Fundamentally Speaking

USDA February WASDE ending stock projections for U.S. corn, soybeans and wheat were all above trade estimates at 1.540, 0.325 and 0.648 billion bushels (bb) respectively but not markedly so.

USDA must feel the loss of South American corn and soybean production will have more impact on our export sales of those commodities in the 2022/23 marketing year while wheat exports again were lowered for fourth month in a row.

USDA will update the 2021/22 carryouts again in the March 2022 WASDE but before then, USDA will have their annual Agricultural Outlook Forum on February 24 and 25 where they will release updated 2022/23 balance sheet estimates for the major crops.

That got us thinking on how close to the mark USDA is in pegging ending stocks for the upcoming season in late February and a year later in the February WASDE report when half the marketing year is about done for corn and soybeans and about three-quarters for that of wheat.

This graphic shows the change in the February WASDE U.S. ending corn, soybean, and wheat stocks from what was estimated a year earlier at their Feb USDA Ag Outlook in million bushels (mb) on the left-hand axis and the percent change on the right-hand axis.

At the February 2021 Ag Outlook Forum 2021/22 corn, soybean and wheat stocks were projected respectively at 1.552 bb, 145 mb and 698 mb.

The current USDA 2020/21 corn ending stocks figure at 1.540 bb is just 12 mb below what USDA projected a year ago, a mere 0.8% miss which is the second smallest difference ever since the Ag Outlook Forum balance sheets started being released in 1998 and well below the average of a 4.1% overstatement.

Wheat stocks come in 50 mb below the year ago projection, a 7.2% miss which is also above the average of a 4.7% overstatement.

Where the USDA missed big was in soybeans as this year's WASDE stocks at 325 mb are 180 mb above the 145 mb given at the February 2021 Ag Outlook Forum.

Reasons for the far higher current soybean carryout than projected is this year's beginning stocks proved far higher than anticipated based on 2020 crop production that was revised higher and exports so far this year coming in well below what USDA had forecast a year ago.

This is why the Feb 2022 bean ending stocks estimate is 125% above what was projected a year ago, the largest percent miss ever by the USDA for beans and the second largest ever for all three commodities.

Keep in mind Ag Outlook projections are what USDA feels ending stocks will be at the end of the marketing year which is August 31 for corn and soybeans and May 31 for wheat so there is time.

Looking at standard deviation figures, USDA's wheat stocks projection in the February WASDE are often closer to what they projected a year earlier than for corn or soybeans.

This may be linked to the fact that USDA has at least one piece of evidence prior to their Forum sessions which is the winter wheat seedings report given in January, and wheat demand and production has proved to be not as volatile as that for corn or soybeans.

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