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Soybean Stocks Fall Way Below Trade Estimates -- USDA

There are far fewer soybeans stored around the U.S. right now than the trade expected, if USDA's data Tuesday is any indication.

In the agency's quarterly Grain Stocks report, USDA pegged old-crop soybean stocks as of September 1 at 92.0 million bushels, down 35% from a year ago. This falls well short of the average trade analyst estimate of 126 million heading into Tuesday's report. The range for soybean stock estimates was 100 to 150 million bushels, making USDA's 92 million-bushel number sharply bullish.

"Soybean stocks stored on farms totaled 21.3 million bushels, down 46% from a year ago. Off-farm stocks, at 70.6 million bushels, are down 30% from last September," according to Tuesday's report. "Indicated disappearance for June-August 2014 totaled 313 million bushels, up 6% from the same period a year earlier."

It's a different story for corn; the corn ending stocks number -- 1.24 billion bushels -- fell above the average analyst estimate ahead of Tuesday's report, but within the general estimate range. Last year at this time, the ending stocks number for corn was 821 million bushels. And a much bigger share of the corn supply right now is sitting physically in farmers' hands.

"Of the total stocks, 462 million bushels are stored on farms, up 68% from a year earlier. Off-farm stocks, at 774 million bushels, are up 42% from a year ago. The June-August 2014 indicated disappearance is 2.62 billion bushels, compared with 1.95 billion bushels during the same period last year," according to Tuesday's report.

Though immediate market reaction was fairly light and mostly bearish, there's some hope that soybeans could see a boost from Tuesday's data, which shows a smaller soybean stockpile than previously estimated. Those supplies come despite no change in last year's crop output. The numbers will likely be traded for a short while, but the focus will flip back soon to this fall's harvest and whether or not it will yield the kind of crop necessary to build up those stocks back to previously guessed levels, says Don Roose, analyst and broker with U.S. Commodities in West Des Moines, Iowa.

"Now we've got a harvest that is real and big so far, so that is helping replenish supplies. It's being traded," he says of Tuesday's report. "It starts to mitigate the downside for soybeans. You've got almost 50 million bushels that has to be accounted for. On top of that, what it means is your huge stocks are going to be not as huge, but still huge."

On the corn side, though, Tuesday's data hold no bullishness. In fact, it reinforces what the trade has been suspecting for some time: That it could take a crop calamity of some kind to give any bullish support to the corn trade.

"The cure for low prices is low prices. It looks like right now we're going to have to come up with some kind of weather problem somewhere in the world, or we're going to have to cut acres back," Roose says. "Demand isn't going to grow as much as it needs to."

Another theme driven home by Tuesday's report is the growing likelihood of a larger soybean crop in 2015: "We're starting to move the corn-soybean ratio to soybeans. The justification is because it's taken a while to replenish these historically tight bean stocks. At some point in time, we'll come back in line," Roose adds. "Into 2015, we've already done it. It may take part of this year's crop in the U.S. and part of South America's crop. We're quickly going to go from historically tight supplies to record-large supplies."


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