The final month of the 2015-16 corn and soybean marketing years is underway, with use during the next four weeks to determine the magnitude of year-ending stocks, according to University of Illinois agriculture economist Darrel Good.
Weather becomes a key factor over the next six weeks as the two crops also enter the final stages of the 2016 growing season, he added.
“For soybeans, it appears that exports during the current marketing year may exceed the current (U.S. Department of Agriculture) forecast of 1.795 billion bu.,” Good said. “With just under five weeks remaining in the year, exports need to average only 6.6 million bu. per week to reach the projected level.”
Unshipped export sales as of July 21 stood at 236 million bu., and export inspections for the two weeks ended July 28 averaged 25.5 million bu. per week.
Cumulative marketing year crush estimates suggest that the crush during the final two months of the year needs to total about 300 million bu. in order for the marketing year total to reach USDA's crush projection of 1.89 billion bu. The 300 million bu. requirement is about equal to the actual crush during the same two months last year, Good said, adding that crush in May 2016 was about 2.6 million bu. larger than in May 2015.
On Sept. 1, USDA will release its estimates of ending stocks for the 2015-16 marketing year ending Sept. 30. While the magnitude of both soybean exports and crush during the 2015-16 marketing year will be well known by that time, the market does not always correctly anticipate the year-ending stocks estimate, Good explained.
“That estimate differed from the average trade guess by 20 million bu. or more in 10 of the previous 20 years and by more than 30 million bu. in four of those years. The largest difference was 61 million bu. in 2008,” he noted.
For corn, it appears that marketing year exports will be just shy of USDA's projection of 1.9 billion bu., Good said.
“With just under five weeks remaining in the year, exports need to average 54.2 million bu. per week to reach the projected level," he said. "Unshipped export sales as of July 21 stood at 370 million bu., but export inspections for the two weeks ended July 28 averaged only 48.5 million bu. per week.”
The Census Bureau's exports estimate will be released Aug. 5 and will provide further insight about the potential magnitude of marketing year exports. USDA's estimate of corn used for ethanol and co-product production also was set to be released this week, but Good said estimates through May suggest that the marketing year total may fall a bit short of the current USDA projection.
Both exports and domestic non-feed use of corn during the 2015-16 marketing year will be well known when USDA releases the Sept. 1 stocks estimate. However, the magnitude of feed and residual use during the final quarter of the year will not be known but instead will be revealed by the stocks estimate.
As a result, Good said the Sept. 1 stocks estimate has occasionally provided a surprise. “That estimate has differed from the average trade guess by more than 100 million bu. in six of the past 20 years. The largest difference was 301 million bu. in 2010,” he noted.
USDA's first survey based forecasts of the size of the 2016 U.S. corn and soybean crops will be released Aug. 12.
“Based on generally favorable weather so far this summer and exceptionally high crop condition ratings, that survey is expected to reveal prospects for very high U.S. average yields for both crops and record or near-record-large crops,” Good said.
While newswires will be releasing production estimates from various private analysts in the next few days, Good said private analysts have not always correctly anticipated the USDA production forecast in August.
“The difference between the average trade guess for corn and the USDA forecast exceeded 250 million bu. in nine of the previous 20 years. The largest difference was 354 million bu. in 2015,” he said.
For soybeans, the difference between the average trade guess and the USDA August forecast exceeded 50 million bu. in 11 of the previous 20 years and exceeded 100 million bu. in five of those years, Good said. The largest difference was 174 million bu. in 2015.
USDA will release new corn and soybean production forecasts in September, October and November, with the final production estimates to be released in January 2017.
The final estimates of the U.S. average yield and production always deviate from the August forecast. The final yield estimate exceeded the August forecast in 11 of the previous 20 years for corn and in 12 of the previous 20 years for soybeans.
For corn, the absolute difference between the final yield estimate and the August forecast exceeded 3 bu. in 12 of 20 years and exceeded 5 bu. in six of those years. For soybeans, the yield difference exceeded 1.5 bu. in nine of the 20 years and exceeded 3 bu. in five years.
Good said estimates of planted acreage of corn and soybeans may also change, particularly in October, due to the availability of Farm Service Agency planted acreage data.
“USDA production and stocks estimates occasionally provide surprises to the corn and soybean markets. Upcoming consumption estimates and production forecasts, however, would have to provide historically large surprises in one direction to alter expectations of a buildup of stocks of U.S. corn and soybeans during the year ahead,” Good said.