One major component that the market uses to help discover price is USDA estimates or what many refer to as crop reports. USDA estimates many things in the ag sector and releases this data weekly, monthly, quarterly and annually. The reason I bring this up is because as of this writing USDA has just released one of the, what I consider, “Big 4” crop reports. Jan 12th they released estimates of quarterly stocks, winter wheat seeding, and updated both the World and US balance sheet. I thought it would be a good opportunity to run through the latest information that they have bestowed on us. I also would like to preface with the fact that these are just estimates and this is the main source of information that the market participants are going to trade off of. I am going to focus primarily on the US balance sheet but keep in mind that we are very much in global market and global estimates are of much importance as well.
Corn saw few surprises in the Jan report as just some minor adjustments occurred. Yield dropped slightly from an estimated national average of 169 to 168.4, bringing overall production down 53mbu. It is interesting to note that imports increased 10mbu. On the demand side food/seed/industrial use dropped 10mbu and exports dropped by 50mbu. This gave a net effect of ending stocks growing by 17mbu to 1.802 billion bushels or a 13.3% stocks-to-use ratio. A very comfortable level.
Soybeans saw minor changes as well. Harvested acres and yield dropped slightly, bringing total supply down by 53mbu. On the demand side of the equation export estimates dropped 25mbu, giving us a net effect of lower ending stocks of 440mbu or a stock to use ratio of 11.9%. This at first glance might seem friendly to prices but at the end of the day grain stocks are still very comfortable.
Wheat was a little interesting as the estimates for winter wheat planted acres deviated from pre-report estimates the most out of all the information that we received. Winter wheat planted acres estimated at 36.6 million acres were nearly 2.7 below the average estimate and 2.9 below last year. However, when you look at the entirety of the wheat balance sheet, ending stocks actually grew 30mbu to 941mbu or a 47.5% stocks-to-use ratio which leaves us with plenty of wheat stocks.
If you would like more information on this and which Wheat Growers programs can best help you in any particular market condition, contact your local Grain Marketing Specialist. Also stay turned as we will have our Winter Marketing Meetings in early February to help further break down this information.