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USDA grain stocks data supports markets

Agriculture.com Staff 09/29/2006 @ 8:03am

Though the markets could gain support from USDA's Quarterly Grain Stocks report released on Friday, there is reason to believe the estimates carry some bearish tone, according to one market analyst.

As of Sept. 1, the U.S. wheat stocks are 30 million bushels above the average trade estimates, due to slower feed usage, according to the USDA. This might be considered negative to the market, but with aggressive fund investing and friendly corn and soybean data, wheat could follow, one analyst said.

For wheat, USDA estimated all wheat stocks at 1.74 billion bushels, slightly higher than the average trade estimate of 1.711 billion bushels.

USDA, in its Friday report, estimated 2006-2007 all wheat production at 1.812 billion bushels, slightly higher but wihin range of the average trade estimate of 1.792 billion.

Meanwhile, wheat for feed use is going down with just 210 million bushels used in the first quarter of the wheat marketing year, compared to 263 million bushels last year.

Sid Love, Kropf & Love Consulting Services LLC., said USDA's wheat figures show what he expected.

"With the higher wheat prices, I figured we would see wheat for feed use would go down. And with higher stocks, this is an indication that what we thought was right."

For corn stocks, USDA estimated 1.97 billion bushels, within the trade average estimate of 1.967 billion.

"This indicates feed use, ethanol use, and exports were a little higher than expected but not by much," Love said.

For old-crop soybean stocks, USDA estimated 449 million bushels, which is less than the trade average estimate of 482 million.

Though it's lower than expected, the soybean stocks figure is still the highest in 20 years.

"This shows that last year's soybean crop was over estimated," Love said. "So, the USDA lowered last year's crop from 3.031 billion bushels to 3.086 billion."

Love added, "That sounds friendly, but a well respected private analyst put out a new production estimate for this year at 3.266 billion bushels. Cheewhawha that's a big number. Friday's market is called higher, but we have a lot of soybeans on the way."

Though the markets could gain support from USDA's Quarterly Grain Stocks report released on Friday, there is reason to believe the estimates carry some bearish tone, according to one market analyst.

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