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Will USDA true up ending stocks picture, industry leader asks

On Wednesday, the USDA releases its May Supply/Demand Report.

On Wednesday, the USDA is expected to make revisions downward on U.S. soybean ending stocks and South America’s corn production.

The May Supply/Demand and WASDE Reports will be released at 11:00 a.m. CT.

The already stoked farm markets could get another jolt higher, if the USDA follows the consensus of the trade.

Mac Marshall, United Soybean Board (USB) and U.S. Soybean Export Council (USSEC), says that all eyes will be on both U.S. and world numbers.

USDA Expectations

For corn, the trade is expecting the USDA to peg the U.S. 2020/2021 corn ending stocks at 1.28 billion bushels, vs. the April estimate of 1.35 billion bushels.

For new-crop corn, the USDA is expected to estimate the ending stocks for August 31, 2022 at 1.35 billion bushels, vs. the April estimate of 1.55 billion bushels. 

Soybean Ending Stocks

The U.S. projected soybean carryout will get a lot of attention. We saw a lot of adjustments over the course of the year.

In April, the USDA pegged the U.S. 2020/2021 soybean ending stocks at 120 million bushels. The pre-report market consensus is between 91 million and 130 million bushels.

“The general consensus is that there will be a slight reduction in carryout from last month,” Marshall says. 

While the USDA did increase its soybean export figure last month, the crush figure counterbalanced to the point that ending stocks didn’t get changed.

“I’m not going to categorically say that this will be the month when we see the USDA make a pretty significant reduction in the ending stocks. We still have a few months left in the marketing year. I don’t want to speculate whether they will true up the ending stocks or take a stepwise approach. The other thing that we are watching are the new-crop balance sheet figures.”

The question is how long the tightness of soybean stocks will persist, he says.

“That is what the trade will look for in Wednesday’s report. What’s the USDA going to put out for ending stocks in the 2021/2022 season. Because we are still early in the planting season, that new-crop ending stocks number has a big range right now.”

In March, the USDA projected U.S. soybean acreage at 87.6 million acres and expected a trend yield.

“So, interpreting what that new-crop ending stocks number will be for August 31, 2022, is a function of what this season’s carryout is expected, combined with this year’s production and demand,” Marshall says.

Marshall added, “We are looking at a banner year for soybean exports right now. Does that continue next year? And, how will the USDA articulate that figure? And, how will the government figure in the real hot soybean crush activity that we have had this year?”

New-Crop Use Adjustments

In Wednesday’s report, the USDA is expected to make additional adjustments for soybean use.

“Traditionally, you look for adjustments for domestic soybean oil and it’s biodiesel vs. food, feed, and other industrial uses. Going forward, those categories will be changed. Soybean oil is not just being used for biodiesel production but also in the whole biofuels sector. This will tell us what’s being used in traditional, conventional biodiesel, but also volumes flowing into the emerging renewable diesel space,” Marshall says. 

South America’s Crops

On Wednesday, the USDA/WASDE Report will update its figures on South America’s corn and soybean production. 

All eyes will be on Brazil’s second-corn crop (safrinha) estimate. This crop has been hit hard by a drought. Traditionally, this is the crop that gets exported.

“This corn number will garner a lot of attention. Pre-report consensus has the Brazilian total corn crop at anywhere between 100.0 and 106.0 mmt. Any significant change in this estimate will impact the corn market and U.S. acreage shifts,” Marshall says. 

Last month, USDA pegged the Brazilian corn crop at 109.0 mmt.

Last week, AgRural, a Brazilian analyst firm pegged this year’s second corn crop at 69.0 mmt., below last year’s 75.0 mmt. crop.

For soybeans, pre-report estimates have the Brazilian crop at 130 million to 138 million metric tons, vs. the USDA’s April estimate of 136 mmt.

“I don’t expect the USDA to revise it down, at this point,” Marshall says.

Brazil’s soybean harvest season is all but completed.

Perhaps more interesting will be the USDA’s estimate for Argentina’s soybean crop.

Pre-report estimates have the Argentine soybean crop coming in around 46.0 mmt. vs. the USDA’s April estimate of 47.5 mmt.

“After a lot of reductions over the course of the year, the local USDA attaché in Argentina has revised down its expectations for the crop, due to dry conditions,” Marshall says.

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