So far April and May have shown considerable amounts of market volatility. This all started with the USDA’s release of their Quarterly Stocks and Planting Intentions Report on March 28th. This is historically a much anticipated report as it gives us a bench mark for grain stocks (as of March 1st) as well as a first look at planting ideas for the upcoming crop year. Most of the trade was looking for the corn stocks number to ultimately give direction to the rest of the grains, and it did just that.

The corn stocks number came in at 400 million bushels more than the average trade estimate at 5.4 billion bushels. This surprisingly large number led to corn traders tripping over themselves to sell corn - and sell they did, dropping over a $1 break in old crop corn market over 6 trading days.

How can this be? How did the USDA find 400 million bushels of corn? Well, in reality they didn’t “find” 400 million bushels of corn. The discrepancy could come from a combination of things: underestimated production due to test weight, lower feed use, etc. Whether you choose to believe it or not, it may as well be fact because those are the numbers we will trade.

At the end of the day the September 1st carryout number is what matters. So does this mean we will add 400 million bushels to the carryout number? Probably not. The April 10th S&D report gave us some idea on what it all means for carryout stocks. The actual effect was an increase of 125 million in ending stocks primarily from a decrease of the feed usage column of the balance sheet. Feed use can be hard to quantify as not all feed rations are measured and recorded precisely. Maybe we had an overzealous analysis projecting stocks too low, or maybe the USDA is full of bologna or maybe a little of both. For now this brings us a projected ending stock of 757 million bushels or a stock to use ratio of 6.8%. We are still historically tight, but we do have a bit more wiggle room.

We still look to have a volatile season with peaks and valleys ahead. Please contact your nearest Wheat Growers location or Grain Marketing Specialist for ideas and risk management tools to help you and your operation.