USDA Reports Preview

By Darin Newsom
DTN Senior Analyst

Of the two sets of USDA numbers scheduled for release Friday, June 30, the size of corn and soybean quarterly stocks should matter greatly to the markets.

USDA will release its June Acreage and quarterly Grain Stocks reports at 11 a.m. CDT Friday.

QUARTERLY STOCKS

While most in the industry are preparing for the hubbub surrounding USDA's latest acreage update, I'm looking forward to the quarterly stocks data. To me, these numbers are key to market direction, acting as signposts passed, telling us the strength of demand. These numbers aren't the guesses that monthly crop production and supply and demand estimates are, but rather data-backed numbers of how much grain is actually being held in storage. The easiest measure of bullishness or bearishness is the sheer size of reported stocks.

In corn, the average pre-report estimate of 5.16 billion bushels would easily be the largest June 1 figure on record, more than 400 million bushels larger than in 2016. Doing a little more math, using the average pre-report estimate and the 10-year average 80.5% of total demand through the third quarter puts total marketing-year demand at 14.463 bb, resulting in ending stocks of 2.477 bb. USDA's June estimates came in with total demand of 14.645 bb and ending stocks of 2.295 bb. If there is a surprise coming in corn, it could be bullish based on export shipments far outdistancing USDA's projected pace through the end of May.

As usual, soybean quarterly stocks could prove to be the most interesting number of the day. The average pre-report estimate came in at 981 mb, a figure that would rate as third all-time high for June 1 behind the 1.092 bb from 2007 and 991 mb the previous year. Using similar calculations as corn, though factoring the 10-year average 86.4% of total demand through Q3, puts expected total demand at 4.105 bb and ending stocks estimated at 423 mb. This is up considerably from DTN's estimated 270 mb following the March 31 Quarterly Stocks report. Also, as with corn, export demand could prove to be a bullish surprise, as shipments ran well ahead of USDA's projected pace through the end of May.

The all-wheat June 1 stocks number is the de-facto 2016-2017 ending stocks figure, with the average pre-report estimate coming in at 1.154 bb as compared to USDA's June estimate of 1.161 bb. There really isn't anything new to see here given the market has priced in record old-crop ending stocks for quite some time. The only shock in the wheat complex could come if USDA releases a number significantly different than its recent ending stocks estimates. DTN analysis following the March 31 Quarterly Stocks report put June 1 stocks at 1.232 bb based on 80.5% total demand through wheat's Q3.

ACREAGE

Will it or won't it? Did they or didn't they? These are the questions everyone is asking during the buildup to USDA's June 1 Acreage update.

Of course I'm talking about the corn/soybean soap opera. Will USDA put U.S. soybean acreage higher than corn for only the second time in history? Did U.S. growers plant, re-plant, re-re-plant, and so on corn enough times to keep acres a silk ahead of soybeans? Of course we won't know for sure at the end of June 30, but we will have a set of numbers for new-crop contracts to react to. Final acreage figures will be made available in October, or November, or January, or sometime after that.

The average pre-report guess had soybeans larger than corn, ever so slightly -- 89.95 million acres (ma) to 89.82 ma. The much-ballyhooed March 31 Prospective Plantings report had corn at 90 ma and soybeans at 89.48 ma. Let's not forget that in early February, based on Punxsutawney Phil seeing his shadow, DTN analysis estimated corn planted area at 91.2 ma and soybeans at 88.3 ma. Let's see if USDA agrees come -- well -- sometime.

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Editor's note: Join DTN Senior Analyst Darin Newsom at 12 p.m. CDT on Friday for a discussion of USDA's Acreage and quarterly Grain Stocks reports. Sign up now at: http://bit.ly/…

QUARTERLY STOCKS (billion bushels)
	6/1/17	Average	High	Low	3/1/17	6/1/16
Corn		5.160	5.360	4.945	8.616	4.711
Soybeans		0.981	1.119	0.872	1.735	0.872
Wheat		1.154	1.185	1.050	1.655	0.976
Grain Sorghum		0.097	0.102	0.092	0.180	0.090
ACREAGE (million acres)					USDA	USDA
	6/30/17	Average	High	Low	3/31/17	Final 2016
Corn		89.82	90.60	89.00	90.00	94.00
Soybeans		89.95	91.00	88.90	89.48	83.43
All Wheat		46.05	47.40	45.70	46.06	50.15
All Winter Wheat		32.80	33.80	32.60	32.75	36.14
Spring		11.23	11.60	11.00	11.31	11.61
Durum		2.00	2.20	1.90	2.00	2.41
Grain Sorghum		5.81	5.90	5.70	5.78	6.69

Darin Newsom can be reached at darin.newsom@dtn.com

Follow Darin Newsom on Twitter @DarinNewsom

(AG/CZ)

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