Anyone who follows DTN Senior Analyst Darin Newsom has no doubt seen and heard about a chart similar to the one posted which has been created for U.S. soybeans to highlight tendencies in USDA supply and demand forecasts. In Wednesday's webinar on this week's USDA report, he referred to it being one of his favorites. Over a number of years, the soybean chart shows a trend where the earliest USDA estimates for recent crop years tend to underestimate demand while overstating ending stocks beginning with the initial May forecast preceding the crop year, while making corrections in monthly reports later in the crop year to account for higher-than-expected demand (not shown). In the 2013/14 through 2015/16 crop years, this trend is quite evident on the soybean chart, while it is perhaps too soon to tell if this story will play out once again for 2016/17 ending stocks.
Given data selected for the same crop years for global rapeseed/canola stocks reported by the USDA in its monthly Oilseeds: World Markets and Trade report, as shown on the attached chart, we see that the opposite trend is taking place -- ending stocks have been estimated low in the initial May forecast while tend to grow higher over time. Over the 2013/14 through 2015/16 period, ending stocks increased an average of 48.7% over the arbitrary period chosen, while so far during the current crop year, 2016/17 ending stocks have been revised 39% higher from the 3.427-mmt initial forecast released in May 2016 to this week's 4.764 mmt estimate.
The current estimate for 2016/17 ending stocks at 5.109 mmt represents tight global stocks, only 7% of estimated global demand that should be supportive for global prices, although this recent trend could suggest that stocks will be revised higher in time.
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Cliff Jamieson can be reached at firstname.lastname@example.org
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