By KARL SETZER
Market Analysis
March 1 corn, soybean and wheat inventory in the United States was higher than a year ago. Corn stocks totaled 7.74 billion bushels, 11 percent more than a year ago. Soybeans in reserves totaled 1.33 billion bushels, a large, 34 percent increase from a year ago. Wheat stocks on March 1 were up 6 percent from last year, at 1.12 billion bushels.
What is more noticeable than the larger stocks is that on-farm inventory was up 60 percent on soybeans, 13 percent on corn and 17 percent on wheat.
One of the most noticeable numbers that affected stocks was corn for feed. We are now halfway through the marketing year and corn use for feed is down 2.7 percent from a year ago. This is well below the 5.2 percent increase to corn demand that was expected, and will make it difficult to justify the 5.3 billion bushels usage number being projected for feed.
If this lower demand on corn continues it will greatly impact ending stocks. Just from the mentioned lower feed use an increase in corn carryout of 400 million bushels can be justified, which would be enough to push us back above the psychological 2 billion mark. This also gives us more room on yield to meet projected new-crop corn demand.
The soybean carryout picture is tighter, but even with the adjusted stocks total, a new-crop ending stocks of 400 million bushels is being forecast.
The greatest surprise in the release came from projected acreage. While corn acres in the United States are expected to decrease 2 percent this year, they are still forecast at a large 89.2 million.
Soybean plantings are projected at a record 84.6 million acres, and while up 1 percent on the year, are still 1.3 million below what trade was anticipating. Wheat acres are anticipated to decrease by 3 percent on the year, but still be a comfortable 55 million.
Now that this information has been released and digested, trade will start paying more attention to planting reports and spring weather outlooks. At the present time there remain few areas of concern across the Corn Belt. In fact, most forecasters believe conditions will remain favorable for the entire growing season.
This is not necessarily the case for the fringe areas, though, as excessive rains in the South and drought on the Plains could easily impact final crop sizes.
One of the regions of the United States getting the most attention on planting progress this spring remains the Delta. Corn planting has been delayed in portions of this region, and there is market speculation that acres could shift from corn to other crops, altering the numbers just released by the USDA.
Last year the affected region produced 556 million bushels of corn and 362 million bushels of soybeans. The states with the most attention being placed on them are Louisiana and Arkansas.
These two states produced 2 percent of the national corn crop last year. By comparison, this production is equal to the 11 counties in northeastern Iowa, and any yield loss could easily be made up for.
We are starting to see more emphasis on global corn production numbers for this marketing year. Some analysts have made sizable reductions to crop estimates, taking the global crop down as much as 50 million metric tons.
This is not from a loss in any one specific region, but rather from a variety of reductions.
If correct, this would take the global corn carryout number back to the 2013/14 level following the 2012 drought in the United States.
Karl Setzer is a commodity trading advisor/market analyst at Maxyield Cooperative. His commentary and market analysis is available daily on radio, in newsprint and on the Internet at www.maxyieldcooperative.com
The opinions and views in this commentary are solely those of Karl Setzer. Data used for this commentary obtained from various sources are believed to be accurate.
