Higher grain stocks cause for concern

MCHENRY, Ill. — In another hit to U.S. farmers already dealing with low grain prices, the U.S. Department of Agriculture’s National Agricultural Statistics Service grain stocks report on June 28 held no good news.

The report, released in tandem with the anticipated planted acreage report, showed larger-than-expected old crop stocks of corn, soybeans and wheat on hand as of June 1.

“This does, in this case, now put the discussion for new crop stocks on corn from 2.1 billion to 2.4 billion possibly. The issue with that is that it opens up the December corn contract to moving from roughly $4.30 potentially down to $4,” said Rich Nelson, chief strategist for Allendale Inc.

As of June 1, U.S. corn stocks in all positions came in at 4.99 billion bushels, up 22% from a year ago.

On-farm stocks were measured at 3.03 billion bushels, up 37% from a year ago, and off-farm stocks were measured at 1.97 billion bushels, up 4% from a year ago.

“Corn stocks came in about 5 billion bushels, a little over 100 million, over the trade estimates. Our prior two quarters of good feed/residual use may be weakened a little in this third quarter,” Nelson said.

Soybeans in all positions came in at 970 billion bushels, up 22% from a year ago.

On-farm soybean stocks were measured at 466 million bushels, up 44% from a year ago, and off-farm stocks were at 504 million bushels, up 6% from a year ago.

“On the soybean side of things, the USDA numbers were relatively close to trade estimates, so no big movement there for soybeans,” Nelson said.

He said that the stocks numbers weren’t likely to move the needle on soybeans much.

“We are still looking at roughly a $10.80 maybe around there for potential downside. We still have lower prices for beans ahead. The positive side of things is we may be able to lightly raise that potential downside a little higher with this report,” he said.

Old-crop wheat was at 702 million bushels, up 23% from a year ago. On-farm stocks measured at 139 million bushels, up 12% from last year, and off-farm stocks came in at 563 million bushels, up 27% from a year ago.

Nelson said analysts were concerned over the disparity in the wheat stocks number. The June stocks report wraps up the old crop marketing year for U.S. wheat.

“USDA put the stamp on old crop wheat stocks at 702. Their prior estimate was 688 million bushels, so we’re a little concerned on the wheat end, with maybe a little higher old crop wrapping up the report,” Nelson said.

The next grain stocks report will be released on Sept. 30.