With an early harvest now rolling in, USDA looked at the crop stock situation and the results are mixed for corn and soybeans. Corn stocks at the beginning of September were 1.71 billion bushels. That’s 2% higher than last year, 23% higher than the previous USDA estimate, and roughly 20% higher than average pre-trade estimates. While the early harvest is contributing to the higher stocks, most of the stock increase was in the western Corn Belt. On-farm stocks are actually down 20%, while off-farm stocks are up 15%. Corn disappearance over the June-August quarter was 2.60 billion bushels, essentially the same as last year. Looking at individual states, Iowa corn stocks were up 15% in total. On-farm stocks were down 5%, but off-farm stocks were up 24%. In contrast, Illinois total corn stocks were down 18% as both on-farm (down 56%) and off-farm (down 2%) stocks decreased.
Soybean stocks at the beginning of September were 151 million bushels, up 9% from last year. This figure is in line with the previous USDA estimate and pre-trade expectations. Practically all of the increase came from off-farm stocks. Soybean disappearance for the quarter was 420 million bushels, down 8% from last year. Digging into the state-level numbers, it was the Iowa soybean stocks that led the increase as soybean stocks increased 26% from last year. The Iowa soybean stock change accounts for over half of the national shift.
USDA also released a small grains update. Crop year 2010 wheat production is estimated at 2.22 billion bushels. This estimate is roughly 2% smaller than USDA’s previous estimate and in line with last year’s production. Combined with the higher wheat stocks the U.S. had from last year’s crop, September wheat stocks are higher than they have been in the last decade. But disappearance is growing, 740 million bushels of wheat were used this quarter, up 12% from the previous year.
Given the pre-trade estimates, the stocks report is bearish for corn and neutral for soybeans. The trade will be sifting through the data to separate the impacts of the early harvest and the late movement of some of last year’s corn, as the stocks report likely captured some old crop corn waiting for some new crop corn for blending.
USDA released the second field-based estimates on the U.S. corn and soybean crops this morning. And the update showed corn and soybean yields moving in different directions. For soybeans, USDA raised its national yield estimate to 44.7 bushels per acre. That is up 1.8 bushels from their trend and 0.7 bushels from last year’s actual record yield. That puts U.S. soybean production at 3.483 billion bushels. Yields in many of the major soybean producing states were increased. Iowa is up 1 bushel to 52 bushels per acre. Illinois and Minnesota saw their yield estimates raised 2 bushels. So while sudden death syndrome has impacted individual farm yields, the national outlook is for higher production. On the corn side, USDA projects the national corn yield at 162.5 bushels per acre, down 2.5 bushels from last month’s estimate and 2.2 bushels below last year’s actual yield. But even with the reduction in yields, a record crop is still projected with 13.16 billion bushels of corn being produced. Iowa’s yield estimate was held steady at 179 bushels per acre, but sizable yield reductions were reported in Illinois, Indiana (both down 6), and Kansas.
USDA reexamined the demand picture for corn and soybeans. In finishing out the 2009/10 marketing year, soybean exports continued to surge as USDA raised their estimate to 1.495 billion bushels, up 25 million from last month. Along with other changes, total 2009/10 ending stocks were down to 150 million bushels, 10 million bushels less than last month’s estimate. Soybean stocks continue to tighten. The 2009/10 national season-average price estimate remained at $9.60 per bushel. The projection for 2010/11 ending stocks were reduced to 350 million bushels as USDA also raised upcoming exports by 50 million bushels. And the projected season-average price for 2010/11 was increased to $9.90 per bushel, up 65 cents from last month.
As with soybeans, the corn stocks picture continues to tighten. For the 2009/10 crop, ethanol and export demand was increased. The 2009/10 ending stocks were lowered to 1.386 billion bushels. The tighter stocks, in combination with higher projected exports and lower projected production, for this year’s crop, point to lower 2010/11 ending stocks and higher prices. Ending stocks for 2010/11 are projected at 1.116 billion bushels. USDA increased the estimate of the 2010/11 national season-average price to $4.40 per bushel, up 60 cents from last month. Given the pre-report ranges reported in the press, this report should be bullish for corn, but bearish for soybeans.