USDA estimates reasonably close to expectations
The USDA's much anticipated estimates of March 1 grain stocks and 2014 planting intentions released Monday contained a few surprises, but no major shocks. March 1 corn stocks and planting intentions are a bit smaller than the average trade guess. March 1 soybean stocks were almost equal to the average trade guess, while planting intentions are slightly larger than expected.
March 1 stocks of corn were estimated at 7.006 billion bushels, about 100 million less than the average trade guess. The stocks estimate implies that feed and residual use of corn in the domestic market during the first half of the current marketing year totaled 3.851 billion bushels. The question is whether that level of use will result in a change in USDA's projection of use for the year. The implied use accounts for 72.7 percent of the USDA's most recent projection of feed and residual use for the year of 5.3 billion bushels. Use during the first half of the marketing year averaged 74 percent of the marketing year total in the previous three years. However, first half use in the four years from 2006-07 through 2009-10 averaged 68 percent of the marketing year total. In the 10 years before that, first half use averaged 64 percent of the marketing year total. First half use this year relative to the USDA projection is consistent with the pattern of the past three years, but is large relative to the pattern before that. Given the most recent seasonal pattern of feed and residual use, along with the decline in the number of hogs and the number of cattle on feed, it seems unlikely that USDA will change the projection of feed and residual use for the year in the April WASDE report. However, reduced wheat feeding this summer along with a late corn harvest this fall might result in slightly larger use.
March 1 stocks of soybeans were estimated at 992 million bushels, about equal to both the average trade guess and the level of stocks a year earlier. The stocks estimate implies that feed, seed, and residual use of soybeans during the first half of the marketing year totaled 145 million bushels. That magnitude of use is within the range of use in the previous five years and should not generate any speculation about the accuracy of the USDA's 2013 production estimate. Over the past 10 years, there has been no correlation between the magnitude of seed, feed, and residual use of soybeans during the first half of the marketing year and the size of any subsequent revision in the soybean production estimate.
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