Fundamentally Speaking

USDA Ending Stocks Projections

After a slew of government reports on January 10, the next major figures from the USDA will be unveiled at their annual agricultural outlook conference in late February.

Their initial balance sheets for corn, soybeans, and wheat for the 2014-15 marketing year will be released.

These estimates are based mostly on computer projections using trend yields and assumptions of no calamitous events or “Black Swans” that would cause major price gyrations.

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Of course, with no idea as to how growing season weather will unfold for the upcoming season, these estimates are really just a shot in the dark, particularly the production projections.

For comparative purposes, this graphic shows the percent deviation from what the USDA indicated for corn, soybean, and wheat ending stocks and what the actual ending stocks figure was as detailed in the final WASDE figures for each marketing year in November.

The averages of these deviations are also plotted and for the 2013-14 year, we are using the December 2013 WASDE estimates.

Maybe due to the USDA having at least some fundamental information for wheat in the January winter wheat seedings report, their February Ag Outlook ending stocks estimate is closest to the final figure that averages 2.4% above the February projection with a low of -39.6% and a high of 46.9%.

The final corn ending stocks figure has averaged 16.5% above the February projection with a low of -49.0% and a high of 157%.

On the other hand, the USDA has a tendency to overstate ending soybean stocks as the final figure has averaged 27.5% below the actual ending stocks number since the 1998-99 season with a high of 21.8% and a low of 60.4%.

Based on large beginning stocks and a high yield the trade is expecting large initial USDA 2014-15 corn ending stocks estimate and the same for soybeans based on a huge jump in 2014 plantings.

If history is any guide, their corn number could turn out to be low and their soybean carryover figure too high.


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