USDA overshoots grain stocks -- traders
There's more old-crop corn on hand on farms and in grain elevators than traders expected, at least according to Monday's USDA-NASS Quarterly Grain Stocks report. And, that's got the bears dominating both corn and soybeans.
Traders, on average, expected 688 million bushels of old-crop corn on hand, but USDA came in with an 824-million-bushel figure that, though while down 17% from a year ago, fueled an immediate lower response when the federal government released the data.
"Old crop corn stocks in all positions on September 1, 2013 totaled 824 million bushels, down 17% from September 1, 2012. Of the total stocks, 275 million bushels are stored on farms, down 12% from a year earlier," according to Monday's report. "Off-farm stocks, at 549 million bushels, are down 19% from a year ago. The June-August 2013 indicated disappearance is 1.94 billion bushels, compared with 2.16 billion bushels during the same period last year."
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The story's about the same for soybeans; traders expected about 126 million bushels on hand, but USDA's number was 141 million. Just like the corn data, that number's 17% lower than a year ago.
"Old crop soybeans stored in all positions on September 1, 2013 totaled 141 million bushels, down 17% from September 1, 2012. Soybean stocks stored on farms totaled 39.6 million bushels, up 3% from a year ago," according to Monday's report. "Off-farm stocks, at 101 million bushels, are down 23% from last September. Indicated disappearance for June - August 2013 totaled 294 million bushels, down 41% from the same period a year earlier."
Immediate trade reaction was sharper for soybeans than corn; in trading right after the government released its quarterly report, November soybeans tumbled 27 cents/bushel, while December corn fell 5 cents, though the bearishness is expected to persist through Monday's session, traders say.
The key numbers in Monday's reports lie in the feed sector; a big reason for higher-than -expected old-crop corn stocks is lower feed usage, and that could have some longer-term implications for the corn sector, says U.S. Commodities grain analyst and broker Don Roose.
"What they really said is that feed usage on corn in the fourth quarter was down at the expense of wheat-feeding," he says. "That makes the wheat balance table get tighter, and it loosens the corn balance table."
As that latter condition happens, it opens the door for more bearish sentiment to slip into the corn trade, Roose says, though trumping that factor could be any one of several variables at home and abroad. "For corn, it's just a 'piling on.' [A turnaround] will come from South America if the weather turns threatening. That could stop this," he says. "Otherwise, so far we're really early on in harvest, and yields are coming in pretty big."
For soybeans, the story's slightly different; though USDA's number was higher than the trade expected, Roose says there's not the bearish tug in that sector as in corn. "Overall, our margin for error on soybeans is not as tight as we are for corn," he says.
Ultimately, wheat remains something of the 'Belle of the Ball' after Monday's USDA stocks report, not just because of increased demand from feed usage in the U.S., but from tough conditions abroad, too.
"Wheat has been the best of the worst. We've had issues in the Black Sea, Russia and Ukraine. It's too wet over there," Roose adds. "And, it's been too dry in Brazil and Argentina."