41.9 bushels per acre. These changes added 37.5 million bushels to the 2011 production total.

Before this adjustment, USDA and the trade had expected 130 million bushels of soybeans in stocks. After the adjustment, the stock number sits at 169 million bushels. So while both markets remain tight, corn got tighter, but soybeans did not. This allowed the market bulls to roam for another day based on the corn information. But the stocks picture also gave us another update on the demand situation.

The high prices over the last couple of months have taken an impact on crop demand. Corn usage for ethanol has slowed down. Feed demand has fallen dramatically. But export demand has been mixed. For corn, demand has slowed nearly all across the board. The only market moving more corn now than a year ago is China. Most of the major markets (Japan, Mexico, and South Korea, for example) are down compared to last year.

For soybeans on the other hand, business has been relatively better. China remains the dominant market and export sales there continue to grow. But there has also been demand growth in Europe, Taiwan, and unknown destinations (which could again mostly be China). So while corn export sales are down by a third, soybean export sales have surged by a third.

Further Reading

You can view the full report by clicking here.

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