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This post contains tables summarizing the historical differences between the USDA’s grain/oilseed ending stocks estimates released in the February Ag Outlook Conference vs actual final ending stocks since 2005/06, as well as a look at how the USDA’s February yield assumptions compare to the first official balance sheet estimates in the May WASDE report and to final yields. We also included the acreage summaries initially posted yesterday, as well as the average farm price estimates comparisons to actual.

A few quick items of note…

U.S. corn ending stocks have proven lower than the USDA’s February estimates in five of the last seven years, but this year’s current 2019/20 ending stocks estimate is a notable 242 million bushels above the USDA’s February “starting point†last year. We feel corn acreage could prove a bit above the USDA’s current 94.0 million acre view, but demand could also prove larger than USDA ideas, as well. Without a major weather problem detrimentally impacting acreage and/or yields, we do feel 2020/21 U.S. corn ending stocks have a strong likelihood of moving solidly back above 2.0 billion bushels from this year’s likely 1.7-1.8 billion, but the USDA’s 2.637 billion bushel new crop ending stocks estimate today appears a bit heavy at first glance. However, something to keep in mind is the fact that prior to last year’s troubled crop, the previous five years all saw the U.S. average corn yield prove higher than the USDA’s initial estimate in February, anywhere from 1.3-5.2 bushels/acre. Even a 2 bu/acre increase from today’s USDA estimate of 178.5 would add 170+ million bushels to the balance sheet and potentially push new crop ending stocks ideas near/above 2.5 billion bushels, so ending stocks near the USDA’s ideas this morning are not out of the question, we just feel it may require a bit larger production than USDA is currently reflecting. Demand is obviously a massive unknown given the Chinese situation, but even penciling in record corn exports of 2.450 billion bushels, which we do not expect but are looking at for illustrative purposes, a 180 bu/acre yield could still allow for ending stocks to move above 2.0 billion bushels.

U.S. soybean ending stocks have historically been heavily biased towards being lower than the USDA’s February estimates having been the case in 10 of the last 13 years. The massive unknown of the Chinese trade picture obviously creates considerable risk to the 2020/21 balance sheet outlook, but we do feel there is upside acreage potential relative to the USDA’s initial 85.0 million acre estimate given the fact their combined major crop acreage estimate of 250.7 million acres is below the 252.1-253.9 million planted to these crops in the 2015-2018 crop years. Accordingly, there appears to be an “easy†2-3 million additional acres that could come into play relative to the USDA’s current view. The same as with corn, the U.S. average soybean yield proved higher than the USDA’s February estimate in each of the five years prior to last year’s struggles and by an average of 2.8 bushels/acre. Adding 2.5 bushels/acre to today’s 49.8 bu/acre estimate by USDA would add 170+ million bushels to the balance sheet and could result in a less constructive balance sheet picture than presented by USDA today with ending stocks at 320 million bushels.

The 2020/21 U.S. wheat balance sheet appears set to see another year of modestly tightening stocks, even if exports decline as USDA expects. While still not considered to be an outright bullish structure, ending stocks look to decline to the lowest level in six years. However, without a strong demand picture, reduced stocks don’t necessarily predicate the need for higher prices. Developments with production/export prospects in major competing countries will be critical to the wheat market in 2020/21 now that U.S. stocks have pulled back to somewhat more reasonable levels.

U.S. soybean oil ending stocks have been a mixed bag over the last eight years with years proving lower than the USDA’s February ideas and three years higher. It is interesting to note, though, that U.S. soybean oil ending stocks have deviated by an average of 18.5% from the USDA’s February estimate over the last eight years, ranging from 32% below to 17% above. An 18.5% deviation from today’s estimate of 1.550 billion pounds would reflect a range of stocks ideas of 1.260-1.835 billion pounds.

The USDA’s 2020/21 Grain/Oilseed Outlook Conference full report and balance sheet can be found in our Market Insights post at https://portal.rjobrien.com/MarketInsights/Blog/Read/39068.

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