Urbana, Illinois
June 26, 2006
Although it may be overshadowed by the Acreage report, the
upcoming USDA quarterly Grain Stocks report will provide an
important checkpoint for gauging prospective year-end stocks of
corn and soybeans, said a
University of Illinois
Extension marketing specialist.
The
report, to be released on June 30, will show the level of
inventory on June 1, said Darrel Good.
"For soybeans, the magnitude of crush and exports during the
March through May 2006 period is pretty well known," he
said. "The June 1 estimate of stocks allows for the
calculation of seed, feed, and residual use of soybeans
during that quarter and provides a benchmark for evaluating
the accuracy of the estimated size of the 2005 crop.
"An unusually large or small residual use for the quarter
may indicate an error in that crop estimate. However, since
the calculated level of seed, feed, and residual use during
any particular quarter varies significantly from year to
year, an extremely large deviation from expected value would
be required to suggest an error in the production estimate."
The Census Bureau estimates the domestic soybean crush in
March, April, and May 2006 at 431.3 million bushels, very
near the level during the previous year. Census Bureau
estimates of U.S. soybean exports are available for March
and April, but will not be available for May until early
July.
>From September 2005 through April 2006, the Census Bureau
estimates of U.S. soybean exports were nearly identical to
the USDA estimates. Using the USDA estimates for May,
exports during the quarter are estimated at 178.2 million
bushels, 33 million less than exported during the same
quarter last year.
Over the past five years, Good noted, the calculated level
of seed, feed, and residual use of soybeans during the March
to May period ranged from 6.3 to 69.5 million bushels,
averaging 40.5 million bushels. For the first half of the
2005-06 marketing year, seed, feed, and residual use of
soybeans totaled 173.6 million bushels, about equal to the
average of the past five years.
"If third quarter use this year is near the five-year
average of 40.5 million bushels, total use during the
quarter should have been near 650 million bushels, leaving
June 1 stocks near 1.02 billion bushels," said Good. "Stocks
on June 1, 2005 totaled 699.3 million bushels and the record
June 1 inventory was 848.9 million in 1986. That record was
nearly equaled--848.6 million--in 1999."
Good said it is more difficult to anticipate the magnitude
of the estimate of June 1 corn inventories.
"Estimating quarterly exports is straightforward, but less
information is available for the other two categories: seed,
feed, and residual uses and processing uses," he said.
Monthly Census Bureau estimates of U.S. corn exports are
available through April 2006, and weekly estimates are
available from USDA for the entire March through May
quarter.
>From September 2005 through April 2006, cumulative Census
Bureau estimates of U.S. corn exports were about seven
million bushels (0.5 percent) larger than USDA export
estimates. The difference between the two estimates has been
unusually small so far in the 2005-06 marketing year, Good
noted.
"Based on USDA export estimates for May, exports for the
entire quarter are estimated at 570 million bushels, 143
million larger than exports during the same quarter last
year and the largest for that quarter in 10 years," said
Good.
Estimates of seed, food, and industrial use of corn require
input from several industry sources and that data is not
easily accessible by the public.
"The approach I take is to answer the question, 'If the USDA
projection of use for the year is correct, what amount
should have been used during the March through May period?"
said Good. "For the year, the USDA projects corn used for
all seed, food, and industrial purposes at 2.985 billion
bushels, 11.1 percent more than used last year.
"Use during the first half of the year totaled 1.405 billion
bushels, 9.8 percent more than used a year earlier. To be on
track with the USDA projection, use should have accelerated
during the third quarter, to perhaps 785 million bushels, a
12 percent increase from the use of a year earlier."
A similar approach, he added, is taken in anticipating feed
and residual use. Feed and residual use for any time period
is not measured, but is calculated as a residual, the
difference between total apparent use and use for exports
and processing.
Feed and residual use during the first three quarters of the
year since 1996-97 (a period of generally abundant corn
supplies) ranged from 82.8 to 85.5 percent of the total for
the year, averaging 84.2 percent.
"Assuming USDA's projection of use for the current year is
correct at six billion bushels, one might expect use during
the first three quarters to be 5.052 billion bushels,
resulting in a third quarter estimate of 1.168 billion
bushels," said Good.
"Based on this approach, corn use during the March through
May quarter should have been near 2.523 billion bushels,
leaving June 1 stocks near 4.465 billion bushels. A large
difference between this calculation and the actual stocks
estimate would point to a revision in the projected level of
domestic use during the current marketing year."
By
Bob Sampson |