Following the March 31 Quarterly Stocks report, all eyes will be on what USDA does with its demand estimates in the April Supply and Demand reports.
USDA will release its latest Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports at 11 a.m. CDT Tuesday.
U.S. ENDING STOCKS
Reportedly, U.S. corn stocks on hand as of March 1 were 7.8 billion bushels. This implied that first-half demand for the 2015-2016 marketing year, as a percent of projected total demand, was 2.3% behind average. Therefore, if the market sees average demand over the second half of the marketing year, total use would come up approximately 240 million bushels of USDA's March estimate of 13.545 bb. And while USDA is likely to make the full adjustment in its April report, it is possible that its demand number is trimmed more than expected, meaning the April ending stocks estimate come in above the average pre-report estimate of 1.849 bb.
Soybean ending stocks were projected to come in at 456 million bushels, down slightly from USDA's March estimate of 460 mb. The March 31 quarterly stocks number (as of March 1) came in at 1.531 bb, implying first-half demand ran 2.9% stronger than average. Assuming average demand for the second-half of 2015-2016, the total could increase by 100 mb over USDA's March estimate of 3.69 bb. Given that, it is possible USDA's ending stocks figure could come in below the average pre-report estimate but above the low end of guesses at 415 mb.
As for wheat, the path of least resistance seems bearish. The average pre-report estimate came in at 978 mb as compared to USDA's March figure of 966 mb. Since then, third quarter stocks (as of March 1) were pegged at 1.372 bb, the largest Q3 figure dating back to the 1999-2000 marketing year. With total wheat export sales 85% through the marketing year running 9% behind the projected pace, it would not be surprising to see USDA lower demand in its April report, resulting in larger-than-expected ending stocks.
WORLD ENDING STOCKS AND PRODUCTION
World ending stocks are also expected to see only minor adjustments in the April WASDE report. The average estimate for corn came in at 208 million metric tons, up from March's 207 mmt. With global production not expected to change much, the difference could come in competition from other feed grains chipping away at demand. Soybeans are expected to add 0.5 mmt to the March estimate of 78.8 mmt, likely due to increases in production for both Brazil and Argentina as well as another bump up in global demand. World wheat ending stocks are expected to be trimmed slightly, a possible result of increased demand as a replacement for corn.
|U.S. ENDING STOCKS (billion bushels)|
|WORLD ENDING STOCKS (million metric tons)|
|WORLD PRODUCTION (Million Metric Tons) 2014-2015|
Darin Newsom can be reached at email@example.com
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