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Pegging USDA June stocks, acreage data

06/18/2013 @ 8:01am

On June 28, the USDA will release the June I Grain Stocks and June Acreage reports that will set the tone for both old- and new-crop corn and soybean prices. These reports have the potential to provide large surprises.

Expectations for the June 1 stocks estimates are based on the estimate of March 1 stocks, the magnitude of imports during the quarter, and estimated consumption during the quarter. Expectations sometimes vary considerably among analysts since estimates of consumption during the quarter vary, and some analysts also try to anticipate surprises. This is particularly the case for corn since feed and residual use of corn is not estimated on a continuing basis, but instead is revealed by the stocks estimate. Here the expectation of the June 1 corn stocks estimate is based on available estimates of other uses during the quarter and a calculation of feed and residual use based on the USDA's projection of use for the year and estimated use during the first half of the year. A surprise in the stocks estimate would be an indication that feed and residual use was occurring either more rapidly or more slowly than projected.

March 1 corn stocks were estimated at 5.399 billion bushels. Imports totaled 20 million bushels in March and April so may have totaled about 30 million bushels for the March-May quarter. If so, total corn supplies for the quarter totaled 5.429 billion bushels. Cumulative corn export inspections through May totaled about 541million bushels. Through April, cumulative Census Bureau export estimates for the marketing year exceeded inspections by 24 million bushels. If that margin persisted through May, cumulative exports totaled 565 million bushels, and exports for the March-May quarter totaled 181 million bushels. Based on ethanol production estimates from the U.S. Energy Information Administration, ethanol production during the March-May quarter was 5.8% less than during the same quarter last year. Based on those estimates, corn consumption for ethanol and by-product production during the quarter is estimated at 1.175 billion bushels. Domestic use for other food and industrial products is estimated at 375 million bushels, which is consistent with the pace during the first half of the year.

For the year, the USDA projects feed and residual use of corn at 4.4 billion bushels, 145 million less than used last year. The estimate of use during the first half of the year was 227 million fewer bushels than use during the same period last year. If the USDA's projection for the year is correct, use during the last half of the year should be 82 million bushels larger than use of a year ago. Use during the final quarter of the year should be much larger than use last year when a large supply of the new crop was available in late summer. With the late planted crop this year, new-crop supplies will be much smaller. If that is the case, the USDA projection would imply feed and residual during the March-May quarter of about 840 million bushels, down about 20 million from use of a year ago. Use at that level would result in total consumption for the quarter of 2.571 billion bushels and June 1 stocks of 2.858 billion bushels.

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