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Tighter corn stocks expected

09/27/2012 @ 10:54am

The U.S. Department of Agriculture on Friday is likely to report tighter domestic inventories of corn than it previously projected, according to analysts polled by Dow Jones Newswires.

Analysts on average expect the USDA, in a quarterly grain stocks report due out Friday at 8:30 a.m. EDT, to report domestic corn inventories as of Sept. 1 at 1.126 billion bushels, down 4.7% from the USDA's most recent forecast for inventories to be 1.181 billion bushels. Estimates by 16 analysts ranged from 887 million to 1.261 billion bushels.

The USDA report, which will be closely watched by commodities traders, comes after the country's worst drought in decades withered the corn crop now being harvested, fueling worries about tight supplies and sending corn futures prices to record levels over the summer.

Grain and soy futures have fallen this week as large managed funds have exited bets that prices will rise, looking to reduce their risk ahead of Friday's USDA report.

Improving corn-crop yield reports from farmers also have pressured prices, as have better-than-expected soybean yield reports in some areas, according to traders.

Market watchers will look to the USDA on Friday for the latest evidence of just how tight supplies of the two commodities were right at the start of the harvest season for corn and soybeans.

Some traders are nervous that the government could report larger corn inventories than expected, because the U.S. corn harvest started early this year and the USDA earlier this month raised its estimate for inventories.

The stocks numbers released Friday, which will be based on surveys of farmers and commercial grain-storage facilities, will be seen as final estimates of corn and soybean supplies as of Sept. 1, when a new marketing year began for both crops.

"On the soybeans, we know the stocks are going to be tight...it's corn that could have a major swing," said Brian Hoops, president of brokerage Midwest Market Solutions.

For soybeans, analysts on average expect the USDA to report domestic inventories as of Sept. 1 at 132 million bushels, up 1.5% from the USDA's most recent forecast of 130 million bushels. Forecasts by 16 analysts ranged from 115 million to 152 million bushels.

The U.S. drought has compounded tightness in global soybean supplies triggered by a drought in South America early this year. Brazil and Argentina, two of the world's biggest soybean exporters, saw sharp declines in production.

U.S. soybean futures also leapt to record levels this summer, but have fallen in the past two weeks.

Wheat futures have slipped along with corn and soybeans this week as market participants exit bullish positions to reduce risk. Supplies of wheat in the U.S. aren't as tight as corn or soybean supplies.

Analysts on average expect the USDA to report wheat inventories as of Sept. 1 at 2.281 billion bushels, compared to 2.147 billion bushels a year earlier.

The USDA on Friday morning will also release a report with final estimates for U.S. wheat production this year.

Analysts on average expect the USDA to estimate total U.S. wheat production this year of 2.270 billion bushels, up only slightly from the USDA's previous estimate of 2.268 billion bushels. Estimates by 17 analysts ranged from 2.247 billion to 2.286 billion bushels.

Write to Owen Fletcher at owen.fletcher@dowjones.com
(END) Dow Jones Newswires
September 27, 2012 11:16 ET (15:16 GMT)
DJ SURVEY: Analysts See Tighter Corn Inventories in USDA Report->copyrigh

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