USDA Lowers Corn Stocks by 34{e7e4ba4d9a3c939171d79cae1e3a0df1d41e5a91c3c4158fbb92284b490bc9d3} vs. 2010

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The big news in USDA’s Grain Stocks report is that the agency found 1.13 billion bushels of corn on hand September 1, above trade expectations but still down 34{e7e4ba4d9a3c939171d79cae1e3a0df1d41e5a91c3c4158fbb92284b490bc9d3} from last year. Other stocks are within the trade’s pre-report ranges, though a touch off the average estimates.

The Small Grains 2011 Summary found all wheat production slightly lower than trade expectations, with soft red winter production the surprise, at 458 million versus the trade’s average guess of 262 million.

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QUARTERLY STOCKS

Corn — It seems demand destruction is under way. USDA reports 1.13 bb on hand September 1 versus 1.71 bb last year. With its average estimate at 964 mb, the trade was expecting 164 mb less than USDA found. The high end of the trade range was just 1.05 bb. USDA reported June-August disappearance was 2.54 bb, down from 2.6 bb during the same time last year.

The report’s surprise is a reprise of last year, when the reported September stocks also were higher than expected — by an even greater amount (300 mb) — and some conjectured that early harvested bushels were the reason.

“Friday’s Quarterly Stocks report should be viewed as bearish for corn with the 1.128 bb well above the pre-report average of 964 mb, above the high end of the range of 1.05 mb, and well above USDA’s September Supply and Demand estimate of 920 mb,” said DTN Analyst John Sanow. “This year’s report feels a bit like deja vu given USDA found 300 extra bushels last year at the same time, with most pointing to new-crop bushels finding their way on to the old-crop ledger.”

Soybeans — At 215 mb, soybean stocks were a touch below the pre-report average estimate of 225 mb. USDA reported disappearance for the June-August quarter was 405 mb, down 4{e7e4ba4d9a3c939171d79cae1e3a0df1d41e5a91c3c4158fbb92284b490bc9d3} from last year.

“Despite this smaller-than-expected number, it still implies one of the lowest levels of fourth-quarter demand on record,” Sanow said.

Wheat — At 2.15 bb, wheat stocks are slightly disappointing regarding first-quarter marketing demand, which the trade expected to be especially robust since soft red winter wheat prices were running below that of corn, encouraging feed usage. All wheat usage was down 2{e7e4ba4d9a3c939171d79cae1e3a0df1d41e5a91c3c4158fbb92284b490bc9d3} from the same period a year earlier, USDA said.


The wheat numbers should be seen as neutral, Sanow said.

Grain Sorghum — At 27 mb, stocks of grain sorghum matched USDA’s September supply-demand report projection — well below the 41 mb that was on hand in in September last year. This puts a damper on market chatter that grain sorghum could replace corn in ethanol production in response to tightening global supplies of corn.

For the full USDA Quarterly Grain Stocks report:

http://usda.mannlib.cornell.edu/

SMALL GRAINS SUMMARY

As expected, all wheat production fell marginally from August estimates, coming in at 2.01 billion, down 9{e7e4ba4d9a3c939171d79cae1e3a0df1d41e5a91c3c4158fbb92284b490bc9d3} from 2010.

Spring wheat production was reduced 11{e7e4ba4d9a3c939171d79cae1e3a0df1d41e5a91c3c4158fbb92284b490bc9d3} from the August estimate, to 463 mb, down 25{e7e4ba4d9a3c939171d79cae1e3a0df1d41e5a91c3c4158fbb92284b490bc9d3} from last year.

However, 2011 soft red winter wheat production was pegged at 458 mb, almost double the 229 mb USDA reports as 2010 production.

In its report Friday, USDA had this to say in regard to the surprise jump in SRW production: “After seeing a reduction in 2010 area due to wet weather during planting, planted and harvested acres increased from a year ago across most of the SRW growing area. Due to excellent weather conditions through much of the season, production was up significantly from the previous year, with production in many of the SRW states up more than 100{e7e4ba4d9a3c939171d79cae1e3a0df1d41e5a91c3c4158fbb92284b490bc9d3} from 2010. Record-high yields were experienced in Alabama, Louisiana, Michigan, Mississippi, North and South Carolina, Tennessee and Virginia. Overall, SRW production totaled 458 mb, up 93{e7e4ba4d9a3c939171d79cae1e3a0df1d41e5a91c3c4158fbb92284b490bc9d3} from 2010.”

Source: DTN

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