Grain stocks higher than expected
By Heather Thorstensen
hthorstensen@agrinews.com
Date Modified: 04/15/2010 8:47 AM
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WASHINGTON— While many were watching USDA's Prospective Plantings Report March 31, the big surprise came from the agency's quarterly Grain Stocks Report, also released that day.
Stockpiles for corn and soybeans were reported higher than expected.
"The surprise is there is no surprise in the planting intentions but the stocks report threw a curve ball," said University of Minnesota grain market specialist Edward Usset. "...There's more to be discovered as to why the stocks are higher than expected. My guess is usage is not as robust as we thought it would be."
As of March 1, corn stocks in all positions totaled 7.69 billion bushels, up 11 percent from a year earlier.
"Although this is within the range of pre-report trade expectations, it was above the average trade estimate of 7.5 billion bushels," wrote Melvin Brees, a market and policy analyst associate with the University of Missouri's Food and Agricultural Policy Research Institute. Brees made the comments in his March 31 crop commentary report.
Soybean stocks in all positions totaled 1.27 billion bushels, down two percent from last year.
"This was the top end of the pre-report range of trade estimates, 1.16 to 1.27 billion bushels," wrote Brees.
The market had an immediate reaction to higher stocks, good weather and a planting intention report that indicated acreage increases.
"That points to higher and higher supplies with little to no demand news to offset that," said Chad Hart, Iowa State University grain market specialist. "...It's something we'll be watching when USDA updates the demand side here in a couple weeks."
Prices dropped for soybeans, corn and wheat.
Soybeans for May delivery dropped 33 cents, or 3.4 percent, to $9.41 per bushel. May corn fell 9.5 cents, or 2.7 percent, to $3.45 a bushel. May wheat prices dropped 21.5 cents, or 4.6 percent, to $4.50.
The affects are likely to hang over the market for a while, Hart said.
"We'll have to wait and see the market continue to react. We saw the initial reaction and it was not pretty," he said.
A positive side to these high stocks is their disappearance, which is the amount of grain seen moving through the market in the last quarter. Corn's disappearance is up 3.5 percent from the same period a year earlier while soybeans' disappearance is up 10 percent.
"We see the demand side building, it's just not as quickly as we thought it was," said Hart. "...It's going a little quicker for soybeans, a lot of that we can point to is the export market for soybeans."
Wheat stocks, reported at 1.35 billion bushels, were very near trade expectations of 1.36 billion bushels, said Brees. Wheat stocks are up 30 percent compared to last year, with disappearance up 12 percent than a year earlier.
The Associated Press contributed to this article.