USDA Reports Preview
Another Row-Crop Season Ready for the Books
OMAHA (DTN) -- Seventeen months of estimating U.S. ending corn and soybean stocks for 2017-18 comes to an end with USDA's September 1 Grain Stocks report on Friday. At 11 a.m. CDT on Sept. 28, USDA will issue both the Grain Stocks report and a Small Grains Summary.
CORN
Back on May 10, 2017, USDA's World Agricultural Supply and Demand Estimates (WASDE) report issued its first estimate of U.S. ending corn stocks for the 2017-18 season, settling early on 2.110 billion bushels (bb). As it turned out, that was a pretty good guess this time around. Dow Jones' survey of analysts expects USDA to show 2.002 bb of corn on hand as of September 1, 2018 -- the final inventory of the 2017-18 season.
In this case, two wrongs did make a right as USDA's original production estimate was low by 539 million bushels (mb) and the total use estimate was short by 635 mb. Of course, it is possible that a surprise may be waiting in Friday's numbers, but there is no denying the pace of corn exports was strong in the second half of the season.
If Dow Jones' survey is correct, fourth quarter corn demand will have hit a record high 3.304 bb, and demand for the entire season will have reached a new record high of 14.935 bb. Credit for corn's new popularity goes to a combination of lower production from South America in early 2018 and a healthy increase in world demand for corn as world incomes are rising. Those same factors are likely to keep U.S. corn demand healthy into the first half of 2019.
SOYBEANS
USDA's initial WASDE estimates for soybeans in May 2017 did not show the same good luck USDA had for corn. USDA's initial 480 mb estimate of U.S. ending soybean stocks in May was 86 mb too high, 22% above the 394 mb that Dow Jones' survey expects to see on Friday. If accurate, this will be the 23rd time in the past 28 years that USDA's initial estimate of U.S. ending soybean stocks was too high -- a problematic bearish bias that has unduly punished U.S. soybean prices early in USDA's estimating process.
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In the case of 2017-18, USDA's bearish start can be traced largely to an initial estimate of 435 mb of beginning soybean stocks that was later adjusted to just 302 mb. If Dow Jones' survey proves correct Friday, total soybean use in 2017-18 will have achieved another record high of 4.321 bb. Even more astonishing, record fourth quarter demand of 828 mb looks likely, in spite of the 25% tariff China enacted on July 6.
WHEAT
If you are looking for higher wheat prices, Friday's reports probably won't help. Dow Jones' survey pegs September 1 stocks of U.S. wheat at 2.35 bb, up from 2.266 bb a year ago. If true, that will mean first quarter wheat demand only totaled 762 mb in 2018-19, the lowest start in seven years.
Keep in mind USDA is currently expecting wheat exports to be up 14% in 2018-19, so it is quite possible Friday's report will also lead to a bearish adjustment in USDA's next WASDE report on Oct. 11.
As far as USDA's Small Grains Summary goes, only small tweaks to the production estimates for the various categories of U.S. wheat are anticipated. According to Dow Jones, all wheat production will come in at 1.871 bb Friday, a slight decline from the current estimate of 1.877 bb.
Winter wheat production is expected at 1.188 bb, HRW wheat at 661 mb, SRW wheat at 290 mb, white winter wheat at 237 mb, other spring wheat at 610 mb and Durum at 72 mb -- all very close to current estimates.
USDA's quarterly grain stocks reports have been known to have big price impacts, but in the specific case of September grain stocks, we haven't seen a dramatic move since 2013 when December corn fell 12 1/2 cents and November soybeans dropped 37 cents on report day. You never know for sure, but a dramatic surprise in this year's numbers doesn't seem likely.
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Come back Friday as DTN reporters will be standing by, ready to post all the most interesting details of USDA's numbers after they're released at 11 a.m. CDT. At noon CDT, join DTN's post-report webinar where I will be explaining what the day's numbers mean to grain prices.
Sign up for Friday's webinar at:
| QUARTERLY STOCKS (million bushels) | |||||
| (Report date 9/28/18) | 9/1/18 | Avg | High | Low | Sep-17 |
| Corn | 2,002 | 2,099 | 1,953 | 2,293 | |
| Soybeans | 394 | 408 | 385 | 302 | |
| Wheat | 2,350 | 2,443 | 2,155 | 2,266 | |
| SMALL GRAINS SUMMARY (million bushels) | |||||
| 2017-2018 Production | 9/28/18 | Avg | High | Low | 2017 |
| All Wheat | 1,871 | 1,907 | 1,848 | 1,741 | |
| Winter | 1,188 | 1,200 | 1,170 | 1,269 | |
| HRW | 661 | 666 | 645 | 750 | |
| SRW | 290 | 294 | 285 | 292 | |
| White | 237 | 247 | 230 | 227 | |
| Spring | 610 | 635 | 591 | 416 | |
| Durum | 72 | 74 | 70 | 55 | |
Todd Hultman can be reached at todd.hultman@dtn.com
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