Anticipating the March 31 soybean stocks estimate
During the previous 10 marketing years, the magnitude of apparent seed, feed, and residual use of soybeans during the second quarter of the year (December-February) ranged from -42.4 million bushels to 88.3 million bushels. However, that estimate is not independent of the magnitude of apparent use in the first quarter of the marketing year. That is, unusually large (small) estimates of use during the first quarter have tended to be at least partially offset by unusually small (large) estimates in the second quarter. Making an estimate of use during the second quarter of the year, then, is conditioned on the magnitude of apparent use in the first quarter. Still, the total for the two quarters over the past 10 years was in a very wide range, from 124 million to 195 million bushels. The average was near 165 million bushels. Our calculation of use in this category during the first quarter of the 2013-14 marketing year was a record large 187 million bushels. That estimate points to a small forecast for the second quarter. If the total for the two quarters was near the 10-year average of 165 million bushels, second quarter use would have been near -22 million bushels.
The estimates of exports and domestic crush presented here along with average feed, seed, and residual use during the first half of the 2013-14 marketing year would point to March 1 soybean stocks of 973 million bushels. However, an estimate that differs by as much as 25 million bushels in either direction from that estimate probably should not be considered a surprise given the historic variation in feed, seed, and residual use during the first half of the marketing year.
The magnitude of feed, seed, and residual use of soybeans during the first half of the marketing year is sometimes used to anticipate whether the USDA will ultimately alter the estimated size of the previous year's harvest. A large (small) level of use, for example, might suggest that the crop was over (under) estimated. While use during the first half of the year has varied considerably, it is not a good predictor of use during the last half of the year. That use has ranged from -99 million to 40 million bushels and is not highly correlated to use during the first half of the year. As a result, the magnitude of use during the first half of the marketing year provides very little information about the likelihood of a change in the production estimate.