October 8, 2010

 

US corn stocks to exceed earlier estimates

 

The US may have higher stocks of corn in storage than previously thought, according to the USDA's September 30 Grain Stocks report for 2009.

 

Corn stocks on September 1 was 1.71 billion bushels - up 2% from a year earlier, and up 300 million bushels from the last USDA forecast (September 10 Supply and Demand Estimates) and trader pre-report estimates.

 

The USDA report asks for reports from producers, Extension educators, and organisations focused on the production side of agriculture. In addition, commercial mills, elevators, warehouses, terminals, and processors were also questioned regarding their supply of commodities as of September 1.

 

"This gives a very good snapshot of what crop is left in storage at the beginning of the marketing year," said Chad Hart, Extension grain marketing specialist from Iowa State University, Ames. "There was more corn in bins throughout the country than the market was expecting," he said.

 

Hart suggested that an early 2010 corn harvest could have skewed the September 1 stocks. "In the southern parts of the country, we were getting that harvest rolling before September," he said. "Some of the new crop is showing up in the stocks."

 

Despite the early corn harvest, the report shows that there is a fair amount of 2009 corn still around.

 

The Grain Stocks report indicated that 485 million bushels were stored on farms - down 20% from a year earlier. Off-farm stocks, at 1.22 billion bushels, were up 15% from a year ago.

 

"Farmers moved a lot of their 2009 corn crop to get ready for the 2010 crop and to use that on-farm storage to capture what they hope for are higher prices in the springtime," Hart said.|

 

Hart said the high off-farm stocks reflect the poor quality of some 2009 corn. Elevators will blend 2009 corn with 2010 corn to meet specifications. Traders had expected the USDA to increase the September 1 stocks number, but 1.71 billion bushels was still high.

 

The CME Group exchange on September 30 closed with the December future at US$4.88 per bushel. The March 2011 future was US$5.00, May was US$5.06, July was US$5.09, and September was US$4.88 per bushel.

 

Compared with prices on September 17, December was US$0.25 lower, March and May were US$0.24 cents lower, July was US$0.23 cents lower, and September was $0.10 per bushel lower.

 

The USDA's weekly export report on September 30 indicated sales of 925,900 tonnes, or 36.4 million bushels. As of September 23, total corn sales were 33% of the USDA forecast for the 2010 marketing year - about 4% ahead of normal.

 

Following the September 30 Grain Stocks report, the futures market's nearby contract traded down almost US$0.27, but then moved higher for a US$0.09 loss for the day.