USDA Reports Preview

Nine months ago, we made a good case that USDA's corn production estimate was too high and low-test-weight corn from a wet fall harvest would be used quicker than normal, resulting in lower-than-expected corn stock estimates.

That proved true through March 1, but since then, coronavirus turned into a global pandemic and wreaked havoc on demand, especially for corn. Thanks largely to the pandemic, tough export competition from South America and the ongoing trade dispute with China, Wednesday's Sept. 1 Grain Stocks report is expected to confirm 2019-20 ended with the lowest corn and soybean demand totals in six years.

USDA will release its Sept. 1 Grain Stocks and Small Grains Summary reports at 11 a.m. CDT on Wednesday, Sept. 30.

SEPT. 1 GRAIN STOCKS

Corn and soybean export sales are off to strong starts in 2020-21, but that is not how it was for 2019-20, and that is what Wednesday's Sept. 1 Grain Stocks report will reflect. According to Dow Jones' survey of analysts, USDA is expected to show 2.243 billion bushels (bb) of corn stocks on hand as of Sept. 1, up from 2.221 bb a year ago.

If true, that is only 10 million bushels (mb) less than USDA's current estimate of U.S. ending stocks for 2019-20 and shouldn't have much effect on prices. For corn, there is a good chance traders will pause for the numbers at 11 a.m. CDT, not find anything to respond to and go back to being more interested in current export sales and harvest progress five minutes later.

For soybeans, Dow Jones' survey expects USDA to find 575 mb on hand as of Sept. 1, down from 909 mb a year ago. That is the same amount USDA is already estimating as ending stocks for 2019-20, so, again, traders are not likely to show much response. A surprise is always possible but does not seem probable in this case.

Dow Jones' survey expects USDA to find 2.163 bb of wheat on hand as of Sept. 1, down from 2.346 bb a year ago. If true, wheat demand in the first quarter of 2020-21 will have totaled 848 mb, up 18% from a year ago and the most in four years.

Dow Jones' wheat stocks estimate may be too low for a new season in which the world is expecting another record level of ending world wheat stocks. U.S. wheat exports are up 3% from a year ago, and corn prices didn't turn higher until mid-August, so it's difficult to imagine where analysts are expecting the higher wheat demand to come from.

2020 SMALL GRAINS SUMMARY

In the September World Agricultural Supply and Demand Estimates (WASDE) report, USDA estimated U.S. wheat production at 1.838 bb, down 4% from 1.920 bb in 2019. Dow Jones' analysts don't expect Wednesday's Small Grains Summary report to show much change and are looking for 1.835 bb of wheat production.

Hard red winter (HRW) and soft red winter (SRW) wheat production estimates are also expected to be close to USDA's September estimates, at 692 mb and 276 mb, respectively. Other spring wheat production is expected at 578 mb, slightly above USDA's August estimate of 577 mb.

With only small changes expected in USDA's Small Grains Summary, it doesn't seem likely that traders will have much to respond to from Wednesday's reports, but a surprise is always possible, and DTN will be there with quick coverage for our readers.

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Come join our webinar at noon CDT Wednesday, Sept. 30, to find out how the reports went and what the numbers will mean for crop prices. I'm also glad to take questions. Register now at: https://dtn.webex.com/…

QUARTERLY STOCKS (million bushels)
	9/1/20	Avg	High	Low	9/1/19	6/1/20
Corn		2,243	2,355	2,120	2,221	5,224
Soybeans		575	608	559	909	1,386
Wheat		2,163	2,380	925	2,346	1,044
SMALL GRAINS SUMMARY (million bushels)
2020-2021 Production
	9/30/20	Avg	High	Low	Aug	2019
All Wheat		1,835	1,850	1,817	1,838	1962
Winter		1,195	1,204	1,185	1,198	1304
HRW		692	700	684	695	833
SRW		276	280	272	277	239
White		227	230	224	226	232
Spring		578	590	568	577	600
Durum		62	64	60	62	58

Todd Hultman can be reached at todd.hultman@dtn.com

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