USDA announces quarterly stocks and prospective planting reports

“We look forward to this time every year for the Quarterly Stocks and Prospective Plantings reports,” said Darin Newsom, DTN senior analyst. “It sets the table for the U.S., and from this point on, we move into spring.”

On March 31, DTN held a webinar about the Quarterly Stocks and Prospective Plantings reports for corn, soybeans and wheat after USDA’s National Agriculture Statistics Service released the data.

Corn

Corn stocks came in at just over 7 billion bushels, and the average pre-report estimate was 7.11 billion bushels. 

Corn Prospective Planting acreage equated to 91.7 million acres. This value came in closer to the low end of the pre-report estimate of under 91 million. 

It is less than last year’s 97.3 million acres, and Newsom said, “We are looking at a sizable reduction in corn planting.”

Newsom reasoned the larger reductions of corn are in the areas that are aquatically challenged and suffering from water shortages, particularly in the Southern and Northern Plains and across the Midwest. 

One of the biggest factors Newsom foresees for the yields of crops to increase is cooperating weather. The last prospective planting of corn came in at 97.4 million acres, but only 95.4 million acres were harvested 

Even though the amount of corn is one of the higher numbers the market has seen in quite some time, Newsom explained the actual amount was slightly below what the market was expecting and was closer to the low side of expectations when compared to corn last year and in March. 

Corn demand

The demand for corn in the first quarter was well above average when the market was moving a lot of corn. Now the overall pace of demand for corn has slowed in the second quarter due to exports. 

“These last few weeks we’ve seen exports pickup, but remember, these are quarterly stocks as of March 1 compared to in December when we weren’t moving and shipping a lot of corn,” said Newsom. “It’s not overly surprising that the second quarter demand did come up short as a whole, and we are still looking at average demand levels.”

“We could still see a record demand in 2013-14, possibly even to the point of exceeding demand and lowering ending stocks of corn just slightly from where we are right now,” added Newsom. 

Soybeans

“Quarterly stocks for soybeans were near what was expected, and this has a very serious ripple effect on ending stocks,” commented Newsom. “Prospective plantings were also larger than expected and could be viewed as bearish, but units are somewhat riding what’s going on in the old crop market.”

The estimate for soybeans was 989 million bushels, and the market showed stocks of 992 million bushels – both levels that came pretty much in line with what the market saw in 2012-13. 

“We weren’t too outlandish and were pretty much in line with what was expected in comparing to where we were with 2.15 billion bushels we saw and what was reported at beginning of December,” commented Newsom. “This is a huge drop from 2.15 billion to 992 million.”

Soybean demand

“Not a huge amount of difference has been seen in demand, so we would say this is some of the tightest saving supplies that we’ve had on hand as of March 1,” said Newsom. “Demand has been outpacing those gains we’ve seen in supplies to the point we are at the lowest point in soybean stocks history.” 

Soybean prospective planting is 81.5 million acres and is slightly above the pre-report estimate of 81.4 million. Last year, the report showed 76.5 million acres of soybeans. 

“If we are just looking at the domestic supply of soybeans, the U.S. is going to need more acres of soybeans to rebuild the U.S. stocks,” described Newsom. 

Wheat

Newsom explained wheat quarterly stocks were slightly larger than expected, but the amount was nothing earth shattering. 

“Folks were taking a look at spring wheat, and the Quarterly Stock reports came in just slightly above what was expected,” described Newsom. “We are building these reports up, and nobody was disappointed or overly surprised with how things turned out.” 

Wheat stock numbers were a little above the expected 1.04 billion bushels, coming in at 1.06 billion bushels. 

“We’ve been watching the demand of developments, or the lack thereof, over the first half of the marketing year,” said Newsom. “Going back to where we were in December with 1.46 billion bushels shows that in the third quarter, wheat demand was relatively slow.” 

Wheat demand

Wheat demand was excellent in the first quarter and started to slow in the second quarter. Newsom explained there was the possibility of seeing stronger demands of wheat in the last quarter due to all of the problems Canada has been having moving its wheat supply.

However, Newsom sees the demand in the third quarter to be smaller, predicting that it will pick up in the fourth quarter. 

The prospective planting for wheat is 55.8 million acres. With Canada’s increase in acres of wheat, Newsom comments the U.S. is going to be increasing its acres ever so slightly to increase its own supply. 

Madeline Robinson is editor of the Wyoming Livestock Roundup and can be reached at madeline@wylr.net.

SIDEBAR:
Soybean shortage

Soybeans saw an all-time high demand in the first half of 2013-14, leaving the U.S. market with about 27 to 28 percent of total supplies for the entire second half of the market year.

“There is no way we are going to get anything newer that is going to bring us back up to the level we saw last year of 31 to 32 percent,” commented Darin Newsom, DTN senior analyst. “We have to see the demand for soybeans shut off and cancellations start to occur because there is absolutely no way we can maintain the base that we are on.”

Newsom continued, “We are eating through our soybean supplies faster than we’ve ever done in the past. We are going to have to see a dramatic decrease over the coming quarters, or we are going to be scraping the bottom of the bins here by the time we get into the fourth quarter.”

High prices are going to be the only solution to a tightening supply situation for the high demand explained Newsom. 

One of the first items that needs to occur in the market is cancellation of soybean orders to start seeing exports go down.