USDA Reports Preview

USDA's Sept. 1 Grain Stocks and Small Grains Annual Summary reports are due out at 11 a.m. CDT Thursday, Sept. 30, and will get a lot of attention. For corn and soybeans, the Sept. 1 inventories will either offer important verification or repudiation of USDA's World Agricultural Supply and Demand Estimates (WASDE) ending stocks estimates. For wheat, traders will get a more complete assessment of how drought hurt wheat crops in 2021.

SEPT. 1 GRAIN STOCKS

USDA is currently estimating U.S. ending corn stocks at 1.187 billion bushels (bb) in 2020-21, a calculation that requires a lot of guessing spread over numerous items in the balance sheet. The beauty of Thursday's Grain Stocks report is that USDA surveys 62,500 farm operators and 8,400 commercial grain storage facilities in an effort to take inventory of actual corn and soybean supplies. It is a big task and has its flaws but is the best check and balance we have to correct the WASDE estimating process.

Dow Jones' survey of analysts expects USDA to find 1.167 bb of corn on hand as of Sept. 1. If true, it would be the lowest ending stocks in eight years and would represent 7.8% of annual use. I suspect U.S. corn stocks will be close to the survey's guess, as cash corn prices held remarkably firm this summer, not succumbing to the anticipation of harvest until the latter half of August.

For soybeans, Dow Jones' survey expects USDA to find 172 million bushels (mb) on hand as of Sept. 1, a little less than USDA's current estimate of 175 mb. This is a situation where a bearish surprise looks possible. Soybean prices had a big roller-coaster ride this year as U.S. supplies looked threatened early, and many analysts were estimating ending supplies below 100 mb. DTN's National Soybean Index peaked at $16.47 on May 12, its highest price since 2012.

Surprisingly, the index broke to a new low in early June and eventually fell to a new 2021 low near the end of August. The $2.43 decline in cash prices in the final three months of 2020-21 was surprisingly bearish and did not match the tight supply expectations of earlier in the year. It is possible Thursday's soybean stocks could come in higher than expected.

Sept. 1 wheat stocks will mark the end of the first quarter of demand in 2021-22 and I suspect wheat stocks will arrive lower than expected. Dow Jones' survey anticipates USDA to find 1.857 bb of wheat on hand as of Sept. 1, down from 2.158 bb a year ago.

With U.S. wheat production estimated at its lowest level in 19 years, it is not surprising to see wheat stocks down from a year ago. If the survey is correct, demand in the first quarter will have totaled 819 mb, the most in five years.

Demand is still difficult to estimate, however, as wheat's production estimate has not been nailed down just yet.

SMALL GRAINS ANNUAL SUMMARY

USDA's Small Grains Annual Summary is based on information gathered from 62,500 producer surveys and from objective yield data in sample plots in 10 states. This year, when drought was so extensive throughout the northern and northwestern Plains, the survey gets added attention because it will provide USDA's first estimate of how many wheat acres were abandoned.

In the case of other spring wheat, USDA's production estimate is expected to be reduced from the current estimate of 343 mb to Dow Jones' survey estimate of 329 mb. In 2002, 15% of planted acres went unharvested, and the 2021 drought looks worse. As an example, a 15% loss of planted acres in 2021 would pencil out to 302 mb of other spring wheat production.

Overall, Dow Jones' survey expects USDA's estimate of all wheat production to drop from 1.697 bb to 1.681 bb, still the lowest in 19 years. The possibility of a lower production estimate Thursday gives wheat bullish surprise potential for both the Sept. 1 wheat stocks report and the Small Grain Summary.

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Sign up for DTN's webinar at noon CDT Thursday, Sept. 30. We'll talk about USDA's new estimates, what they mean for prices and answer any questions you may have. If you're busy at noon, you can still watch the webinar as a link will be provided for your viewing convenience. Register now at: https://ag.dtn.com/…

QUARTERLY STOCKS (million bushels)
	9/1/21	Avg	High	Low	6/1/21	9/1/20
Corn		1,167	1,252	1,000	4,112	1,919
Soybeans		172	202	145	767	525
Wheat		1,857	1,998	1,783	844	2,158
SMALL GRAINS SUMMARY (million bushels)
2021-2022 Production
	9/30/21	Avg	High	Low	Aug	2020
All Wheat		1,681	1,720	1,648	1,697	1,826
Winter		1,321	1,364	1,296	1,319	1,171
HRW		778	785	772	777	659
SRW		366	370	355	366	266
White		174	182	166	176	246
Spring		329	357	295	343	586
Durum		34	38	31	35	69

Todd Hultman can be reached at todd.hultman@dtn.com

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